How to access funding for your vineyard business

According to a report published by Strutt & Parker (1 July 2024) there are now over 1,000 vineyards in the UK covering around 18,800 acres and collectively producing 20-22m bottles in 2023. Last year the UK also had the fastest growth in vineyard surface and wine production than any of the major wine producing countries. British vineyards and wine makers have been earning well deserved national and international attention and awards, especially in the sparkling wine categories.

The report also highlights significant unrealised potential for planting vines in the UK, with an estimated further 83,000 acres suitable for vines. This fast-expanding and, let’s be honest, glamourous sector comes with its own challenges and access to the right funding and investment is essential.

It is no surprise that investors and entrepreneurs are looking closely at the investment opportunities in this sector. Establishing a vineyard business isn’t for the faint hearted. Issues range from employing the right team, or contractors to manage operations, who have the knowledge and skill to help select the appropriate land and vines to suite the location, having access to appropriate storage and winemaking facilities and being able to market your wine to the most receptive audience. This entire process is very front-loaded in terms of expenses, and quite often a vineyard will not begin to produce grapes for at least three to five years, and it will several years before you will begin to see a meaningful return on your investment.

For longer established businesses, sustainable growth and business expansion also requires a significant financial commitment upfront.

Here at Gullands, we have a team of dedicated solicitors who can guide you through running your vineyard business at whatever stage of the business cycle you are at. From setting up a business entity, the land purchase or lease, employing staff, advice on contractual terms with suppliers and customers, accessing business finance, business succession and exiting the business.

Depending on where you are in your business cycle, your funding requirements and options may vary, and a solicitor can advise on the legal responsibilities these involve. You may need to consider specialist lenders who deal in agricultural or specialised financing solutions. This could include asset-based lending for more established businesses or bringing angel investors on board directly to provide a cash injection for growth rather than through classic lending structures.

For more established businesses, asset-based lending involves frequently complex lending terms which secure the loan against your business’ assets. This can include the land itself, but may include plant and machinery, receivables generated by the vineyard and the wine you will produce itself. Depending on your individual business circumstances, some agreements will be bespoke and require tailoring to your specific needs to ensure you maintain the flexibility you require in order to operate day-to-day. Care and advice should be taken around directors’ personal guarantees for loans.

Direct investors can be useful if you have individuals, or a dedicated community, who wish to see you grow. This could also include issuing a special class of share (for incorporated companies), or loan notes secured against some part of the business, such as the wine produced in the future. Your solicitor will look at future-proofing this type of agreement and minimising liability for a poor production year.

Once you have found the right funding for your vineyard and business borrowing needs, the Commercial team here at Gullands would be glad to guide you through the legal implications of your decisions, so you can focus on reaching the goals you have set for your vineyard business.

Contact Sarah Astley or Gabriela Alexandru for more information.