Fractional Vineyard Ownership

Owning a vineyard is a common fantasy for wine lovers, but the cost of admission is steep. The price of a small vineyard site and winery in Napa starts around $5 million, and escalates from there. Bordeaux is far higher, and regions such as Argentina are generally cheaper, but either way it’s not the spare change in your piggy bank.

Fractional vineyard ownership has become a hot concept over the past decade. In wine country, the idea of fractional ownership is an inversion of the normal rules of real estate. Rather than purchasing a share of a property that permits you an annual stay of one, two or four weeks, you’re buying an acre or two (or a few rows) of a vineyard. Generally, you have a choice between getting involved in the winemaking process of letting the experts do it for you. Once your grapes are made into wine, you’re obligated to purchase it as well.

The pioneer in the field was the Napa Valley Reserve, owned by Bill Harlan (proprietor of Meadowood resort and Harlan Estate) and sometimes described as a “country club for wine lovers.” For an entrance fee of $165,000, members take ownership of a parcel of the vineyard. They may purchase between 6 and 75 cases each year, have a special blend created for them, and attend events at the winery. This is chicken feed compared to Napa’s tony Calistoga Ranch, which offers ownership opportunities starting at $475,000; each member receives a two-bedroom residence and the chance to make their own wine. Compared to this, Wine Estate Capital Management is a bargain. The company operates two vineyards in France and two in South Africa, and sells shares beginning at $100,000.

For the sponsors of these programs, there’s another benefit in these difficult economic times: Fractional ownership guarantees that they will sell all of their wine. I was reminded of this recently when I learned that O. Fournier in Mendoza, Argentina has earmarked 350 acres of vineyards, to be sold in parcels to 85 investors. When I visited the winery several years ago, the owner was complaining about sluggish sales in the U.S. market. Ten plots have been sold thus far, and soon he won’t have to worry.