Summary points from financial analysis

• Starting a winery requires a huge outlay of capital upfront and in the first two years;
• Production is lower than capacity for several years as you develop your market—you cannot sell all the wine that the winery capacity could produce, if equipment were fully utilized, in the early years;
• Therefore, costs per unit are very high (for fixed costs) for perhaps the first five years until you reach the winery’s capacity—implying lower or negative profits.

Solutions

• Outsourcing? --> invest in equipm. JIT
• Branding? --> focuse on standard, not on property!
• Diversification? --> offer unused cap