A Case Study in Maximising Boutique Winery Profitability and Business Resilience.

Richard Whitfield, Leon Juffermans, Gert Noordzy & Paul Dean 

ABSTRACT 

This case study explains how and why the Wild Dog Estate, a boutique winery in Australia, has successfully evolved and attempted to maximize its revenue streams and the profitability and the resilience of its overall business over a 17 year period. As well as growing grapes and olives, the Estate makes wines and spirits, is involved in cattle grazing and food production (pickling, bottling, charcuterie, smoking, brining), and online, cellar door and restaurant sales of its own and other artisanal wines, beers, ciders, spirits, and food, and finally, offers unique guest accommodations and winery experiences including property tours, nature walking trails, vineyard “long lunches” and weddings and other activities. The different revenue streams complement each other and smooth out year-round income peaks and troughs. More importantly, they interact synergistically to stimulate additional customer demand and significantly increase average customer spending and length of stay. Partnering with like-minded people on different business ventures under the Wild Dog umbrella has been a strong feature of the development of the estate. This has reduced business risk by bringing in specialist expertise and additional financial resources as each new business line has been established. However, it has also increased business complexity and the difficulty of maintaining a consistent and coherent overall vision for the property. Also, a lack of local government support has been a significant impediment. The Wild Dog Estate business lines and activities largely grew organically over many years, but always with an overarching vision to increase engagement and to attract a broader range of customers so that infrastructure and other investments could be amortized over a larger base. Strong arguments can be made that other boutique wineries should consider following a similar path, but they could be more deliberate in their business planning and grow faster. To prepare this case study, public information was reviewed and selected senior managers and partners in Wild Dog Estate businesses were interviewed in depth. 

Introduction 

Australia is an advanced mid-sized economy (US$1.33 trillion GDP in 2020), and its major exports are minerals, fossil fuels, agricultural products and education and other services, mostly to Asia (Reserve Bank of Australia, n.d..). The country is heavily urbanized, with the population mostly concentrated in several major coastal cities, but it still has a global reputation for open, nature loving lifestyles and sports. It also has a very cosmopolitan population of around 26 million, with citizens that have originated from almost all world countries, and with 30% of its population being overseas born (Australian Bureau of Statistics, 2020). Melbourne and other major Australian cities regularly feature highly in global rankings of the world’s most liveable cities (Economist Intelligence Unit, 2021). 

Early European immigrants in the 1800”s established vineyards in several parts of Australia, notably the Barossa and Clare Valleys north of Adelaide, several places around Victoria and in the Hunter Valley and other areas in New South Wales. These different colonies generally encouraged wine production to offer a supposedly less socially damaging alternative to the consumption of distilled spirits (Dean et al., 2023). Beginning in the 1970”s there were concerted government and industry efforts to expand Australian wine production, including expanding into new regions like the Margaret River, south of Perth in Western Australia. The country is now among the world’s top 10 wine producing regions and exports large quantities all round the world (Wine Australia, n.d..). 

Today, the Australian wine industry (Wine Australia, 2021) is dominated by a small number of major producers, e.g., in 2021 just 46 wine grape levy payers crushed over 3,000t each (and overall, about 83% of the total national wine crush), while 1,247 levy payers crushed 10t-3,000t and 592 crushed less than 10t. The large producers primarily make “mass market” wines for export or distribution through large retail outlets. By contrast, the small producers make “boutique” wines and rely on cellar door and online sales and niche distributors. For ongoing sales, small boutique wine makers must develop personalized customer connections, whereas the large producers rely on mass marketing, their branding and widespread product availability to generate sales. 

Many holiday makers cite experiencing food or wine as a reason for their trip, and wine tourism is growing in popularity and value in Australia. During the years 2000–2006 the average number of winery visitors grew by 6% per year for domestic tourists and 8% per year for international tourists (STCRC, 2008). This trend has continued more recently. Food and wine are becoming an increasingly important part of promoting international tourism to Australia, where market research indicates that only 26% of prospective international visitors associate the country with good food and wine, whereas past international visitors rank Australia 2nd across 15 major markets for its food and wine experiences (Tourism Australia, n.d.).

Generally, food and wine tourists are looking for authentic and memorable experiences in attractive natural settings that involve unique local products and services offering good value for money. They also want to interact with knowledgeable winemakers, chefs, and service staff to enhance their own knowledge of food and wine and build memories to enrich their subsequent lives (Sparks et al., 2005). Many wine tourists are well educated and socially progressive and support environmental preservation and enjoy outdoor activities in natural surroundings (Honeywell, n.d..). They highly value time spent in winery environments and want to be immersed in beautiful, undiscovered surroundings where they can relax and experience and learn new things and be inspired. Typically, they prefer wine regions reasonably close to large cities with good transport links, but which maintain their relaxed country feel. They also often prefer casual in/outdoor dining and picnic areas that pair local wines with local produce. They enjoy learning about local wine and food production and preparation.

Boutique wineries that combine cellar door activities with restaurants or cafes, plus onsite accommodation and sales of other local produce and crafts, are viewed as being more successful, especially if they also include tours and open viewing of wine making processes (Sparks et al., 2007). Based on a survey (Sparks et al., 2005), the top reasons people give for visiting a wine region are:

• scenery/natural beauty (45%),
• good/great wines/wineries (31%),
• easy access from home (30%),
• knowledgeable/friendly people and services (16%),
• food, including local produce and restaurants (15%),
• a critical mass of close together wineries/wines (14%), and
• other activities/things to do (10%)

Wine tourism is a well-established channel through which small wine producers can promote their products and develop stronger customer connections (Karlsonn & Karlsonn, 2017). In this regard, wineries should aim to build relationships with visitors who are discerning and interested in both oenology and gastronomy and who want to enhance their knowledge of wine production and enjoyment. Retaining these customers over time to increase their lifetime spending is much more cost-effective than having to continually acquire new customers. To build customer loyalty the whole experience is important, including dining with local wine and food pairings, and enjoying local accommodation, history and culture and special events. Subsequent ongoing communications with winery visitors is clearly crucial for maintaining these customer relationships and building ongoing product sales (O’mahoney et al., 2008; Wine Australia, 2021), along with easy product delivery. 

Figure 1.  Victorian wine regions and the Wild Dog Estate.

As shown in Figure 1, the Wild Dog Estate is near to the fast-growing town of Warragul (population 23,000) about 100 km southeast of Melbourne (population 5.15 million) in West Gippsland, which is mostly known for dairy farming and other niche agriculture with a long-time focus on gourmet foods and beverages (Wikipedia contributors, 2022a May 2). Generally, West Gippsland enjoys a Mediterranean/Californian climate with long, dry and warm summers and cool, wet winters. Winter snows fall on the higher peaks, but not elsewhere. The Estate is within easy freeway driving from Melbourne, or visitors can arrive by train to the nearby railway station. It is even close to a small local airport. The region’s hilly terrain and cooler climate has been found very suitable for growing Chardonnay and Pinot Noir grapes (Wine Gippsland, 2022). The broader region is also known for sightseeing, cycling, hiking and bush walking and winter snow skiing in highland areas. And it is between the well-known Yarra Valley and Mornington Peninsula wine tourism areas. Thus, it is popular with weekend day-trippers and longer-term holidaymakers interested in food and wine tourism and communing with nature and other outdoor recreational activities. It can also grow by spill over from nearby better-known wine areas. 

History and evolution of the Wild Dog Estate 

The Wild Dog Winery (n.d.) is 49.4 ha of attractive hillside grasslands, trellised vineyard blocks, and an olive grove and herb garden, along either side of a ridge the runs east-west across the middle of the property, and with a naturally wooded valley bottom on the south side of the ridge. The vineyard blocks are mostly on the north side of the ridge, and the olive and juniper groves and herb (bush tucker) garden are on the south side. A road runs in along the ridge line to a complex of buildings near the middle of the property. These buildings include a winery and a distillery, storage/equipment spaces, the Baw Baw Cellar Door (n.d.) shop , the Hogget Kitchen (n.d.) restaurant and the Winemakers Cottage (airbnb.com.au), rental accommodation building. Plans are in progress to add 5 tented glamping units to the olive grove and 5 cabin glamping units to open pastureland northeast of the restaurant.

Table 1. The Wild Dog Estate development chronology.

Date				Major Action
1982				First grapes planted: Shiraz, Cabernet Sauvignon, Chardonnay, Pinot Noir, Cabernet Franc and Riesling.
2002				Olives planted; Correggiola, Manzanillo, Fantoio and others.
2005				Property purchased by current owners. Re-trellised all vines and planted Sauvignon Blanc, Pinot Gris, Viognier. Extended winery and wine storage.
2009				Added The winery restaurant; named Best National and Victorian Winery Restaurant in 2014.
2013				Government grant to establish the “bush tucker” garden and wetlands boardwalk.
2017				Brought in other winemakers to expand product range; stopped using herbicides pesticides to move towards organic wines. Hogget Kitchen takes over The Winery Restaurant; awarded one Chef Hat in 2022.
2018				Gin making started.
2020				Baw Baw Cellar Door opens (but there had previously been some intermittent cellar door activities).
2021				Winemakers Cottage opens as AirBnB rental property
2023				Glamping accommodation units should be added to the property.
2024				May become a certified organic property.

Originally, dairy and cattle grazing property, grapes were first planted in 1982, and olives were planted in the early 2000’s. The first owners planted a range of grape varieties (see Table 1 for details) to determine which would grow best in West Gippsland. The current owners are a couple that are now (2023) in their early 70s. Before buying the Estate, they had been (and still are) successfully operating a rural reception business for several years. The wife was the executive chef while the husband managed the front of house and the overall business. They bought the Estate in 2005 to expand their wine and other agricultural activities. Over the years since then, they have expanded the lines of business on the property, as noted below in Table 1.

The new owners first strengthened the wine business by re-trellising the original vineyard blocks, adding some more vineyard blocks with some different grape varieties (and replanted some existing vineyard blocks) and extended the winemaking and wine storage areas. Next, they opened a restaurant as a new line of business on the property. Then they obtained a government grant to add the “bush tucker” garden, wetlands boardwalk and viewing platforms to provide new attractions for visitors. Later, to provide added expertise and productive capacity, they brought in another restaurateur to take over that business line and progressively added four winemakers to focus on newer and different wine styles. They then added gin and grappa making as another business line to further expand the product range and to use the winemaking wastes and bush tucker plants more productively. This required an expansion in cellar door sales and related activities and new manager was brought on board to handle this growing business line. Finally, they have recently added onsite accommodation and are looking to expand this most recent business line into glamping.

This case study next looks in detail at the different businesses and revenue streams on the Estate. First, it considers the different land uses and then the production and retail facilities and activities.

In recent times the Warragul township has been growing strongly so that it is starting to encroach on the Estate. This is a major problem because nearby land use rezonings has greatly raised property values and led to major increases in Council Rates,1 which have risen from less than $7,000/year in the past to $21,000 for the whole property 3 years ago. Since then, the property has been split into parts, and the rates for the restaurant portion increased from $2,000 to $8,000 in one year. This is a mixed blessing, because it raises a significant operating cost but does mean that there are more people living close-by who might want to visit the Estate.

Vineyard blocks

Totally, on the Estate there are 12.15 ha of trellised grape vines divided into several blocks each containing one, or a few, grape varieties and the total annual crush is approximately 60t (or about 5t/ha). Generally, it takes 1-3kgs of grapes to produce 1 bottle of wine, so the annual production volume is about 40,000 bottles of red, white, and sparkling wines, but this can vary significantly from year to year. Now there 11 different varieties of grapes on the property, with the largest plantings being Shiraz, Cabernet Sauvignon, Riesling, Pinot Noir, Chardonnay, Sauvignon Blanc, and Pinot Gris.

Having previously been dairy and cattle grazing property, the first grapes were planted in 1982 as part of the major national initiative to grow the Australian wine industry at that time. Several grape varieties were planted, partly to study which would grow best in the region. Also, small dairy and grazing properties were starting to become sub-economic in the 1980s and were looking for alternative land uses. When the current owners purchased the Estate in 2005, they rejuvenated and expanded the vineyard blocks. More recently, in 2017–18, four younger, energetic winemakers were progressively brought on board to manage the vineyard blocks and winemaking so that the Estate owners could reduce their workload. One of the new winemakers’ first actions was to migrate the Estate towards organic winemaking.

Demand for organic wines is growing, but from a relatively small base (Wine Australia, 2019). These wines are grown and crafted with minimal intervention in an environmentally sustainable and carbon neutral way to elicit each varietal’s natural flavours. This approach resonates with increasing numbers of better educated, progressive wine consumers. The Estate stopped using industrial fertilisers, herbicides, and pesticides in 2017 but the last traces of these materials will only decay by 2023–24 and the property may seek organic certification then.

Generally, grape vines are pruned each year. Later, the grapes are harvested and loaded into trailers and towed to the winery for processing. Since the Estate was established, all the grapes grown on the property have normally been crushed onsite. The present winemakers also buy in additional grapes as needed, sometimes from other properties that they also manage. After crushing and destemming and maceration everything is used onsite to make wine. Also, most of the winemaking wastes are used to make gin or grappa or fed to the cattle on the property. (Waste grape stems, seeds and skins make a very good finishing feed for cattle.) 

This case study next looks in detail at the different businesses and revenue streams on the Estate. First, it considers the different land uses and then the production and retail facilities and activities.

The grape vines and trellises are a significant Estate asset. It takes grape vines 5+ years to reach productive maturity, but then they have a 50+ year working life. However, grapes grow on new buds so that the vines need annual pruning. The current winemakers lease vineyard blocks from the Estate and pay fees to use the winemaking and wine storage equipment based on their production volumes. The winemakers own the grapes they harvest and pay for the grape vine pruning and harvesting, and purchase and use their own wine barrels (which are all significant production expenses). 

This arrangement is very mutually beneficial. The Estate gets reliable passive income from the vineyard blocks and winery with little direct involvement or production/sales business risk. Generally, the four young winemakers are all now in their 30s and have each had about 10 years of practical winery working experience in the region. They are proving themselves to be talented winemakers, wanting to expand their careers in this direction, but do not have the capital to purchase their own properties. This arrangement gives them relatively low cost access to established vineyard blocks and winery facilities, and enables them to establish sales channels for their own branded wines with minimal capital investment. It seems to be working out well, and their winemaking reputations are generally expanding. 

Olive grove 

Olives were first planted in Australia in the early 1800’s, at about the same time as grape vines, and in similar locations (because they require comparable climatic conditions). With varying levels of success, olive oil has been locally consumed and exported from Australia since the early 1900s. The industry and plantings started to expand significantly after World War II with the arrival of relatively large numbers of Southern European migrants. Over the last 30+ years the local olive industry has been growing strongly on the back of steadily increasing demand (Olive Australia, n.d..). 

Olive groves are somewhat like vineyards in that it takes several years for the plants to reach maturity (8+ years, compared to 5+ years for grape vines), but thereafter they have a very long productive life but require annual pruning and fruit harvesting. Like wine grapes, there are also many varieties with different climatic requirements and flavour profiles. Growers must also be aware that olive trees are often biennial bearing, i.e., they produce much larger and then much smaller crops in alternate years (Wine Australia, n.d.). 

Olives can be pickled and sold as a food, or they can be crushed to make olive oil. Generally, several kilograms of olives are crushed to get one litre of olive oil. Also, the olive production from each tree is relatively variable and depends on the bearing year and recent weather and rainfall patterns and the quality and nature of the pruning done. Nonetheless, in well maintained olive groves each tree may produce 5-50kgs of olives each year. In most cases, olives are primarily crushed for their oil, with relatively small quantities set aside during harvesting to be pickled for sale as food. 

Interestingly, olives are typically harvested 1–2 months later in the season than wine grapes and pruned 1–2 months after them as well. Some of the pruning and harvesting equipment is the same, but the actual picking is done very differently. Also, while some of the storage tanks and bottling equipment is similar, crushing olives to extract their oil is very different to destemming and crushing grapes. Also, there is no grape equivalent to pickling olives to make foods. While it is not now done at the Estate, it should be reasonable to sell olive oil and olives through the same cellar door and online sales channels as wine because there is likely to be considerable customer crossover. Thus, olives and wine grapes can be good complementary crops to increase total property revenues, sales channel throughput and extend some staff and equipment utilizations. 

It is not clear why the previous owners chose to plant the 800-tree olive grove and it is currently a somewhat under-utilized asset at the Estate. However, the strong and ongoing growth in Australian demand for olive oil and pickled olives that began in the early 2000s has stimulated (and continues to stimulate) new olive tree planting and industry expansion (Australian Olive Industry, n.d..). 

In a good year, the existing olive grove can produce over 4.7t of olives and 750 l of oil, but this varies significantly. This is a low yield compared to the most productive olive groves, so there is considerable scope for improvement. Additional manpower and expertise are needed to fully develop this business line. Given that olive growing, and processing is an expanding industry in Victoria, it should be worthwhile to look for a new business partner to manage this asset, like what is currently done for the vineyard blocks and winery. 

“Bush tucker” garden 

Local indigenous edible plants and animals are called “bush tucker” in Australia and in many cases, they are unique to the continent (Wikipedia contributors, 2022b November 6). Beside a small grove of non-native juniper berries (which are the basis of the taste of gin), a range of aromatic native plants are grown in a bush tucker garden on the Estate and used for infusing in the locally distilled gins to get different taste profiles. The bush tucker garden comprises about 100 plants, including Lemon Myrtle, Anise Myrtle (sometimes called Native Liquorice), Mountain Pepper, Davidson’s Plum, Illawarra Plum, Finger Lime, and Strawberry Gum. The Juniper plants adjacent to the bush tucker garden are very difficult to source and grow in Australia. As noted earlier, the Estate obtained a government grant to establish the bush tucker garden and investigate their commercial use. 

The garden was initially established as an attraction for visitors to explore and as a natural food source for the onsite restaurant. They have since become a very notable element in the unique gin recipes developed for the Estate. The garden requires little maintenance, and all its output is consumed onsite. 

Other land usage 

A small (45± head) cattle herd still grazes on the property, and the calves sold provide another source of income and are an attraction for visitors. They also eat a lot of the winery wastes. Thus, the cattle are another very good complementary business line. 

To complement the winery, restaurant, accommodation and other onsite activities, the Estate also has several scenic viewing platforms and picnic areas scattered around the property. There are also nature walking trails and a boardwalk through the fern gully and wetlands, which are home to some relatively rare flora and fauna, e.g., Giant Gippsland Earthworms (Megascolides Australis). Finally, there is a large outdoor deck at the restaurant that can be used for private events and celebrations. The Estate regularly hosts weddings, business retreats, “long lunches” and other events. At different times it has also hosted music concerts and other entertainments. 

The Estate is tied into the Victorian electricity grid, but it does have one small isolated photovoltaic system with just a few panels and a battery to run a computer and labelling machine. Strong arguments can be made to make the property self-sufficient in electricity generation and storage. This makes a powerful environmental statement that is in keeping with the Estate’s market positioning. Additionally, Australian cost trends where grid electricity prices are regularly increasing mean that developing local electricity generation and storage is often a good financial investment. 

There is a very reliable spring on the property and rainwater is harvested and stored onsite so that it is self-sufficient for water, and sewerage is also treated onsite. Spring water is mostly for wine and farm use, while properly filtered potable rainwater is used for human consumption. Being self-sustaining for water is also market positioning for the Estate. 

The different business lines on the estate have separate Internet connections and Wi-Fi networks. There would be merit in consolidating these to set up a property-wide Internet connection and Wi-Fi system that can simultaneously carry several public and private networks. 

Finally, some investigations have been done to investigate beekeeping on the Estate. Bees are very important for pollinating the grape vines and olive trees, and honey can be another useful food product line. Modern technology, such as flow hives (www.honey flow.com.au) can dramatically reduce the labour involved in managing bees and collecting honey and honeycomb. There is an opportunity to bring in another partner to develop this potential new business line. 

Winery 

Generally, after harvesting, wine grapes are destemmed and then crushed to extract their juice. Yeasts are then introduced to grow in the juice and convert some of its sugars into alcohol. Because the grape skins and seeds fix the colour of wines, they are quickly separated from the juice for white wines but are left in the mix during fermentation for red wines. After fermentation, the juice is stored in tanks to age and for residual solids to settle. Some wines are then further aged in oak casks to change their flavour profile. After aging, the wines are finally filtered, blended, and bottled ready for sale. Typically, white wines are ready for consumption within 4+ months, while sparkling and red wines may not be ready for drinking for 1+ years. Thus, wineries must have equipment for destemming and crushing grapes and filtering and bottling liquids. They must also have storage tanks and oak barrels. Winemaking is a seasonal process so that some equipment utilization is quite low. 

As the owners got older, in 2017 the Estate decided to withdraw from direct winemaking and invited several young winemakers to partner with them on wine production and sales. Because of the significant capital expense, access to established vineyard blocks and winery facilities is a major career development barrier for ambitious younger winemakers. Over time, four younger winemakers were recruited, and they lease vineyard blocks and use of the winery facilities. They also pay all the operating costs associated with wine production – vineyard maintenance, grape harvesting, winemaking consumables, etc. Finally, the winemakers own their wine inventory while it is in storage for ageing and pay the associated holding costs. Their products are sold through the Estate cellar door and online sales channels and through each winemaker’s own other sales channels.

Distillery

The combination of making wines and distilled spirits (especially gin) in the same location is becoming more popular because the production processes and sales channels used are similar, thus raising facility utilization factors (Anderson, 2021). Also, with distilled spirits there is less final product variability and ageing is often unnecessary, and profit margins are comparable. Wineries always have wastage where some of the wine produced does not meet quality standards. Rather than discard this material, they often use it for making spirits. Neutral alcohol is refined from the wine and infused with botanicals/herbals (aromatic plant materials) during distillation to make different alcoholic spirits and finally diluted with filtered or distilled water to set the desired alcohol concentration, e.g., juniper berries are used to give gin its characteristic basic taste. In a somewhat similar way, grape skins, “must” and other wine making leftovers can be pulverised to make a pomace that can be distilled to make grappa (Cohen, n.d..).

Unlike winemaking, distilleries do not follow a seasonal cycle so that equipment utilization can be relatively high. Additionally, they often use winemaking wastes to further reduce costs. Finally, making distilled spirits also increases warehouse and sales throughputs, thus reducing their unit operating costs. As such, distilling spirits like gin and grappa is an excellent “off season” alternate business activity for a winery.

Following this industry trend, the Estate started investigating gin making in 2018. It first contracted with a Melbourne based distillery to formulate recipes for four different gins that incorporate botanicals from the bush tucker garden to give them unique taste profiles. Since then, the Estate has purchased its own onsite still and regularly does production runs to make their gins to replenish the sales inventory, which are sold through the existing cellar door, wholesale, and online wine sales channels. The Estate was also working with a young distiller to develop a grappa product line and were also looking at making Japanese style sakés but, very sadly, he recently died after an illness. The Estate is actively looking for a partner to expand production and sales of gins, grappas and other distilled spirits. Current annual production is around 1,000 l, but the production capacity is in place to grow this several times to match rising demand.

As a side note, the Estate has also investigated establishing a brewery onsite but, somewhat strangely, local government regulations only allow breweries within industrial zones. This is unfortunate, because craft brewing is a strongly growing industry in Australia, and the Estate has good spring water and land suitable for growing the hops and other grains used to make beers.

Somewhat similarly, the Estate has an arrangement with a boutique Gippsland based apple cider maker to produce an own labelled cider for sale.

Bonded warehouse

Generally, alcoholic beverages are heavily taxed, but wineries usually incorporate bonded warehouses so that they only need to pay the relevant taxes when the beverages are sold. The duties payable on the sales of distilled spirits are handled separately to those for wines, but in a similar way. Generally, the required taxes are built into the product sales price.

Domestic distilleries must be licensed by the Australian Tax Office and submit monthly sales reports and pay the required duties on the alcohol sold, with some reductions if the spirits are made at a licensed facility onsite. These duties are CPI (Consumer Price Index) adjusted every 6 months. To encourage industry growth, small producers may get substantial rebates on these duties at the end of the financial year. To understand the scale, a 1,000 l container of raw ethanol might cost AU$3,000, but after distilling and dilution, the duties payable on the gin (about 40% alcohol) sold from it might be AU$90,000+. It was not difficult for the Estate to get the relevant licensing.

For winemaking, the duties payable are handled by a suitably qualified accountant and are calculated within the normal annual business tax return. Small volume winemakers, like the four on the Estate, are normally eligible for significant rebates on the duties payable, again to encourage industry growth.

Cellar door – Baw Baw

While there had been some earlier intermittent attempts at cellar door sales of wines, mostly as part of the earlier Winery Restaurant operations, a more professional stand- alone cellar door was established on the Estate in 2020. This was timed to match the ramp up of wines released for sale by the new winemakers. A new manager was brought in to develop and operate the new Baw Baw Cellar Door business line.

A space comprising of a cosy, shaded outdoor seating area for about 50 people and an indoor serving bar that can also seat 20, and a public bathroom facility was set up. Arrangements were made to establish a range of 16 different red, white, sparkling and dessert wines, along with 4 different gins, from six different winemakers and distillers. It also sells cider under the Estate label which is sourced from a Gippsland based boutique apple cider producer. Finally, the cellar already also offers some local craft beers, and there are plans to expand the product range more. As well as tasting wines, Estate cellar door visitors can order food platters, sourced from the nearby Hogget Kitchen restaurant, as accompaniments.

The Baw Baw Cellar Door (n.d.) operates as a normal retail business, leasing the space from the Estate, purchasing products from the winemakers, distillers, and restaurant, and on-selling them to customers. Visitors can buy wines and take them away or have them delivered to their homes. Additionally, a website was established that incorporates online wine sales. Currently, the focus is on wholesale sales to specialist retailers, but a membership club where regular customers are offered discounts may be set up if sales increase. Focusing on wholesale minimizes the onsite staffing needs, but with adequate volume a membership club can be more profitable, because it brings the wholesale profit margin inhouse. 

It is not done now, but there may be an opportunity to add olive oil tastings and sales to the cellar door. And possibly even tastings and sales of olives and hampers from the Hogget Kitchen restaurant. It may also be worthwhile to see whether there are other nearby local speciality food makers looking for representation and additional sales channels. 

It may also be worthwhile to look at representing other nearby boutique food and beverage makers to develop a regional online membership club and sales channel to maximize sales throughput, but this would require a significant investment. 

The Baw Baw Cellar Door also showcases sculptures and other works by local artists, but the sales are minimal. It may be worthwhile for the Estate to commission some local sculptures to be positioned at different places around the property to give it an “art park” feel and provide another attraction for visitors. There is already an interesting sculpture of a hogget (yearling sheep) outside the restaurant. 

Finally, the cellar door is currently open Friday-Sunday each week. This can be expanded if the number of visitors can be increased through more extensive and coordinated promotion of the Estate. 

Restaurant – Hogget Kitchen 

An onsite restaurant was originally established by the Estate in 2009 and successfully operated inhouse until 2017. For example, it won National and Victorian awards for being the best Winery Restaurant in 2014. This built on the owners pre-existing reception centre operating experience. As they grew older, the owners decided to invite Trevor Perkins (Rittey, n.d..), a young, up-and-coming chef to lease the restaurant space and take over the restaurant operations. He is a Gippsland native who had spent several years working in several very good regional restaurants and who is passionate about eating locally and sustainably and following a “land to plate” philosophy. This was mutually beneficial because the Estate got regular, relatively risk-free passive income from the asset and the chef could take-over and make his mark and expand a well established restaurant business with minimal capital investment. The new operator has continued to develop the restaurant, which has recently been awarded one Chef Hat (Australian Good Food Guide, n.d..). 

The new Hogget Kitchen (n.d.) restaurant has both indoor (50 seat, with some room for expansion) and outdoor patio (20 seat, with room to expand to 40 seats) areas and has 3–5 front of house staff and about 6 kitchen staff. It normally operates Friday-Sunday but can open at other times, e.g., it regularly holds special food events, such as “feasts”, “long lunches” and father’s and mother’s days meals. It also regularly hosts weddings and other group events. 

The restaurant typically offers chef curated table d’hôte meals (a multi course menu with just a few choices at a set price) of fresh seasonal produce and house speciality foods. The chef follows a “nose to tail” philosophy to minimize waste and often forages in the bush tucker garden and elsewhere around the Estate. The restaurant works extensively with a small group of local speciality food providers so that everything on the menu has a strong local focus. Finally, it also undertakes extensive inhouse food processing activities for pickling, bottling, charcuterie, smoking, brining, and in-house butchering. Note that slaughterhouses require special licensing, so the restaurant buys semi-processed carcasses from a good local supplier. At present, these products are primarily sold through the restaurant, thus there is significant scope to increase the sales channels, but this would require expanding the onsite production capacity. The authors believe that this should be investigated further. 

The Hogget Kitchen leases the premises from the Estate and bought and upgraded the kitchen and dining equipment and furniture over time when it took over. They have also established an electronic subscription-based e-newsletter to build customer rapport and to promote the various restaurant activities and events. 

Accommodation – the wine makers cottage and glamping 

The Wine Makers Cottage is a 2-story, 4-bedroom, 2.5-bathroom building that can sleep up to 10 people. It also has kitchenette facilities and a private outdoor BBQ and fire pit. 

The success of accommodation offerings at other wine making properties triggered the desire to have something similar at the Estate. The cottage had previously been used as a wellness centre, but not very successfully. This led to the renovation of the building in 2019. Then, the Wine Makers Cottage launched on airbnb in 2021. Airbnb was chosen because of recommendations from others and to minimize advertising and administrative costs and it has been very successful. 

At around the same time, the benefits of glamping, i.e., lower capital investment with potentially higher room rates, were seen and the possibilities at the Estate began to be explored. The long-winded process of getting regulatory approval for glamping units on the property was initiated and negotiations with an experienced glamping tent manufacturer were begun. 

The glamping manufacturer had originally owned a similar business in Europe, but immigrated to Australia in 2015 with his business partner/wife and their teenage children, partly to improve their lifestyles. Also, their research indicated that glamping was relatively underdeveloped in Australia and Asia compared to Europe, but seemed to be following a similar strong growth trajectory. Thus, there was a good opportunity to establish a new glamping business in Australia (www.glamxperience.com.au), and this has proven to be a good decision, as evidenced by the “Most Unique Accommodation, 2017”, “Best of HOUZZ Design, 2018” and other awards they have been receiving. 

The glamping tent manufacturer became interested in a joint venture, where they would own and operate the accommodation units and pay the Estate a share of the revenues. The Estate would contribute the accommodation license for the property and provide the access roads and the electricity, water, Internet, and sewerage infrastructure to support the glamping rental activities. The final arrangements are still being negotiated. 

The glamping tent manufacturer wants to open a new line of business to operate glamping sites on rural properties. This gives the manufacturer a good investment path for the free cashflow from the existing business and at the same time develops a reference site to stimulate other winery properties to invest in glamping. 

The current plans are for 5 glamping tent accommodation units to be scattered within the olive grove and another 5 glamping cabin units to be positioned in open pastureland northeast of the restaurant. Hopefully, they will be ready for rental in 2023. 

Given the recent strong growth in Wellness/Spa retreats in the nearby Mornington Peninsula, see, for example, Waters (2017), it may also be worthwhile to revisit the previously poorly performing onsite wellness centre, but this also would require significant new investment.

General business development strategy and its strengths and weaknesses

The current Wild Dog Estate owners already had a successful rural reception business, and so purchasing the Estate was a natural expansion of their general vision for a multi- faceted rural hospitality business where visitors could enjoy a broad range of food and wine and related activities and experiences. Since then, they have progressively expanded the Estate so that it now includes cattle grazing, a vineyard and winery, a distillery, a restaurant, an olive grove, juniper grove and bush tucker garden, nature walks viewing platforms and picnic areas, cellar door sales and visitor accommodation. They have also brought several partners on board to strengthen management expertise and the overall reputation and attractiveness of the Estate. At the same time this has also increased the sources for investment capital and spread the business risks and reduced the workload on the owners as they have gotten older. Recent initiatives to expand the accommodation options to include glamping are positive. There is still scope for significant further developments to bring on another partner to expand olive production and sales. Additionally, there is significant merit in the idea of bringing in a further new partner to set up beehives on the Estate and add a new craft honey business line. Moreover, the potential to find a good new partner to more successfully re-establish a Wellness/Spa facility on the Estate should be examined. Also, more can be done to integrate wine and spirits sales with olive oil and speciality food sales both online and at the cellar door. Finally, there is scope to further strengthen customer relationships through a better coordinated online membership club and e-newsletter that encompasses all the Estate’s business lines, and even extending it to represent other nearby boutique food and beverage producers, but this would require significant investment.

While it may have initially been a response to the personal circumstances of the owners, the strategy of bringing in different partners to run the different major business lines within the Estate is a very good one in the view of the authors. Young, ambitious food and wine tourism entrepreneurs often have limited access to capital and cannot afford the time to wait several years while vineyards, olive groves and restaurants, wineries, distilleries, and other facilities reach maturity. But they do bring in very valuable new thinking, expertise, and enthusiasm. They can also strongly enhance the attractiveness of the property as their careers and reputations develop.

The synergies between the different business lines on the Estate are very clear and make it much more attractive for visitors. Also, the overall vision for the Estate is logical and coherent and the overarching focus on creating a full spectrum of food and wine tourism experiences within a single property is compelling. It makes for more stable “year- round” attractions with fewer seasonal visitation peaks and troughs and builds customer loyalty and provides many reasons for repeat visits. Nonetheless, there is a noticeable lack of development and overall integration in the existing property, and it has taken a long time to establish the full range of activities present. With more strategic planning and coordinated development work it should be possible to achieve comparable, but more well-rounded and evenly established, results within a significantly shorter time. 

There is a danger that the different business lines within the Estate become isolated silos so that considerable energy must be devoted to communicating the overall vision for the property and creating a common working culture and ambience. For example, as the owner explained, the operator does not see maintenance of the outdoor garden and other areas surrounding the restaurant as part of his responsibility, although it clearly has an impact on the overall customer experience and visitors’ impressions of the property. One way of overcoming this problem may be to create the equivalent of an apartment complex owner’s corporation so that all the participating businesses have a say in the overall “look and feel” of the Estate and contribute fees to maintain and develop the common areas, like gardens, car parks and so on. It is very difficult to retrofit this kind of arrangement so it should be established practice from the outset.

There is also a lot of merit in maximizing the onsite utilities infrastructure (for electricity, water, sewerage, and Internet) to reduce the property’s reliance on wider utilities grids. Utilities self-sufficiency is good market positioning for this kind of property, and it also minimizes ongoing utilities costs. Nowadays, general cost trends mean that it makes good financial sense to invest in onsite utilities infrastructure, especially for electricity generation and storage, and for water.

The interviewees described difficulties in dealing with the Gippsland local government several times. They cited the long-winded and intricate processes that must be followed to gain approvals and licenses for various tourism related business activities on farmlands. They also queried the logic of some local ordinances, e.g., that breweries can only be in established industrial zones. They also noted that the local government does not seem to see any value in developing local tourism, e.g., it does not fund any local tourism information centres, unlike the extensive local government support seen in the nearby Yarra Valley and Mornington Peninsula local government regions. Clearly, local government support is crucial, and should be sounded out before embarking on this kind of hospitality business development. It is very difficult for a single property to achieve critical mass for local tourism and, generally, several nearby properties need to be developed and this requires stronger local government support.

Lastly, proximity to large and growing urban centres is a two-edged sword. Urban encroachment onto this kind of natural food and wine retreat brings with it additional customers, but at the same time raises land values and may make alternative land uses more financially attractive. It also creates land use conflicts, e.g., residential properties usually dislike nearby agricultural activities (e.g., crop spraying and tractor usage), especially at night. It may be best to simply accept that long term capital gains from land value increases put a natural limit on the lifespan of these properties and an eventual change in land use is inevitable. This can be planned for.

To cope with encroaching urbanization, the Estate prepared a detailed proposal for rezoning some of its land on the north side around the existing vineyards for residential use and rezoning the building complex for agricultural industrial uses. Then, the proceeds from sale of the residential land over several years would be used to relocate the vineyard blocks to north facing pastures on the south side of the property underneath electricity distribution power lines where building can never be permitted. A natural woodland buffer would also be created between the Estate and the future nearby residences. Unfortunately, the local government chose to reject this proposal. 

Conclusions

The Wild Dog Estate is a good role model for how a rural property can be successfully developed to become a multi-faceted food and wine tourism destination with multiple mutually reinforcing lines of business that are stable and resilient. There are many synergies created by combining vineyard/wineries with restaurants and accommodation. Adding distilled spirits and olives to the mix strengthens and enhances these synergies further, as would adding beekeeping and honey production. And integrating cellar door and online sales and a membership club for all these food and beverage products strengthens them even further. These combined attractions increase customer patronage and loyalty and the chances for repeat visits and sales. It also greatly increases asset utilization to substantially reduce unit operating costs. Thus, it is a very compelling strategy.

Bringing in different partners with special expertise and resources to provide individual focus for each business line is also compelling. However, mechanisms must be put in place to ensure that all the partners have a coherent overarching vision for the entire property and that they effectively contribute to the development and maintenance of the common areas and shared visitor facilities.

In the authors view, it is crucial to begin any development of a rural retreat with a clear vision for the property and all the lines of business that it will eventually include. Then the entrepreneur should strategically plan how this vision can be best implemented in phases. The time required to establish particular business lines varies significantly and this must be catered for, e.g., vineyards and olive groves take 5–8 years to reach productive maturity, wineries may take 2+ years before aging and releasing their first vintage, and restaurants and accommodation facilities may take 1–2 years to build and establish a market presence. Lastly, the ultimate working lifespan of the property may be limited which can affect the pace and scale of the work and overall business.

As a final caveat, strong local government support is a key pre-condition for embarking on this kind of rural food and wine tourism business development journey.

Note

1. In Victoria, Australia local government revenues are largely derived from annual property taxes that are called “Council Rates”.

Acknowledgements

The authors gratefully acknowledge the generous assistance and support of the Wild Dog Estate for participating in this study.

Disclosure statement

No potential conflict of interest was reported by the authors. 

ORCID 

Richard Whitfield http://orcid.org/0000-0002-6737-095X 
Gert Noordzy http://orcid.org/0000-0002-8321-7349 

Case questions 

The following are some possible questions for when using this research in a case learning situation. 

Compare and contrast large “mass market” wine producers and small “boutique” wineries. 

What is the profile of desirable food/wine tourists and how should this affect the features and business scope and practices of boutique wineries? 

Thinking about the different (actual and potential) business lines within the Wild Dog Estate, how would you prioritize their relative importance to the overall success of the business? And if you were establishing a new boutique winery, in what sequence would you invest in and launch the different business lines? 

Winemaking is a core business line on the Estate. How and why has it evolved over the years? 

Recommend how you would structure the organization and manage the Wild Dog Estate and its various sub-businesses and coordinate their activities – explain your reasoning? 

In your view, do businesses have a natural “lifespan” – explain your thinking with reference to this case? 

Wild Dog Estate case study teaching notes are privately available from the authors via email from rcw@ewias.org. 

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