Buying a Custom Crush Winery: Client Wine Value Is Different From Facility Service Income

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

A busy custom crush facility can contain valuable wine without earning the retail value of that wine. For a purchaser, the central commercial question is what the facility earns for its services and which obligations support that income.

Production volume, wine ownership and facility revenue should therefore be explained separately. A large volume in the cellar can indicate activity, but it does not by itself establish a profitable service business or inventory owned by the seller.

Begin with the role the facility performs

TTB distinguishes custom crush operations from alternating proprietorships. Under its custom crush description, the bonded winery produces wine for a customer and carries the relevant production responsibilities. In an alternating arrangement, the participating wineries are separately qualified and responsible for their own operations.

Identify the actual arrangement before evaluating the financial presentation. Similar equipment and a shared location can support different commercial relationships. The operating agreements should explain which relationship applies to each relevant customer or occupant.

Count the service fee once

Suppose a hypothetical facility processes 10,000 cases for clients and charges an illustrative $30 per case for the defined service. Its modeled gross fee income is $300,000. The scope of that fee must be specified; it may not include every activity the client requires.

If those clients later sell their wine at $240 per case, the resulting $2.4 million of modeled client sales is not automatically facility revenue. Adding it to the $300,000 fee would combine different parties’ receipts and materially overstate the service operation being evaluated.

Gross fees still need a cost comparison

Assume, solely for illustration, that the service operation incurs $180,000 of variable expense and $90,000 of fixed expense within the defined period. The balance is $30,000 before any excluded financing, tax, replacement or other costs.

These are invented figures, not a local custom crush rate or industry margin. They show why an apparently large amount of processed wine can support a smaller operating balance than a purchaser might expect from volume alone.

Connect occupied space to the work still owed

Wine remaining onsite may require storage, handling or later processing. Establish what the facility has already been paid to do, what remains unbilled and which future costs accompany the work.

A payment received in advance can arrive before all related services are complete. Its presence in a bank account does not explain the amount of work remaining. Have the financial advisers reconcile receipts with the obligations being assumed rather than treating every historical cash receipt as freely available operating surplus.

Capacity has a timetable

Compare client commitments with the buyer’s intended production program. Occupied space that generates service income may also limit the immediate space available for the purchaser’s own wine. Conversely, unused space does not establish that new paying clients can be secured on favorable terms.

Separate existing contracted activity from possible future business. The cost and timing of any transition should appear in the acquisition scenario, especially where the buyer plans to change the facility’s use or customer mix.

The agreement is part of the income evidence

Review the applicable pricing, service scope, duration and provisions relevant to a proposed ownership change with appropriate advisers. Historical activity is useful context; the contracts help explain which commercial relationships the buyer can reasonably include in the future plan.

Our custom crush and alternating proprietorship guide explains the broader distinction. Explore real estate and home for sale in Napa, and contact Diamond to connect facility volume with the actual business and property interests offered.

Source checked October 28, 2026. All rates, volumes and expenses are hypothetical. No contract transfer, accounting treatment or individual operating return is determined.