Economic Feasibility of Small Oklahoma Wineries

Abstract

Until recently, winemaking was almost non-existent in Oklahoma. While some may have been interested in operating wineries in Oklahoma, the industry saw little change after prohibition was repealed due to a complex system of state regulations regarding the sale and distribution of wine and spirits which limited winemakers to marketing their products solely to wholesalers and distributors. However, the industry began to experience dramatic growth as state legislation was updated to expand the rights of winemakers to include the rights to serve winery samples on site or at festivals and trade shows and to sell directly to customers, retail outlets, and restaurants. Since 1992, when state legislation began to trend towards promoting winemaking in Oklahoma, the numbers of wineries has grown from two to over forty. While recent years have proven to be a very exciting time of industry change and growth, there are many challenges facing Oklahoma winery entrepreneurs. The historical lack of commercial winemaking in the state has created a void in economic knowledge on a range of Oklahoma winery issues. Current and prospective winery operators, persons engaged in supporting industries, and sources of investment capital need more information and resources devoted to the commercial operation of wineries in the state of Oklahoma. This research was conducted to increase the understanding of factors influencing the economic viability of a small Oklahoma winery. To this end, a feasibility template based on a hypothetical small Oklahoma winery was developed which allows one to consider the start-up and subsequent ten-year winery business operations under various capital input scenarios, capacity/size; equipment schemes, wine selections and product pricing.