Running a winery is one of the most rewarding businesses out there. You get to make something you’re proud of, build a brand people love, and create experiences that keep customers coming back. But behind the tasting rooms, the barrels, and the beautiful bottles, there is a very real financial engine that has to work smoothly for the winery to stay healthy.
The challenge is that wineries are not just businesses. They are farms, manufacturers, wholesalers, retailers, and hospitality operations all wrapped into one. A typical small business can get away with a simple bookkeeping setup. A winery cannot. When the financial systems behind the scenes are not built for how wine is grown, produced, aged, and sold, small mistakes eventually turn into expensive blind spots.
Here are the five most common financial mistakes wineries make and what you can do to stay ahead of them.
1. Treating Vineyard and Winery Operations as One Cost Center
A grape’s journey from vineyard to bottle crosses multiple “businesses” inside the same company. The vineyard behaves like agriculture with seasonal costs, farming labor, irrigation, and maintenance. The winery behaves like a manufacturer with production labor, overhead, equipment, fermentation costs, and bottling.
Many wineries lump everything together into a single set of books, which makes it almost impossible to understand the true cost per case or which side of the business is more profitable. When vineyard and production expenses sit in the same bucket, margins get blurred, and owners lose the ability to make smart decisions about pricing, staffing, equipment buys, and production planning.
A few examples of what gets misclassified:
- Vineyard labor showing up under production
- Bottling supplies coded as general expenses
- Equipment depreciation not allocated to production
- Vineyard utilities mixed in with winery overhead
The fix is straightforward but powerful. Set up your chart of accounts so vineyard, winery production, and tasting room activities all stand on their own. This gives you a clear picture of where money is being spent and which part of the operation needs more attention or investment. When owners finally see this separation, it usually becomes one of the biggest moments of clarity in their financials.
2. Inaccurate Inventory and Cost of Goods Sold Tracking Across the Wine Life Cycle
Wine inventory is unlike anything else. Grapes become juice, juice becomes bulk wine, bulk wine ages for months or years, then becomes bottled inventory, and then gets allocated to wine clubs, distributors, tasting rooms, and online sales. At every stage, the value changes. Costs accumulate. Losses occur. And inventory has to be measured consistently or margins will never be accurate.
The most common issues we see include:
- Not capitalizing production labor into inventory
- Forgetting to include overhead like utilities, rent, or depreciation
- Losing track of volume loss during fermentation, racking, or bottling
- Mixing vintages or varietals without proper costing
- Choosing an inventory valuation method but not applying it consistently
When inventory is undervalued, margins look artificially high. When it is overvalued, profit appears lower than it really is. Both scenarios make pricing decisions much harder. A winery might hold back a release thinking margins are thin, or discount too aggressively without realizing how much went into producing that bottle.
The best solution is to adopt a system that tracks inventory at each stage of the wine life cycle. Inventory counts should be done regularly. Costs should be allocated accurately and consistently. And COGS should flow directly from real production data, not rough estimates. When wineries dial this in, pricing, forecasting, and production planning immediately become more strategic.
3. Relying Only on the P&L and Not Managing Cash Flow Proactively
If you only ever look at your P&L, it is easy to believe your winery is doing better than it actually is. Wine ties up cash for a long time. You spend heavily during harvest. You buy barrels, bottles, labels, and supplies months before you sell a single case. You pay tasting room staff and vineyard crews long before the revenue catches up.
That means a P&L can show a strong profit while your bank account tells a very different story.
Common cash crunch moments include:
- Harvest expenses are hitting all at once
- Bottling runs that require large upfront payments
- Distributor payments are coming in slower than expected
- Wine club cycles that do not align with operating expenses
Cash flow forecasting is one of the most valuable tools in a wine business because it helps you understand what will happen before it happens. A good forecast reflects production cycles, inventory build-up, wholesale payment timelines, and seasonal revenue trends. Wineries that build and update cash flow projections avoid emergency debt, late vendor payments, and last-minute financial stress.
4. Using Generic Bookkeeping Systems That Do Not Fit Winery Operations
Generic small business bookkeeping systems are not built for vineyards, bulk wine, fermentation stages, bottling runs, or tasting room sales. Yet many wineries try to make those systems work anyway. The result is inaccurate data, messy records, and financial reports that do not reflect the realities of the business.
We usually see issues like:
- Labor is not split correctly between the vineyard, the cellar, and the hospitality
- Payroll taxes or seasonal labor classifications are not handled correctly
- Fixed assets are tracked inconsistently or not depreciated properly
- A/R and wine club billing are not reconciled regularly
- Vendor invoices are not coded to the right cost center
When bookkeeping is generic, owners fly blind. The numbers may look “fine” at a glance, but they are not telling a truthful story.
A winery-specific chart of accounts, consistent reconciliations, accurate labor tracking, and a detailed fixed-asset register all make a dramatic difference. These are not small tweaks. They are the fundamentals that allow owners to trust their financials and use them as a tool rather than a historical record.
5. Falling Behind on Compliance, Especially Excise Tax and Multi-State DTC Sales
Wine is one of the most regulated products in the United States. Between federal excise tax, state regulations, shipping rules, reporting requirements, and DTC compliance, a winery has more ongoing obligations than most other small businesses combined.
The compliance mistakes we see most often include:
- Missing or late federal excise tax filings
- Reporting inventory incorrectly
- Not tracking breakage or spoilage
- Shipping to states without the correct permits
- Miscalculating sales tax on multi-state orders
Compliance issues can lead to penalties, notices, audits, or even shipping restrictions. They also create stress for owners who just want to focus on making and selling wine.
A reliable compliance calendar, accurate inventory records, and a system to track where wine is shipped are essential. Many wineries find relief when they partner with an accountant who handles federal and state filings on their behalf, so nothing slips through the cracks.
Final Thoughts
Most of the financial mistakes we see are not due to bad decision-making. They come from treating a winery like a typical small business when it is anything but typical. Wineries have unique production cycles, complex inventory, multi-channel sales, and strict compliance requirements. When the financial systems underneath are not built for those realities, owners end up working harder than they need to.
The good news is that every mistake on this list is completely fixable. With clearer cost tracking, better inventory systems, proactive cash flow planning, accurate bookkeeping, and consistent compliance support, your winery can run more smoothly and profitably.
If you would like help getting your financial systems in order or want a deeper look at how your winery is performing, the team at Llamas Financial is here to support you.
