Leasing 101 – Vineyard Equipment

Background

Canadian wines have become famous around the world for their creative blends and attention to detail. The first commercial Canadian winemaking operation began in 1866 when three gentlemen from Kentucky acquired land on Pelee Island – Canada’s most southerly (and warmest) point. There, they planted 30 acres of native North American Catawba grapes. A few months later two English brothers, Edward and John Wardoper, also set up shop on the island and planted their own vineyard. Gradually vineyards were planted on the mainland and slowly moved east along the shores of Lake Erie to the Niagra Penninsula, where Canada’s major concentration of vineyards is still situated today.

The first vineyards in British Columbia were planted in the 1860s at the Oblate Mission of Father Charles Pandosy near Kelowna, in the Okanagan, but it wasn’t until the 1930s that the first winery was established in the valley.

By contrast to Ontario, in the Okanagan Valley of British Columbia, the Church was the driving force behind the planting of vineyards and winemaking. Currently, there are 45 wineries in BC, which make up over 2800 acres under vine.

Source: Adapted from the Canadian Encyclopedia

The Future

According to a highly discussed paper published by Associate Professor of Political Science at Simon Fraser University, Andy Hira, the future of BC wine is being challenged by market saturation and steadily increasing costs of production. Hira’s central question is “can B.C.’s wines improve their quality and value to expand their markets or are we at the peak for the wine industry now?”

The Importance of Equipment

“Mechanisation is quickly becoming the best way to streamline production in agriculture.”

Consider these ideas addressed by Munckhof Manufacturing in Oliver, BC.  They supply a wide range of agricultural equipment, and they are Western Canada’s leading supplier of vineyard equipment.

– Any new technology or product that gets developed is only considered an asset or benefit until it reaches 50% usage in the industry. At the tipping point, it is simply a detriment to those who do not yet have it.

-All variable costs grow beyond static costs when viewed over a long enough time period.

It’s clear that having the right equipment is now a basic minimum for survival in the highly competitive, Canadian wine industry.  The trend towards global consolidation has changed the financing landscape for industrial and independent wineries, and margins continue to thin as large conglomerates capitalize on economies of scale and productive capacity. Canada needs entrepreneurs, especially in the wine industry, where creativity and attention to detail help evolve and inform our tastes and inspirations. And Canadian entrepreneurs need access to capital so that their operations can continue to grow.

As wine drinkers ourselves, we’re proud to partner with the independent vineyards and orchards across Canada that keep our economy growing. In agriculture, where revenues are seasonal and at times, unpredictable, smoothing the acquisition costs of equipment over its useful life can drastically improve long-term sustainability and profitability.

If you’re considering purchasing new equipment for your vineyard or orchard, call to talk with us to find out how leasing can help your operation save on tax, improve cash flow, and ultimately, become more profitable.

Clarity Leasing is a privately held equipment finance firm that specializes in alleviating the capital restrictions on growing companies.

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On August 17th, 2011, posted in: Clarity Leasing | Blog by