Drunken Dragon Winery: Business Plan

The following is the Business Plan prepared for Drunken Dragon Winery using the Futurpreneur online tool in March of 2017:

1.0 Executive Summary

Company Profile Summary

Drunken Dragon Winery, owned and operated by Michael Deazley, will be located on the Eastern Shore of Nova Scotia and produce unique fruit wines.

Market Research Summary

The Nova Scotia wine industry is currently estimated to be worth $200 million, and growing. Drunken Dragon Winery will be targeting those living in and visiting the Halifax Regional Municipality.

Marketing Summary

Drunken Dragon Winery's primary marketing strategy will be to attend farmer's markets and festivals to offer tastings. As a secondary marketing strategy, a website and social media presence will be developed. Drunken Dragon Winery will be listed in Tourism Nova Scotia's 2018 Doers and Dreamers Guide as a destination.

Drunken Dragon Winery will be housed int he basement of a popular landmark on the Eastern Shore. Specialized equipment will be purchased to turn locally-sourced fruit into wines to be sold once aged.

Finance Summary

Drunken Dragon Winery should be able to get started with less than $45 000. Due to the length of time it takes to ferment and age a wine, there will be few if any sales the first year. However, it should be possible to make $100 000 in sales in the second year. Therefore there will be several months of expenses such as electricity, heating, internet access, and advertising building up in that first year.

2.0 Company Profile

Business Overview

Drunken Dragon Winery makes wine from a wide variety of fruit, vegetables, herbs, and spicese -- but not grapes. In the view of Drunken Dragon Winery, the market is saturated with grape wines. Besides, there are so many other flavours out there that can be had in a wine, and Drunken Dragon Winery is for the adventurous. Drunken Dragon Winery was established on 01/04/2017.

Drunken Dragon Winery will strive to create new & unusual varieties of wines as well as some tried & true classic fruit wines in order to appeal to those looking for more variety and a bit of adventure.

Drunken Dragon Winery is a product business. It will offer several varieties of wines produced in 400 L batches and bottled in 750 mL bottles, starting with:

  • Lemon Wine
  • Blueberry Wine
  • Blueberry-Lemon Wine
  • Rhubarb Wine
  • Rhubarb-Pineapple Wine
  • Honey-Lemon-Ginger-Jalepeno Wine

Company History

One day Michael Deazley jokingly suggested making lemon wine, only to search the internet and find a few existing recipes offered by other hobby home-brew vintners. His first attempt at producing a lemon wine was met with great success. Unfortunately, under liquor laws as they exist, it is technically illegal to even give someone wine made at home. Michael wanted to share his lemon wine with more people, and to do so he would need to acquire a manufacturer's permit. Since Michael is unemployed, making the leap from hobby home-brew wine-making to a commercial winery business seems a logical choice. And so the Drunken Dragon Winery was born.

Management

Drunken Dragon Winery is owned and run by Michael Deazley, whose experience in turning fruit into wine spans more than two decades. He is not afraid of experimenting with unique flavours and has successfully developed recipes for three wines you cannot find on the shelves of local liquor stores.

Location

Drunken Dragon Winery will be both a manufacturing and retail business located at 11470 Highway #7, Lake Charlotte, Nova Scotia, B0J 1Y0. As the owner of Drunken Dragon Winery, Michael Deazley, does not currently own any property, renting a space to manufacture his wine is a more logical option than purchasing. The basement of Webber's Store is one of the only such spaces to be found between Musquodoboit Harbour and Sheet Harbour, the region Michael is from and wants to remain in. It is a section of unfinished basement, allowing a great deal of freedom in how Drunken Dragon Winery utilizes it. When the time comes to open an on-site retail store, the large parking ot and nearby attractions will make it an ideal location for tourists. Besides, Webber's Store has been a widely recognized landmark for generations. It will be easy for newcomers to find Ddrunken Dragon Winery at this location

Legal Structure

Drunken Dragon Winery will operate as a sole proprietorship as it will be owned and operated entirely by Michael Deazley.

Vision & Mission

Within ten years, Drunken Dragon Winery hopes to have found a permanent home to start a Farm on whichi it would be ideal to produce as many of the ingredients for its wines as possible. On this Farm would be Greenhouses, Orchards, Vineyards, Gardens, and an Apiary.

To produce wines increasing in quality with every batch through daily monitoring and/or testing as well as constant research, continued education, and small-scale experimentation.

Goals & Objectives

  • To sign a lease by April 30th, 2017.
  • To have fermentation tanks and all other equipment installed by June 30th, 2017.
  • To have the first five batches of wine started by July 7th, 2017.
  • To offer the first wine tastings in January or 2018.
  • To make the first sale of wine in January of 2018.
  • To have 10 000 L of wine bottled by March 31st, 2018
  • To open the On-Site Retail Location by April 1st, 2018.

Professional Advisers

Andrea Deazley: Andrea is the sister of the owner of Drunken Dragon Winery and has nearly a decade experience working in the Quality Control/Assurance field. She studied Food Safety at Marine Institute and is also a hobby wine-maker.

3.0 Market Research

Industry Profile & Outlook

Drunken Dragon Winery operates primarily in the Distillery/Brewery industry.

There are currentl about twenty wineries operating in Nova Scotia, with sales of $15.4 million in 2015 (and another $300 000 in exports). It is estimated that Nova Scotia's wine industry is currently worth $200 million -- and it is growing.

As a commercial winery focusing on "fruit" wines, it is possible to purchase -- even import -- fruit or fruit juice/concentrate to use in wine-making. The cost of the equipment to meet the 10 000 L minimum production capacity can be somewhat prohibitive, adn the tanks take up quite a bit of space. But with modern practices, it is possible to produce year-round and have a palatable wine in as few as three months, though it is still considered good practice to age the wine for at least six months.

Nova Scotia is one of the first places in North America to have grown grapes, the first vineyards having been planted in the 1600's. However, it is said that the first winery opened in the 1970's. Given that alcohol was prohibited in Nova Scotia from 1921 to 1930, this isn't surprising.

Nova Scotia's wine industry is growing and is forcasted to continue growing for the foreseeable future.

Local Market

There are currently no other wineries on the Eastern Shore of Nova Scotia. The majority of potential customers will come from the city of Halifax, whether residents or visitors.

Key Competitors/SWOT Analysis

Winery Strengths Weaknesses Opportunities Threats
Beavercreek Winery In Business for 12 Years
Other Attractions
Poor website Create strong website
Lunenburg County Winery 33 awards since 1998 Poor web presence Create strong website and social media presence
Midgard Meadery In business since 2006
Own Apiary
Products can only be purchased in Cape Breton Could get their products in stores in Halifax
Muwin Estate Wines Ltd. Experience
Product sales widespread
Small selection Create different wines
Drunken Dragon Winery Willingness to create unique products & use imported fruit Inexperience
Not established
Not able to grow own fruit/have own apiary

Target Market

Drunken Dragon Winery is focused on selling to Consumers (B2C).

  • Young -- 80% under 40 (demographics)
  • 50% male, 50% female (demographics)
  • College educated (demographics)
  • Not stuck in tradition (behaviour)
  • Interested in variety (lifestyle)
  • Looks for locally crafted products (behaviour)
  • Less status oriented (lifestyle)
  • Lives in or visiting the Halifax Regional Municipality/Eastern Shore area (scope)

Keys to Success

Drunken Dragon Winery will need to have a well laid out and informative website as well as a strong presence on social media. Once its products are aged enough for sale it will need to be present at festivals and farmer's markets.

Constant monitoring of products in fermentation along with research & experimentation will be fundamental for Drunken Dragon Winery to produce wines capable of competing long-term.

4.0 Sales & Marketing

Pricing Strategy

  • Midgard Meadery charges 429.95-$39.95 for a 750 mL bottle of their meades.
  • Lunenburg County Winery charges $14.99 for a 750 mL bottle of wine.
  • Muwin Estate Wines Ltd. charges $14.99-$15.50 for a 750 mL bottle of wine.
  • Other local wines vary between $13.99 and $58.99 for a 750 mL bottle of wine.

Drunken Dragon Winery is planning to charge approxiamately $15 per 750 mL bottle of wine.


  • Federal Excise Tax: 40.62/L
  • Bottle Deposit: $0.10
  • NSLC Mark-Up: ??
  • Cost of Ingredients: ~$2/bottle
  • Labour Costs: ??

Drunken Dragon Winery is aiming for a reasonable price over the cost of producing the wine while allowing for taxes and other government fees.

Marketing Strategy

  1. Possibly the most effective marketing strategy for Drunken Dragon Winery will be to have a table at farmer's markets such as the Halifax Seaport Farmer's Market once it has enough aged wine for attendance to be worthwhile.

  2. Arguably just as important is to develop a presence on social media such as Facebook, Twitter, Instagram, and Youtube.

  3. As there is a strong wine tourism market in Nova Scotia, being listed as a destination by Tourism Nova Scotia will greatly increase the traffic coming into Drunken Dragon Winery's on-site retail shop.

Marketing Activities

Farmer's Markets:
  • Halifax Seaport Farmer's Market does not have the cost of renting a table listed online.
  • Musquodoboit Harbour Farmer's Market charges $25 a week for a table.
  • Assuming five varieties of wine to sample, and up to two bottles of each per week, budget for $150 of product given away as 75 mL tastings.
Online Presence:
  • The cost of social media accounts is technically free, but for small fees, these platforms will promote a page or run advertisements.
  • A website can cost roughly $100 per year, with the cost going down the more years paid for at once.
Tourism Nova Scotia:
  • It appears to be free to be listed online.
  • The Doers and Dreamers Guide is undergoing a formatting change; it may no longer be free to be listed in it.

Marketing Objectives

  1. For Drunken Dragon Winery to have a table at at least one farmer's market weekly starting January of 2018.
  2. To have Drunken Dragon Winery listed by Tourism Nova Scotia for 2018.
  3. To have six varieties of wine available by March 2018.

Positioning Statement

Drunken Dragon Winery stands for the production of unique flavours of wine at affordable prices.

The Sales Process

At farmer's markets, Drunken Dragon Winery will hope to attract customers by offering free tastings. Of those who stop to taste, it is expected roughly 10% will purchase at least one bottle of wine. When customers come into the on-site retail shop, it is expected they will accept the offer to taste most if not all products, with 50% of customers purchasing at least one bottle of wine.

The sales cycle timeline of Drunken Dragon Winery is less than 24 hours.

5.0 Operations

Location(s)

As Drunken Dragon Winery is looking to be located between Musquodoboit Harbour and Sheet Harbour, the basement of the widely recognized landmark Webber's Store is ideal. Several nearby attractions make this a strategic location for targeting tourists and being easily located. These include the following:

  • Public boat launch on 15 Km long Lake Charlotte
  • Webber's Lakeside Resort
  • Webber's Motel
  • Memory Lane Heritage Village
  • Clam Harbour Beach Provincial Park

Drunken Dragon Winery will launch its website on 31/03/2017.

Across the top of the page will be a banner with the name Drunken Dragon Winery as well as the logo to the left. Directly underneath will be a drop-down menue. At start-up, the website will have a short 'About Drunken Dragon Winery' section, a 'How to Find Us' section, a list of products being produced, and a blog keeping any followers or visitors informed on the progress being made as well as the projected date for drinkable wine.

Creating websites has been a hobby of Michael Deazley's for two decades now. While he has no formal education in it, he is quite capable of creating something functional and easy to navigate. It will be an ongoing project he may eventually have to hand off to someone more qualified.

Legal Issues

Drunken Dragon Winery anticipates the following legal issues:

  • business licenses
  • location & zoning by-laws
  • health inspection
  • intellectual property (i.e. Patents, trademarks, and copyright)
  • operating licenses (i.e. Child care centres, gas stations, etc.)
  • industry specific licenses (i.e. Dentistry, alternative health care, ets.)
  • import/export
  • registering employees
  • contract agreements (partnerships, independent contractors, etc.)

Drunken Dragon Winery will need a business license. It will be necessary to confirm that the location is in a "wet" area of Nova Scotia (as there are currently still 105 "dry" regions). Municipal approval is also required. As Drunken Dragon Winery will be producing a product meant to be consumed by humans, it may be necessary for the premises to be inspected. A Manufacturer's Permit: Commercial Winery will need to be acquired from the Nova Scotia Liquor Cormporation (NSLC); the process appears straight forward enough. A separate license will be required to sell wine in an on-site retail store, as well as another for any off-site sales (such as at farmer's markets).

Insurance Issues

Drunken Dragon Winery requires insurance for business property and earnings, as well as liability insurance.

Human Resources

Michael Deazley plans on being the only person working full-time for Drunken Dragon Winery, but he is the owner. Drunken Dragon Winery may need to hire a few part-time employees to help on fruit-processing days and bottling days. Once there is enough aged product, a few part-time employees may also be needed to attend farmers markets and other events, as well as to staff the on-site retail store on days when Michael is busy with other aspects of the business.

Process/Production

Drunken Dragon Winery will be producing wine in 500 L fermentation tanks, of which it is estimated it will need six. To meet the 10 000 L minimum production capacity, that means twenty batches of wine, started an average of every two weeks to take advantage of different fruit seasons. In a batch's first week, fruit will be processed (generally cut up or crushed) and placed in water with appropriate additives. This is known as the 'must'. A hydrometer is used to take a Specific Gravity (SG) reading of the must; this is accepted as an appropriate way to measure sugar content and the reading should be as close as possible to 1.080. On day two, yeast is added. The must is stirred daily for at least four days. This week is known as primary fermentation. Hydrometer readings are taken daily during primary fermentation, and primary fermentation is considered over when the SG has dropped to near 1.030. After the week of primary fermentation, the liquid is syphoned (or pumped) from one tank into a second sterilized tank. The pulp of the fruit is pressed to obtain the remaining liquid. An airtight lid is fitted. Now the wine is in secondary fermentation, which can last up to two months and is considered over when the hydrometer reading shows an SG of about 0.900. The change in SG should signify an Alcohol By Volume (ABV) of 11%. Before bottling, additives known as finings are added to make the wine clearer by causing sediment to fall out of solution. These additives are generally not vegan; the alternative is to transfer to another tank and leave to sit for another month before transferring yet again, tying up tanks and extending the production time. Four days after adding the finings, the wine is ready to be filtered and bottled. The wine should then be botle-aged for at least two months, preferably for six months to a year, before being consumed.

Risk Assessment

Farmers markets such as the Halifax Seaport Farmer's Market try to keep a balanced blend of vendors, so Drunken Dragon Winery may not be able to get a table. These Markets also tend to all take place weekly during the same hours and want vendors to attend weekly, meaning Drunken Dragon Winery may not be able to attend enough markets to effectively get word out. Using social media for marketing purposes can be more difficult than one would assume, and attracting local customers is more imortant than having people all over the globe interested in visiting Drunken Dragon Winery -- if they ever go to Nova Scotia. A listing in Toursim Nova Scotia's Doers and Dreamers Guide may be effective, but as the majority of other Nova Scotian wineries are located two or three hours away, it may not be enough to attract customers if they cannot find something else they want to see on the Eastern Shore. It may become necessary for Drunken Dragon Winery to hire a consultant or contractor to manage the marketing aspect of the business.

Drunken Dragon Winery is relying on Michael Deazley's experience brewing 23 L batches of wine at home. Moving to 500 L batches will be a big change, though theoretically the recipe scales proportionally. Mcihael will need to start monitoring more aspects of his wine than just SG and temperature in order to produce a consistent product. Also, sometimes wine takes longer to ferment than expected. While in some cases it is possible to add a substance to give the yeast a boost, in many cases the only course of action is to wait. Unfortunately, this means that it may become impossible to keep up with the 10 000 L minimum production capacity without purchasing more tanks. While Michael has consistently turned out a good tasting wine, it is possible for that luck to run out. Instead of dumping the wine, it may be possible to acquire a Manufacturer's Permit: Craft Distillery and distill the failed wine to be aged in oak casks, becoming brandy. Or wine could be turned into vinegar. If Drunken Dragon Winery fails to see good sales by the end of year two it will hire a consultant to help improve the wine recipes and practices it follows.

If Drunken Dragon Winery is unable to make $50 000 in sales in year five, it will be time to call the venture a failure an close down.

6.0 Financials

Start-Up Costs & Break Even

Drunken Dragon Winery is applying for financing from Futurpreneur Canada, hoping to have the loan by the end of April 2017. More than 50% of business ownership will be held by applicant(s) under 35 years of age.

$40 000 overhead/($15 product-$7.50 cost)=5334 bottles of wine must be sold for Drunken Dragon Winery to break even.

Sales Forecast

It could take three months for fermentation equipment to arrive. It takes another two months to ferment the wine, and it will need to age at least four months after that. Therefore, the earliest possible sale will occur in January 2018, though most people would recommend waiting until August of 2018. It is estimated to average using two bottles of each wine variety per week to offer tastings to potential customers, resulting in up to 1560 L of product being given away instead of sold. Glass bottles break, therefore it is expected to lose 5% of bottled wine each year.

The average price of a bottle of wine is $15.

The average cost of a sale as a percentage of the sale price is 50%.

Cash Flow

Income Statement