Dirt, Deals, and Dollars | Mike Hansen | Barrels & Roots

I sat down with Mike Hansen, founder of the Hansen Vineyard and Winery team under Sotheby's International Realty, and this one pulled back the curtain on a corner of the wine world most people never see. 

Mike isn't just a broker, he's also a grower farming 14 acres of Chardonnay, and that dual lens changes everything about how he reads a property. We got into what actually makes a vineyard valuable, from soil type and vine age to buyer category and contract structure, and why water is less a price driver and more a deal killer. Mike walked me through the full farming cycle, start to finish, in a way I honestly hadn't heard explained on this show before. 

We also talked about what institutional buyers want versus what a winery wants, why caves without temperature control are basically just expensive warehouses, and why buying a vineyard with no grape contract right now is one of the riskiest moves you can make. If you've ever romanticized owning land and growing grapes, this episode is a necessary reality check - and an inspiring one.

If you could only ever own one acre of vines, what would you plant and where?

Transcript

SPEAKER_00 0:00

And like you said, like I think the best example is like, oh, what a pretty winery. You know, you walk in there and you're looking at it, going, Oh, this is lovely looking inside. But like, yeah, like the the person who knows what they're looking for is going to be looking for something completely different. And I think that's the thing that is like people just don't consider, you know.

SPEAKER_01 0:22

Well, I'll give you the best example. I'll give you the best example. Grapevine leaves are not supposed to turn red. And and and yet when you see people come out to visit wine country, what do they want to take pictures with in the fall? I want to go take pictures with all the all the all the vines. Oh, look, it's turning colors in the season. No, that's red blotch, you know, or or that's some other disease, you know, and so it's it's just hilarious to me. Like, especially, and and when I see other real estate people that have their photographers take pictures of all of the red leaves in the fall, and that's what they use for their feature image on their wine country estate that they're selling. I just go, oh man, that's maybe not what you should be selling.

SPEAKER_00 1:16

Well, welcome everybody back to the Barrels and Roots podcast. I'm your host, Sean Trace, and I have a really interesting guest with me today. Would you like to tell people who you are and a little bit about what you do?

SPEAKER_01 1:27

Yeah, sure. Uh my name is Mike Hansen. I am uh the founder of the Hanson Vineyard and Winery Team, which is a uh team under the Sotheby's International Realty Umbrella. We are real estate brokers, but we specifically service the vineyard and winery industry. Uh, and we occupy kind of a space um in the transactional area that is missing in terms of, you know, there's your big MA firms, there's kind of your normal realtors, uh, where specialized advisors that not only have experience in the wine industry, but actively participate in it. Um, the team is made up of myself and my father, uh, who is a 40-year veteran winemaker and winery GM in the industry, and um, and I grow 14 acres of shards. So um we're half in, half out of the business, but uh we act as as service advisors and and partners really for the strategy side of vineyard and winery sales.

SPEAKER_00 2:29

That's awesome, man. And it's also because you guys are like you say, you're you're you're in it, you know. But I it it leads so many questions because like you've built an intersection, uh career right at the intersection of wine and real estate. How did that path even begin for you? Like, that's my biggest question.

SPEAKER_01 2:48

Yeah. Um well, yeah, it kind of wasn't a straight line, that's for sure. Uh, so um I didn't start doing real estate until I had a full-blown corporate career in the health and wellness space. Uh, my uh my wife at one point had decided she was gonna get her real estate license and never finished. Uh so we had all of the books lying around at my house. And I was like, well, you know, I'm doing this corporate career and I'm doing fine. We were both doing great, uh, but I'm working a lot. Let me try and see if I can, you know, do a little bit of real estate on the side. Maybe it turns into something, maybe it doesn't. Uh and so I got my real estate license. This was maybe seven, eight years ago. And um I uh immediately sold a couple homes. We bought an investment property, uh, had a couple of friends that I was working with that that bought houses, and um, it really quickly started turning into you know potentially more than a side hustle. Uh, and then at the time um I started touring my dad's uh my dad's company, and he was working with a large uh a large wine brand um based out of Europe, and uh I started touring them at a couple of vineyard properties. Um and you know, I grew up around vineyards and I grew up around wineries, and uh whole life had kind of and my whole profession or professional career had had kind of tried to avoid the wine industry. Uh and you know, then I find myself out there kicking dirt with these guys, looking at these different properties and going, dang, this is really fun. I'm actually really enjoying this. Uh, and and it so happened that one of the guys who had a couple of these properties listed, um, you know, I brought a couple proformas. I was fresh off my master's in business. I made all of these, you know, projections and analyses, and I was like, look what you can do with these properties. And um I was super, you know, bright-eyed and bushy-tailed about it. And uh he saw those projections and he's like, hey man, these are really good. You should come work on my team. Uh, and so I ended up joining uh Crew Land Company, worked with the Crew Land Company for a couple of years, and Dave Garcier over there, he's a great guy. Um and yeah, we we had a ton of work and it was a really bad part of the cycle, which we're kind of still in, but uh it was uh it was great. And and I decided when I started working with Dave that that would be the time where I transitioned away from um kind of my corporate career and went full full dive into the real estate. So um that was maybe four or five years ago. Um and so you know we're we're kind of building uh out in the open in front of everybody, but uh there I I believe there's a lot of space uh in this niche that that hasn't generally provided a lot of value back to the industry, and so that's our goal.

SPEAKER_00 5:50

It's interesting too because I think when people one of the things that I I I very much believe is that people don't understand all of the stuff that goes into the wine industry, they do not understand all of the parts and all of the pieces that are making it up, and one of the things I think that is just um definitely a an area that people don't understand is the land, and like you know how how important where you're planting these vineyards are and like what goes into it, and also the value of it, and that's one of the things too. Like I was so curious about as the property values have skyrocketed, how that affects the prices of wine and things like that, you know, because it's so interesting. Napa Napa's got Napa and Sonoma have gotten really expensive, you know. And it's like, how does that affect the overall industry?

SPEAKER_01 6:42

Yeah, so it's a great question, and it's really a multifaceted answer because it if you if you're seeing property values kind of blow up, there might be a couple of contributing factors to that. Number one being inflation, and right property has largely been a hedge against inflation because it'll sort of match that same uh appreciation rate um as the rate of inflation. So, you know, if we're talking about nominal versus you know net, then there's a conversation to be had there. But um, what what it really does is it adds fuel to the fire because as part of a strategy, you might see if a property value increases, just kind of like what people do with these renovate and refinance, you might see lines of credit be pulled off, you might see these lines of credit be reinjected as either marketing capital or as production capital or acquisition capital. So it really depends on the kind of size of the landowner. But what I would say is that most people aren't just sitting there going, wow, my property's gone up a lot in value. Great. You know, that that's not the case. They're leveraging it, they're using it. Um, they might be pulling lines of credit off of it, uh, they might be using it for redevelopment. So um, in in kind of an indirect way, it adds fuel to the fire that was this premiumization. And, you know, I think it really did contribute to some of the overinvestment and the over-leveraging that we saw really in the 2021, 2022 period when we had really low interest rates and all of the property values were up, and there was a lot of excess capital injected into the system. Uh, and and we saw a lot of people take advantage of that. And I think now we're at the double compounding negative side of um, you know, people taking that leverage and going, ooh, cheap money, let's let's refinance, let's you know, take advantage of our high property value. But then you also saw uh the the demand falsely propped up through um you know the pandemic and and the capital that was injected to to the buyer, to the uh end user. Um and you know, I think we saw uh an unusual jump in wine sales and that sort of thing. I mean, the trend, if you if you subtract kind of the COVID years, the trend was largely negative in consumption. So um, yeah, I mean, it it it definitely affects the total economy of the system. Um and and inside of that also, you know, labor plays a big part of it. And as we see prices inflate, we see sort of a match of labor going up, and you know, that's a direct cost line item into your final product. And so, you know, really it's it's kind of a symptom of a larger inflationary and kind of economic pattern that um, you know, really attributed towards increasing costs for the final product. Um, so great question, uh, you know, a long answer to really what's a multifaceted, uh multifaceted question.

SPEAKER_00 9:45

Yeah. It's an interesting, and it's a great answer because you know it's like nothing's ever simple. And you know, the the direction country companies go, the direction an industry goes is definitely one of those. But like for someone who loves buying but doesn't understand the business side, what actually goes into owning a vineyard? You know, I mean that's something that I think people don't understand as well.

SPEAKER_01 10:10

Yeah. Um, I try to talk about this a fair amount on my socials. There, there are really any like annual crop is really interesting because you have revenue at one part of the year, you know, unless you have an unusual lease structure, which would be like a monthly lease structure or something, uh, you know, you're getting paid only at harvest. And so um you're you're you're putting in all of these incremental investments into a product that is in the future. And so inherently there's this, there's this um risk where you're putting up money all throughout the year up until the end of the year, and then you harvest and then you get your revenue, uh, hopefully. Um, and you know, there are natural disasters that might preclude you from your revenue. There are, you know, just the regular industry patterns, you might have lost your contract. There's you know a lot of risk, and and and and and it's farming. So, you know, you you the the vines wake up, you gotta do stuff. Once the vines start waking up as a result of the change in the weather, it's time to get rolling. And they don't care whether or not you have a contract or not. And um, and so it's time to farm. And there are a lot of different aspects. If you want, I can you know kind of explain the cycle of of the work. Uh, but it's it's that's actually really interesting.

SPEAKER_00 11:26

You know, what is some of the cycle of the work?

SPEAKER_01 11:28

Yeah, really. So so you actually want to start at the immediately after harvest. Uh, because after harvest, the vines aren't yet fully dormant. And so, you know, I I really think of the year as after harvest to the next harvest. Uh, because there are treatments that you do, you know, pre-dormancy. Uh, you know, you might inject some fertilizer into the system or you might compost just to try and get some nitrogen to the roots so that when the plants wake up after the dormancy period, they have some available energy to start, you know, doing foliar growth or pushing wood growth. Um, so you know, you're you're you're playing this game where you're matching where the vine's at with the treatment of it, and you're kind of trying to hedge against certain negative outcomes that could happen, right? So, so after a harvest, you maybe inject some type of fertilizer, maybe you don't. Uh, then you go into the dormancy period. Towards the end of the dormancy period, you prune, right? And and when you prune, there's also a bunch of stuff that you got to do with the wires, right? So if you have trellising and that sort of thing, then you got to move the wires up and down. If there's any irrigation issues, you got to fix those. Uh, there's a whole water side of it. Maybe you shut off your water because there's freezing temperatures in your area and you need to protect your irrigation system. Maybe you don't. So you're also kind of taking care of the circulatory system of your vineyard, which is the irrigation. Um, and then uh after you prune, we we see that process of uh of bud break, which is where you start to see the little buds on on if you've pruned down to two or three, you know, buds on on each cane, then then you start to see the buds kind of pressurize a little bit and then they pop open, you see the first leaves. Uh that's a really exciting kind of time. Bud break is here, it's beginning of spring. Um, then you you know we'll see shoots get up to about six inches. Once we have six inches, uh, you'll go through and you'll do your first spray, which would be kind of a copper-based spray. Usually, you know, it depends on what style you farm. This is kind of conventional farming. Uh, so you go through a spray with like some copper sulfide or something, and and that's to prevent you know, kind of longer-term fungal issues uh that may occur. And all of this is location dependent, weather dependent, you know, what you have in in your particular area for you know challenges that are presented to you by nature. Um once you get to uh, you know, maybe second wire in height, you got to go through and you got a sucker, which is you know, all of the all of the little shoots coming out either from the rootstock that are stealing energy from the plant that you want to get up into the canopy, you got to go through, you gotta sucker those out. So you're gonna go and trim all that and you'll strip away some, you know, of these like old uh you know, dormant vines that might be shooting up halfway up the rootstock or whatever, uh, or halfway up the the cordon. Um, and you know, so you go through, you clear all that out, get get your vine, you know, so directing its energy to the leaves in the area where where you want it. Um that's when you probably start to go through and have a normal spray program if you're doing conventional farming where you're applying sulfur to prevent things like powdery mildew uh and other stuff that could damage it. Um, then you got bloom. Bloom will come in that period, uh, you know, May, June, somewhere in there, with flowers open. Vines are self-pollinating, so the flowers open, the vine will pollinate itself, and then you have fruit set. If you get a frost during this period of time, you could be in trouble with what's called with fruit set, which would be pretty much how much fruit you're gonna have at the end of the year in terms of cluster count. Um then as it's getting up, you start to play this game of how many leaves do I want per cluster? Uh, how many leaves does it take to ripen whatever I'm ripening? And there are, you know, different uh there's different amounts of leaves based on leaf size, foliar area that could ripen a cluster. So if you have a cluster of Chardonnay versus a cluster of you know Cabernet Franc, it's gonna be different. Uh what the leaf ratio, the area ratio of the leaf area versus how much you need to ripen that. Uh, you go through your season, you ripen your fruit, you irrigate if you have to, uh, then you get to harvest. And there's some spraying in between there, and you know, you may you may do some leaf pulling to clear the fruit zone so that there's less chance of mold. And at that point, you're really battling against mold, powdery mildew, you know, you might fight against larger uh pests like deer or you know, wasps will go after grapes or birds. So then you might net. Uh, I mean, so it's really this game where once you get through the major parts, bud break, you don't want frost. You got your wind fans going, you're protecting that. Uh bloom, you don't want frost, you're trying to protect against that as well. You don't want a big rain during bloom. There's nothing you can do about that. Um, so you know, you and then it's just fighting the elements and trying to mitigate any harsh stuff. And then and then you get back to harvest. And harvest is okay, we want the right physiological markers, we want the right sugar, we want the right development of acids and tannins, we want, you know, the kind of perfect conditions to pick those grapes, and then hopefully it's not too hot and we can get a pick window where we get we can pick the grapes at at their exactly where we want them. If it's screaming hot, we got a very small window. If we got a nice temperate end of season, you know, we don't have to rush to pick all of our grapes. Uh, and then the cycle repeats. And I think that's about as good as I could do.

SPEAKER_00 17:09

That's pretty amazing because honestly, that's the first time in my entire on barrels of roots that I've had someone explain that cycle, and it's fascinating to me. And I don't even know how I didn't ask that before now. So when you said, Yeah, maybe I could share it, I was like, hell yeah, because I haven't heard it yet. That's awesome, man. Yeah, really appreciate that.

SPEAKER_01 17:29

And it's interesting. And you might go you might do a couple other things. You might you might you know mow inside of there, and there's weed management, and you might turn the turn the the dirt over, and you know, there's there's a few other things that you might do, but for the most part, like that's that's the cycle.

SPEAKER_00 17:47

I love that. I have another question for you too. I've got a bunch of questions after that. Like, yeah, because I saw a post the other day, I don't know where I saw it. It might have been one of the posts that you liked or something, because it was talking about how two wine uh vineyards sold recently and both in the valley, and like they were dramatically different prices. And I wanted to know what makes a a vineyard or winery valuable, and what are buyers really looking at beyond just the wine? Because that's fascinating to me. Is it the the ground? Is it the location?

SPEAKER_01 18:21

Yeah, well, I'll start with water. Um, water is a necessity, water doesn't necessarily determine price, it will turn a deal on or off. It's it's a it is a yes or no to the deal requirement. So um, you know, in terms of water, like it's really hard to quantify because you must have it. This is agriculture, and so you know, if there's any scarcity of water resources on the property, there's likely not been a successful vineyard there. Uh, or if it is, it's dry farmed and you know, it's not a kind of commercial style vineyard. Um, so water is a yes or no. And I'll get into buyer types in a second and how they look at different things because certain buyer segments look at things differently. Um but then after that, you know, it gets into quality of the of the vineyard and how do you describe quality? And quality can be looked at in a couple of different ways, depending on the end user. Now, is this a quality commercial farmed thing where we're farming for yield and we're gonna sell these grapes on the market, and we need to have you know consistency, uh, not necessarily the highest quality fruit, but what we're looking for is a lot of yield. So take like a 150-acre ranch in Russian River in Sonoma, where you're growing Chardonnay and you're pushing five, six, 10 tons to the acre, you know, and and you're selling all that. There, there's a there's a a model, the farming model, and you have to be able to hit yield and cost to uh yield and price per ton in order to cover the cost that you've spent throughout the year and make the margin that's required. And this is why this is why I kind of say like different buyer types will attribute uh qualitative value differently. Like if it's a pension fund and they and they're gonna farm it for yield and they're gonna farm it for consistency, what they're gonna want is they're gonna want tonnage, they're gonna want stable sales at a stable sale price, and they're gonna want as much certainty in the model as they can have. And so what that looks like is a stable, healthy, medium-age vineyard that yields well, has great water resources, a stable contract, and is in an area where the land value probably won't drop dramatically, right? That's one type of buyer, right? And so, you know, you look at uh and and that bucket also could be matched up with like larger vineyard land tracks, right? 80, 70, you know, maybe maybe even 50 acres and above, right? Right now, uh a producer, a winery probably aren't looking at a hundred-acre vineyard, you know, because there's so much uncertainty in the demand cycle for the end and buyer, for you know, the wine drinker, that you know, that's risky to take on that much fruit. Where are we gonna sell it to? Who are we gonna give to our excess to? So they don't want to necessarily pay for land that's not going to flow in into their own bottles for uh you know, grapes that aren't gonna flow into their own bottles. Um, and then you know, so so then you look at a deal like the Markham deal, where you saw kind of a historically above average like 400k per acre sale, and you get this big price. Tag well who were the two buyers, you know, who were the two players and what were they doing? And and that deal between Dominus and Markham, you know, achieved a price per per acre that was dramatically higher than you know what ended up selling, what True Body ended up selling for, which you know was three times four times higher, you know. And so why did that happen? It was still an older vineyard, but but what was it? It was a trade between two producers, right? And that's where you look at okay, what's the buyer type? These are two of the highest end wineries in Napa Valley. They're making a trade, and that trade is largely going to reflect their statuses inside of the game because that vineyard was meant for and had a purpose to go into the bottles. You know, it was it was accounted for. It was like, no, this is vertical, this is going right into our bottles, nobody else can have it. So the asset was a a diamond, right? I'm not gonna just farm this and sell it to everybody. This is this is going into my program, right? Versus True Body, which was a much larger land acreage, 140 acres planted. And that one was, you know, this is a commercial play. We're gonna farm this and we're gonna sell this because who's gonna put 140 acres worth of grapes into their program today in Napa Valley? You know, nobody. So uh, I mean, maybe duck one. But it's like, you know, so so you have this thing of who's buying it and what is the asset? What class is it going into? Is it an institutional-sized asset? Is it an investment asset, or is it a programmatic asset where we're putting we're actually gonna take this and put it vertically into our wine bottles and we're gonna put that at the end of the day? Because you get economies of production, right? You if you own the vineyard and it goes up all the way into your bottle, then you take margin at each step in the development process and and the production process. So um, you know, it's an interesting thing. Uh there are in general some attributes of vineyards that will make them better than other vineyards, uh, soil types, like what micro soil types.

SPEAKER_00 24:22

That was what I was thinking. Yeah, yeah.

SPEAKER_01 24:24

Microclimates. Uh, you know, your location plays a big part into it. Like, and and really it's it's the stresses that are imparted to a vineyard and how well suited to those stresses the varietal choice and the rootstock is. Uh so like, yeah, so so you have like hillside Napa Valley, Cab Franc, Hillside Napa Valley, Cabernet, this stuff is struggling against a certain set of environmental challenges, and that's what produces tension inside of the inside of the vine, which then causes a physiological response where you see these high concentration phenolics, high concentration of tannins, maybe smaller berry size, because you're not able to hold so much water since all the water is draining off the hillside. You know, it's kind of the same thing in Russian River where you see this really sandy soil. Uh, the you know, the the prized soil is the gold ridge fine sandy loam, right? And and what that what it is is it's really well draining. And and so you cannot, even if you irrigate it every day, you're not going to yield five tons to the acre. So you have a concentrated berry. You have a, you know, considering the fact that like the majority of all the phenolics of a berry are held inside of the skin, right? It's not in the juice in the center. All of the tannins, all of the you know, kind of complex aromatics are locked up inside of the cell walls uh of the the actual skin, you know. So if that's the case, less juice inside gets you a higher skin to juice ratio, which is gonna be more extraction, right? More concentration of flavors. So, you know, these are the things, right? And if you're gonna if you're gonna that would be considered higher quality because you have a more concentrated end product, right? And so, you know, if if your marketing is so good that you don't need a more concentrated end product, then you may have a great selling wine that you can take price on, and it might not matter, right? But if you want to talk about like winemaker nerds, like straight physiological betterness and more concentration of flavor, then you need to have a set of challenges that match the kind of physiological planting choices uh and varietals that you've made. Um, so you know, and and and this is where winemakers get super into it, is it's like, okay, how did all of this nature interact with this plant and make the challenges that cause this particular expression of the fruit that end up in my glass and I smell that, right? That's that's where people really get hooked.

SPEAKER_00 27:25

It's interesting too because you know, for you, you're not just a broker, you're also a grower. And like, how does that change the way you see deals and opportunities? Because people like for me, like a lot of the stuff I don't get, but it's so interesting to me. But like for you as a grower, does that change the way you look at stuff?

SPEAKER_01 27:46

You know, it does, um, for a couple of reasons. I mean, first of all, I'm really quick to just because I'm always looking in my vineyard for problems, I'm really quick to see problems in a vineyard. Uh and that might be looked at as a bad thing, but personally, I think it's a good thing because I want, if I were a seller, I would want somebody who understands the product. Uh, and if I were a buyer, I would want somebody who understands and has my back and protecting me if they see something, say something, right? So, um, and then also like because I'm a grower and I understand the pathway of my grapes and you know, the end, like I'm a part of the value chain. So, like when I walk a site with somebody, whether on the buy side or the sell side, it's like, how is this fitting into your larger strategy? Or how is this fitting into your you know, buyer's larger strategy? And so I'm looking not just at the asset, but how does this play in the economics of the total wine game? You know? Um, and so that's that's the way that I look at this stuff. It's integrated more into the wine business versus just like, oh, this is a nice vineyard, you know. I'm I'm not looking at it like that.

SPEAKER_00 29:10

You're not looking for the view, you're not looking for the stuff that other people are. You're like, how does this, you know, how does every last little bit affect the the economic output of this property, you know?

SPEAKER_01 29:22

I'm sure there is all we have to look at it. We have to look at it that way because the economic outlook, like, is the saleability, and I don't know if that's a word, it's the saleability of the asset. If there is no clear economic picture of where this fruit can go, who can use it, what contracts do we have, what contracts could we get, there is no sale. Yeah, that's where we're at in the market today. There has to be a crystal clear economic picture of where every grape is gonna go, unless you have a magic product producer buyer that's like, eh, we'll take all the excess, no worries, you know. Um, so the economics have to be totally clear on a site, otherwise, you know, it's gonna be hard to sell it.

SPEAKER_00 30:07

Yeah, that makes a lot of sense. I want to ask you another one too, because um, you know, what's something that most people completely misunderstand about the economics of running a winery?

SPEAKER_01 30:20

Um, well, there are a lot of things about wineries that wineries are highly variable, first of all, because almost every single winery was at one point started by somebody who loved wine and it was just a family project. Yeah, like if you look if you look at all of the wineries in Sonoma and Napa, you know, I would say probably at least 50% of them are just somebody's last name. And yeah, it's because wine has always been sort of an individual passion that has then turned into a collective passion that then has turned into a business. Um in terms of things that are overlooked, uh, I think that the the what I would say about that is like flashy stuff often looks like value and might not be if the underlying uh sort of um build quality isn't there. For instance, if you have a cave system, everybody loves cave systems. Caves are beautiful, they're an awesome place to go. If you don't have temperature control in your cave, then your cave is largely no better than a warehouse, you know, for for aging barrels. You know, if you're if you're above 63 degrees, then you're not, you know, you don't have control of your malolectic fermentation. And and so you know, you could be co-fermenting on accident. You there's a lot of stuff that you might you know not be able to control. And so, you know, if you have a cave, that's great. If you don't have temperature control in your cave, it would be better for your wines, and you would have more control over your wines if you just put that thing in a temperature-controlled warehouse. So that like value can look a certain way and not be actually right for winemaking. Um yeah. Uh, what else? What else do people overlook? I think the layouts of wineries sometimes is like you might drive up to a winery and be like, wow, this is beautiful. And then a winemaker will drive up and be like, where do they truck the fruit in? This looks like a nightmare. What do you have to put it over there and then jump on a forklift and then bring it in where like the crush pads way over there? How do you get the the crushed grapes into your tank? Like, so that that's one thing that I think like just everyday people don't look for, but a winemaker is gonna look for. Um, and then even little things like slope drains, right? What it if you don't have a slope drain, then you're gonna have to squeegee the entire you know uh fermentation floor every day. And so that's where you have to turn on, like, okay, the actual work lens, like how does this place flow as a production facility? And is it actually, you know, if you're having to go and and forklift up barrels to move them to the side to access your other barrels, like this is just labor hours, and uh yeah, so the the the layout on the actual path of work uh in a winery, I think is something that people don't always uh see. And because you've started all of these things as sort of family passion projects, the there's it's so variable how a winery is laid out.

SPEAKER_00 33:44

Um yeah, the fact that the business side is there's just so much going on, and like you said, like I think the best example is like, oh, what a pretty winery, you know, you log in there and you're looking at it going, oh, this is lovely looking inside. But like, yeah, like the the person who knows what they're looking for is gonna be looking for something completely different, you know? And I think that's the thing that is like people just don't consider, you know.

SPEAKER_01 34:13

Well, I'll give you the best example. I'll give you the best example. Please, please. Grapevine leaves are not supposed to turn red. And and and yet when you see people come out to visit wine country, what do they want to take pictures with in the fall? Red vine. I want to go take all the all the all the vines. Oh, look, it's turning colors in the season. No, that's red blotch, you know, or or that's some other disease, you know, and so it's it's just hilarious to me. Like, especially, and and when I see other real estate people that have their photographers take pictures of all of the red leaves in the fall, and that's what they use for their feature image on their wine country estate that they're selling. I just go, oh man, this is maybe not what you should be selling.

SPEAKER_00 35:06

Wow. Yeah, see, that's wild. Well, you know, when someone's looking to buy a vineyard, what are the biggest mistakes they made, except for buying places with red red leaves, man?

SPEAKER_01 35:16

Um, you know, I think the biggest thing is is that they they don't understand the investment cycle, and they don't understand how clear they need the economics to be on the vineyard, you know, and this doesn't really happen anymore, quite frankly. Like the lifestyle buyer is so much more um financially oriented today that like I just sold this ranch in Forrestville at the end of last year, and the guy I was working with never owned a vineyard or anything like that, and he, you know, kind of romanticized the wine industry, but like he needed to know who is the end buyer, what's the exact investment cycle? How much money can I expect out of this? What's the cushion? Like he was very sophisticated, and so I think like you know, it used to be that you could just go and buy a vineyard estate on spec and you'd find a buyer for your grapes and it would all be hunky-dory. That's not the case anymore. So I think the biggest mistake you could do is buy a vineyard with no contract, you know. I personally I think that's the the with no plan, you know, that that would be a huge mistake because you don't know, you might not be able to sell those grapes for years, and then you're just saddled with the investment of keeping it running and trying to figure out that I would never buy that. That that would be super sketch.

SPEAKER_00 36:37

Well, on the flip side, when someone is selling, how do they know it's the right time to exit? You know?

SPEAKER_01 36:44

Yeah, timing is always rear view, so it's really tough. You know, a lot of people are like, I don't want to sell right now, I'm gonna wait for the bottom of the market. We don't know when the bottom of the market's gonna be, and we're not gonna know until two years after it happens. So um, you know, it's it's gonna be uh challenging um to try and time the market. I think what if people are gonna sell, a couple of things they should look for uh is what is the the what what part of the age cycle are my vines in? Uh how old are my vines? You know, if you have 25, 30-year-old vines, it's the end of an economic life of kind of a vineyard. That doesn't mean that the grapes won't be good, it just means that your yield is going to be trending down from an investment standpoint. People are gonna look at that and say, that's old, right? It actually has nothing to do with quality, you can get great quality off of old vines. I mean, we see this everywhere with the old vine zinc craze that's going on. And like you can get great quality off of older vines, but from an investor's viewpoint, 30 years kind of the is kind of the economic life of a vine. 30 years. So, you know, if you have a 30-year-old vineyard, uh, you're gonna have trouble selling that unless you have a really cool contract, a really cool story around it, and it's going into some bottling that is spoken for. So, like if you're gonna try and sell your property today, you should attach a contract to it. Even if you buy the grapes and you take the risk, there should be kind of a guarantee. And what some people are doing is they're putting a revenue guarantee into escrow. So basically, like there's a holdout number that stays in escrow. Like, if you're promising a buyer that, hey, you'll be able to sell these grapes and get this amount of revenue, okay, hold that revenue in escrow until the end of the year. Hold put it earmarked, that same amount of money earmarked and hold it in escrow. And then, and then if I can actually sell these grapes and make that money, I'll just keep it out of escrow versus those proceeds going to the seller. So that's where we're that's where we're at in terms of creativity. We're we're having to do some really interesting stuff uh to just make a buyer feel safe enough to execute a purchase. So, like, I guess the best piece of advice is if you're gonna try and sell your property, know what challenges buyers are facing now and know what they're trying to protect themselves against, and then make sure that you have a plan in place for those risks that are perceived in the market.

SPEAKER_00 39:22

Hmm. Makes a lot of sense, man. Well, and something else that I was thinking about, because I am internally curious, but um, you know, if someone listening dreams about owning a vineyard one day, do you think it's first of all a good idea? And what do you want them to understand before they even think about it?

SPEAKER_01 39:47

I don't think it's a bad idea. Um I I'm not doom and gloom. I do believe that this is gonna recover. And I and I think you if I if somebody's gonna own a vineyard, you know, number one, don't romanticize the farming aspect of it. Um farming is work and it is expense. And at the end of the day, if there's no revenue coming, then it's 100% expense. So know that. If you're gonna romanticize something and you're gonna dream something, make sure that that dream is shareable with people who will support it. So if you're gonna have a dream to grow grapes and make wine, have a freaking awesome dream, you know? Make it shareable, bring people with you, you know, because I that's that's where wine is successful, you know? It's when it builds community, it's when a lot of people get behind the vision, you have a shareable story, you have a pat like everybody loves this word passion, and passionate about wine. It's fine to be passionate, but if you can't build a community with that passion and you can't sell your stuff at the end of the day, it's unsustainable, it is an unsustainable business, and so like I think it although we love to separate business and passion, be passionate about the success of your venture, you know, don't just do it because you love grapes and you love wine and you love farming, you know.

SPEAKER_00 41:32

I think that's some of the best advice in any passion project. You know, you gotta see can you make money at it? I I work with people doing content and YouTube, you know, like and at the end of the day, they have to see can uh you make money doing this this project, you know? And if you can't, you've gotta think about that really carefully because you know it can be quite dangerous if you are just dumping money and you have no hope of a return, you know? And so I think that one day at a time you you you can get things figured out, but you've gotta look at that that path to to making your cash back, man. So I love that. Well, where can people go to find out more about you and what you do?

SPEAKER_01 42:20

Yeah, um, people can go to our new sparkly fresh uh website, which is sellingvineyards.com. Uh, you can get a lot of information on there. There's what stuff to learn. There's all sorts of maps and all the listings that are for sale and Napa and Sonoma and tons of value on that website. Um, you get a little bit of story about myself and my dad and our team. Um, you can go follow our page, which is uh on Instagram, the HVW team, Hanson Vineyard Winery Team, HVW team. Uh, or you can follow me personally, Hanson underscore land. Uh, I'm very active on LinkedIn. So, you know, you can find me on LinkedIn, connect with me there. Um and other than that, you know, my phone number is all over the internet. Give me a call.