Purpose

Does it make economic sense to invest in winery startups with high land prices? This paper aims to apply a capital budgeting analysis for a startup project to investigate the role of land prices in the decision-making of a wine entrepreneur.

Design/methodology/approach

This paper uses a capital budgeting analysis to evaluate the value of a winery project using the six investment criteria: net present value (NPV), internal rate of return (IRR), modified IRR, profitability index, payback period (PB) and discounted PB.

Findings

This study finds that high land prices are economically justifiable (NPV is greater or equal to zero) when the weighted average capital cost is sufficiently low for investors who are able to diversify risks and with access to a cheap source of funds. Additionally, this study demonstrates that wine entrepreneurs need a long-term investment horizon because the recovery of the initial investment in winery startup projects takes many years.

Research limitations/implications

The startup winery projects are heavily influenced by wine pricing, production and cost assumptions. As a result, different assumptions made at other wine regions may result in slightly different outcomes for the acceptability of the wine startup projects.

Practical implications

High land prices are economically justified for investors and entrepreneurs with the ability to diversify risk and access to cheap financial resources. As such, land prices can be a critical obstacle for individual entrepreneurs who experience a lack of capital.

Social implications

In the famous wine regions of the world, high land prices may result in more wineries being owned by the capital rich wine conglomerates.

Originality/value

This paper provides estimations of land prices based on financial methods to discuss the justification of observed prices and the implications regarding the ability of investors and entrepreneurs to access capital.

中文翻译：

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高地价对酿酒厂启动项目可行性的财务影响

目的

投资地价高的酒厂初创公司是否具有经济意义？本文旨在对一个初创项目应用资本预算分析，以调查土地价格在葡萄酒企业家决策中的作用。

设计/方法/方法

本文使用资本预算分析来评估酒厂项目的价值，使用六个投资标准：净现值（NPV）、内部收益率（IRR）、修正的内部收益率、盈利指数、投资回收期（PB）和贴现PB .

发现

本研究发现，当加权平均资本成本对于能够分散风险并获得廉价资金来源的投资者而言足够低时，高地价在经济上是合理的（NPV 大于或等于零）。此外，这项研究表明，葡萄酒企业家需要一个长期的投资视野，因为葡萄酒初创项目的初始投资需要很多年才能恢复。

研究限制/影响

初创酒厂项目深受葡萄酒定价、生产和成本假设的影响。因此，在其他葡萄酒产区做出的不同假设可能会导致葡萄酒创业项目的可接受性略有不同。

实际影响

对于有能力分散风险和获得廉价金融资源的投资者和企业家来说，高地价在经济上是合理的。因此，对于缺乏资金的个体企业家来说，土地价格可能是一个关键障碍。

社会影响

在世界著名的葡萄酒产区，高昂的地价可能会导致更多的酒厂被资本丰富的葡萄酒集团所拥有。

原创性/价值

本文提供了基于金融方法的土地价格估计，以讨论观察价格的合理性以及对投资者和企业家获得资本的能力的影响。