Buying a vineyard or winery – Contracts and commercial law

Buying a vineyard or a wine estate means acquiring a set of assets. Land is at the heart of the deal, but you can also buy crops, buildings, grants, goodwill, and intellectual property. On top of that, you buy them – trading companies can be sold as corporate transactions or “stock sales” rather than as a direct purchase of the underlying assets.

This article focuses on the assets you are acquiring and the terms your purchase agreement may need to meet.

Ground

First and foremost, when you buy either bare land to plant vines or an existing vineyard, you are buying land. Whether the soil is good for growing grapes is only one factor in determining whether the land is good. Land is a complicated asset and when buying it for a vineyard you need to consider issues such as:

  • Are there any restrictions that might prevent you from growing vines there? For example, does it have the appropriate planning permissions for its current or proposed use? Can you sell the wine in addition to making it, or organize wine tastings and weddings?

  • Are there any third party rights that could affect operations? For example, is there a public trail through the middle of the vineyard, or are there historic trails that may be recorded in the future?

  • Do you inadvertently take on other liabilities that you did not expect, such as claims from vendor employees or environmental pollution?

  • What is planned in the neighborhood? For example, is it next to a proposed new subdivision, or will HS2 or a new bypass go through it?

  • Where does the water come from? If you have abstraction licenses or a private water supply, can you use them for the business and what obligations do you assume?

  • Is there good access to the public road?

  • How much tax will you pay on the acquisition – what are the SDLT and VAT rates?

Your lawyer’s due diligence will answer these questions and more. Armed with this knowledge, you can adjust the price, if necessary, and negotiate reasonable terms in the contract to protect against risk.

Expert Opinions

“Buying a vineyard is a new opportunity for clients to find a real connection to the land and a chance to create a heritage investment. The best sites are hard to find, hard to acquire and the journey is often fraught with pitfalls and sorrows – you have to be resilient. The vines are in the ground for a long time, so it is important to take the choice and preparation of the site very seriously!”

Rupert Coles – Director, Rupert Coles Ltd

Buildings and equipment

When it comes to production, wineries need space to store bottles, store expensive equipment, house people on site and, increasingly, entertain visitors and customers. From bats to asbestos, there are nuances with bricks and mortar. A good surveyor is important if you want to understand the responsibilities and potential costs of maintaining or converting farm buildings.

Compliance with the town planning regime is essential. Three areas stand out the most: use, development and listed buildings. Your lawyer should check whether or not the site has the appropriate consents for your proposed use – the planning rules are not straightforward and many wineries will require specific consents for retail and leisure.

Around 400,000 buildings in England are listed, including a surprising number of former agricultural barns. Performing unauthorized work in a listed building without consent is a criminal offense and therefore cannot be taken lightly, and there is no limitation period for enforcement action, so you may have to repair unauthorized work performed by the seller. In more serious scenarios, you may decide that the seller must seek consent for unauthorized work themselves before they are completed, and you may retain part of the sale price as a holdback to meet the risk.

Less serious but more common in draughts, older buildings lack building regulation certificates and potential non-compliance with minimum energy efficiency standards (MEES), where energy performance certificate ratings of F or G make a building unleasable. Again, you need to understand how this will affect your use of the site before trading.

Viticulture also requires specialized equipment, much of which is valuable and difficult to remove. If included in the sale, a key point to check is whether the seller is able to sell you everything you think you are buying – nemo dat quod no habet, which literally means “no one can give what he hasn’t got”, is a long-established principle, but one that can easily be ignored when equipment is held on hire-purchase terms. Assuming it is owned and included, there may be accounting items to deal with in the contract, such as depreciation choices, and having an experienced accountant to work with your attorney is essential.

Harvests

Most vineyards will be on the market in early spring and contracts are often exchanged in early summer – a quick sale where efficient lawyers have a sales package ready can be exchanged in less than a week, although that most larger sales take six to ten weeks. Most sales will then end within a few months, before or after the harvest.

If completion occurs before harvest, then the contract must deal with grapes. Growing crops are part of the land and will be included in the sale by default; if they are, the seller may very well ask you to pay them and any other element of what is known as the “tenant’s right” on the basis of an evaluation on completion, in particular if the completion is close to harvest.

It is more common for the seller to want to keep the current crop. They will then need conservation rights to harvest and store the grapes. A good contract will set out costs, liability and insurance during this period, as well as a provision allowing you to keep or sell the grapes if the seller does not remove them – otherwise you are left as an “unwitting bailee” and will have to follow a notice procedure before you can do anything with the grapes.

Many vineyards will be located on a larger farm and not all of the land will be under vines. The rest, and in fact the field margins, will often be used for grazing or for more conventional arable crops. Although crops can be processed alongside grapes, it is not uncommon to purchase cattle or sheep with a farm and an appraisal or price adjustment may be required for livestock and deadstock.

The cultivation of the vine remains agriculture and the land is therefore eligible for agricultural subsidies. These can be lucrative but complicated, especially as the Common Agricultural Policy fades after Brexit in favor of environmental land management schemes. In the event of a purchase, you must decide whether or not to take the rights to the grants, in which case the documents must provide for the transfer process and set an agreed price.

The brand

Judging a book by its cover may be frowned upon, but judging a wine by its label is often wise. The name, logo, recipe and method are essential, so they must be properly registered, protected and enforced so that no one else can steal or benefit from your intellectual property. You should also consider licensing your name and trademark overseas. In the digital Wild West, the opportunities and pitfalls are greater than ever.

The contract may cover whether intellectual property is included, both in the strict sense of label design copyright and trademarks, but also in the broader sense of farm names. It’s not uncommon to ask a seller to stop using a farm name in the future and transfer website names and social media IDs to you upon completion.

Finally, when you buy the business, you also need to consider goodwill and, possibly, book debts. It is from this perspective that it becomes important to use lawyers and agents with corporate experience, as the transaction will be more akin to a merger or acquisition than a single asset purchase. .

Expert Opinions

“The UK wine industry continues to grow and demand for English wine and therefore vineyards continues to outstrip supply in key areas. A top product more often produced in established environments and attractive means there is growing interest in the concept of wine tourism.Wine trails and tasting sessions alongside local and seasonal produce are becoming more common options for tourists in the UK, allowing savvy operators and avant-garde to take advantage of it.

Andrew Chandler – Rural Agency Manager, Carter Jonas

In summary

It will hopefully have become clear that there is no “standard” purchase – each acquisition will have ownership and company specific terms – and therefore you need a lawyer who can anticipate every potential problem and offer you a solution. . If you are interested in buying a vineyard or a winery, do not hesitate to contact us.

Funding

Making wine is expensive. You need land, labor, specialized plant and machinery, and long-term capital to support expansion and maintenance. It takes 5-10 years for a new vineyard to start selling wine, so sufficient capital will be needed in the early years.

Vineyards and cellars

A good bottle of wine is a wonderfully elegant and simple thing. But the manufacturing process is complicated. Small variables in soil, climate, management and markets can make the difference between a good year and an average year.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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