Revenue
- Revenues or any return do not fully begin until the production year (fourth year) in any investments of a Winery.
- However, it is not beyond the production that a Winery owner should expect matured grapes to harvest a satisfactory yield for commerce.
- In general, grape growers should expect an average yield to be about 7.5 ton/Ha in optimal growth resourced farm with good managers.
- There are some cultivars that could produce yields of 8.5 to 10 ton/Ha.
- Produce quantity and quality are major determinants of a sale price for grape growers.
- Quality is represented by the sugar content in the grapes in which it will be measured by brix refractometer.
- It is common for there to be a base sale price for a minimum acceptable quality.
- There is a general trend in which the price increases as the sugar content increased and the price decreases in a reduced sugar content.
- Potential grape growers should understand that there is a high association in between yield and sugar.
- Usually a grower is required to sacrifice yield during the viticulture via pruning to increase sugar content of the grapes.
- Hence, grape growers need to prepare sequences of activities considering the effect of cultivar, grape yield and sugar content on price as they prepare a plan.
- The base price offered for wine grapes in all over the world varies from winery to winery.
- The price assessed at markets for grapes in Tanzania for this document, is often set merely without knowing the brix content of grape fruits at a base price.
- The price increases or decreases from the base majorly seasonally with a randomly determined taste (sugar content).
- The market is very seasonal in which retailers occasionally brought edible grape fruits to the market with prices ranging USD 1.72 to 2.58 per a Kg.
Contribution margin
- The contribution margin is the difference between the revenue generated and the expenses used to generate the revenue.
- It should provide funds to cover other expenses including loan payments, fixed costs and capital expenses.
- Growers, retailers and consumers need to expect that, sale price offered for grapes will vary depending on the grape varieties and qualities.
- Both yield and quality of the crop has an impact on the revenue generated.
- Small scale grape growers in Dodoma can gain a drastic increased return with a positive net cash flow at the fourth production year and an in-pocket accumulated profit at the sixth production year (Table 7).
- Significant revenue recorded might be because of easily availability of facilities and growth resources with less production cost.
- Cheap labor costs, availability of land, water and suitable climates will favor the business to succeed and grow fast.
- The presence of AFMAT helps such Growers greatly in giving researching, giving consultancy and trainings, providing skilled man power, producing production guide and creating market opportunities through bridging producer-industry linkages.
Conclusion and Recommendation
- Winery business requires a great deal of concerns to every details of production management in order to ensure an adequate quality and high volume to satisfy the revenues required. For a business venture with no requirements for borrowed money, a pressure on the finances will be significantly less and the breakeven on the investment will occur much sooner.
- As it is indicated in the economic analysis table there is huge return that can shorten the payback of the initial investment. The major important reasons for the fast increased economic return is realized due to an increased demand, cheap labor accessibility, availability of local inputs, low risk production, land and water sources availability.
- Comparisons of returns and costs revealed that there is a significant profit earned over the investment costs. The report finally came to conclude that there is a paramount demand, an opened gate and high profitability in a winery business and invited all responsible donors to finance this AFMAT Pilot Project which is potentially fast growing, ecologically sound, socially acceptable, beneficial to multitudes of unemployed in the community and sustainable enterprise.