Written by Wine Alliance Treasurer Mike Stubbs
Previously, I have written articles dealing with record keeping and your winery. If you are producing more than one varietal of wine and are running your winery as a business venture, you will need to keep the production costs of each varietal separated so as to determine the cost per bottle.
Any time a business sells a product that either they purchased for resale or produced for retail, they need to know their cost per item. In our case, that means the cost per bottle of wine for both accounting and tax purposes. At the end of every accounting period, your Income Statement needs to show total sales dollars and cost of sales dollars for each line item or varietal of wine sold.
I like to use a “Job Cost Sheet” for each varietal. From day one with grape or juice costs, to final bottling, I break down my Job Cost Sheets into two parts. First, all material costs such as grapes, top off wine, bottles, corks and labels, as well as other similar category items would be included in this section. My second section includes any and all labor costs that you might incur from A to Z in making your wine. Examples include transportation labor, chemical testing or other outside labor, crushing labor, racking costs and final bottling costs.
I do not include equipment costs, mainly depreciation, as those costs are indirect and most all equipment is depreciated over a specific life. Since said equipment is generally good for more than one particular varietal, equipment is an expense item separately listed in the expense section of your Income Statement. Other expense items in this section would be utilities, maintenance of equipment, advertising, and so on.
When a given varietal is bottled and ready to sell, all that is necessary is to total all costs on your Job Cost Sheet and divide that amount by the number of bottles produced. Every time you sell a bottle of that varietal, you now know what your cost was and how much profit you are making per bottle.
Even if you are only making wine for yourself and not as a business, would it not be nice to know what it took in dollars to make that bottle that you just gave as a present to Uncle Joe?