Vineyard Investment: When Passion Becomes Business

05.24.2011 ZF English

Investments in vineyards have attracted a number of well-known people in Romania, such as the governor of the central bank, Mugur Isarescu, former justice minister Valeriu Stoica, poet Mircea Dinescu or businessmen like Mihai Miron and Daniel Guzu.

Passion for wine was what made them invest as much as millions of euros in some cases.

Valeriu Stoica, former justice minister and founding partner of one of the biggest law firms in Romania (Stoica & Asociatii), says he has been investing everything he and his wife earned from practicing law in a vineyard in Dragasani and the mansion in Dobruta since 2007. The passion is both new and old, as it runs in the family because his wife's great-grandfather, who was a bank manager, bought the vineyard in Dragasani in 1927.

The vineyard of the former minister is next to the vineyard of Mugur Isarescu, where the "Casa Isarescu" wine is made by Mar SRL company and sold only in restaurants for 30 to 85 lei a bottle.

"This is more than a business; although you need profit to go on, it is not the key element," the lawyer says.

When it comes to vineyard investments, operating income is only made after five or six years from the planting of the vine, investors say.

Sales on the wine market fell 10% in 2010 compared with 2009, reaching about EUR400 million, according to the association grouping the most important producers in the wine business. A total of 6 million hectoliters are made every year, of which only 1.2 to 1.5 millions are sold officially, with the rest either drunk by those that make the wine or going to undocumented sales.

"Investments in winegrowing are not undoable," says businessman Mihai Miron, who owns Ropharma, a pharmaceutical distribution company.

The larger the vineyard is, the lower the costs to start it are, but no less than EUR10,000 to EUR12,000 per hectare. There are also annual costs to maintain the vineyard, worth several hundred euros and the cost to make the wine, where only the sky is the limit considering the variety of equipment used in the process.

Mihai Miron believes that grapevine can be grown successfully throughout the entire country except for the northern area and that Romanians have several old and very good assortments: Tamaioasa Romaneasca, Feteasca Alba, Cramprosia and Grasa de Cotnari (white wines) and Feteasca Neagra and Babeasca (red wines).

Businessman Daniel Guzu, who exited the paint and varnish business Fabryo at the end of 2008, has invested millions of euros in wine. He is already selling wines branded as Casa Panciu, Sagio and Setila.

Dan Balaban (who used to be the biggest wine distributor in the nineties), too, has built a business together with enologist Bogdan Costachescu. Their company, Davino, established about twelve years ago, was the first producer that had the courage to withdraw its wines from supermarket shelves and is only selling through hotel, restaurant and catering companies and specialist stores.