Key Concepts with Frances Spangler, CFO at Bricoleur Vineyards
Frances Spangler did not take a direct route to wine country. She spent two decades in New York and London working at Arthur Andersen, one of the world’s largest public accounting firms, before trading financial statements for fermentation tanks. When she finally made the move to Northern California, she helped build Sugarloaf Crush, a premium custom crush facility on the northern edge of Sonoma Valley. That experience of building a high-quality winemaking operation from inception gave her a perspective on winery finance that most CFOs never develop: she understands both the numbers and what it actually takes to make the wine.
Now serving as CFO at Bricoleur Vineyards, a premium Sonoma County estate with big ambitions and rapid growth, Frances sat down with Lauren Heindel to walk through winery cost accounting from the ground up. This is not a conversation about software or shortcuts. It is a clear-eyed look at how wineries should be thinking about what it costs to make what they sell, why the wine industry operates differently from other manufacturing sectors, and what better costing actually changes about the decisions you make every day.
In this episode, we cover:
What cost accounting is and why it operates differently in wine than in other manufacturing industries
The five core components that make up winery COGS and how to think about each one
Why barrel depreciation creates a fundamental mismatch between cost and benefit, and how to account for it
How to handle grape costing when you farm your own fruit, and why the "sell to yourself" question matters more than most winery owners realize
The Rosé dilemma: how to cost Saignée juice without distorting your P&L on either the rosé or the red wine it came from
When to use GAAP-based financial accounting versus managerial accounting, and what each one actually tells you
What is cost accounting, and why does it work differently for wineries?
Cost accounting is the process of capturing all production costs, both fixed and variable, and applying them to finished goods inventory. For a winery, that means tracking everything that goes into making a bottle of wine and matching those costs to revenue when the wine is sold. It is the financial foundation for pricing, margin analysis, and long-term planning.
But Frances is quick to point out that winery cost accounting is not as clean as it sounds. The wine industry lacks the standardized accounting guidance that other manufacturing sectors have built up over decades. There is no dedicated GAAP guide for wineries the way there is for banking, insurance, or oil and gas. That hole means finance professionals in wine have to piece together best practices from specialized accounting firms, peer networks, and their own judgment in real time.
There's no official literature that really speaks to wine accounting. There's no GAAP guide. But ultimately, accounting concepts are the same across everything. It's the application that gets complicated.
Frances Spangler , CFO
Bricoleur Vineyards
The core mechanics, raw materials, labor, overhead, are the same concepts you would apply in any manufacturing business. What changes in wine is the complexity of the inputs, the long timelines between cost and revenue, and the judgment calls that do not have a rulebook to consult. A wine that costs you money to make in 2023 might not generate revenue until 2027. Standard manufacturing accounting was not designed with that timeframe in mind.
If you are building your winery's cost accounting process from scratch, Frances recommends starting with firms that specialize in wine. Moss Adams and BPM both have dedicated wine accounting practices and can answer questions that a generalist accountant may not have encountered before. The more people you can talk to who have already solved the same problems, the faster you move.
Breaking down the true cost of a bottle of wine
Before you can build an accurate winery costing model, you need to know what actually goes into the number. Frances walks through five core components that make up the cost of producing wine, each one with its own accounting considerations.
- Grapes come first, whether you grow them yourself or purchase from a grower. This is typically the largest cost driver, and how you account for it depends heavily on whether or not you farm your own fruit, which carries its own set of complications covered below.
- Winemaking costs vary significantly depending on whether production happens in-house or at a custom crush facility. Custom crush simplifies some of the costing because you are paying an invoice rather than tracking internal labor and overhead. But it also means less visibility into where the costs are coming from and less control over how they are allocated.
- Storage and aging is the category that makes wine genuinely different from other manufactured goods. A barrel is not the same cost object as a stainless steel tank. The type of vessel, how long the wine ages, and how that aging affects quality all feed into how you allocate costs over time, sometimes over years.
- Overhead covers the fixed and variable costs that do not attach neatly to a specific lot: labor, utilities, facility maintenance, insurance, and the general cost of keeping a winery running. These need to be allocated across your production, and the methodology you choose matters for the accuracy of your bottle cost.
- Packaging closes the loop. Bottles, corks, labels, capsules, and secondary packaging all add real cost before a bottle reaches a customer, and they are often underestimated in early-stage winery financial planning.
Frances recommends tracking grape costs by variety and vineyard block rather than as a single lump-sum input. The more granular your grape costing, the more clearly you can see which SKUs are actually profitable and which ones are quietly being subsidized by the rest of your portfolio.
Barrel depreciation and grape allocation: where winery costing gets complicated
Two of the most common winery costing challenges Frances works through are barrel depreciation and grape allocation. Both involve a gap between what the accounting says and what is actually happening in the business.
With barrels, the standard approach is straight-line depreciation over four years. A barrel that costs $1,200 generates $300 in annual depreciation expense, or roughly $1 per bottle if you age 300 bottles in that barrel each year. The math is simple and consistent. The problem is that a new oak barrel contributes significantly more to wine quality in year one than it does in year three or four. The flavor and texture impact from fresh oak declines over time, but the depreciation schedule does not reflect that curve.
Ultimately you have a mismatch between the cost and the benefit if you are depreciating on a straight-line basis, when the value is given in a non-straight-line fashion.
Frances Spangler , CFO
Bricoleur Vineyards
This does not mean straight-line depreciation is wrong for your GAAP books. It is consistent, auditable, and that is what financial accounting requires. But if you are using barrel depreciation data to make decisions about which lots to put into oak, or how to price wines that were barrel-aged, you need to understand what that number is and is not telling you.
Grape allocation is a different kind of problem. If you farm your own fruit, you face a decision: do you “sell” those grapes to yourself at market rate, or at a break-even cost that captures your actual farming expenses? Break-even costing ensures that every dollar spent growing grapes ends up in your bottle cost. Market-rate costing lets you benchmark your farming against what you could buy fruit for on the open market, and sometimes that comparison reveals something surprising.
Frances has seen wineries realize that the cost of farming their estate Sauvignon Blanc exceeds what the market will pay for a bottle under their label. In that scenario, the costing analysis raises a real strategic question: would you be better off selling your grapes and sourcing someone else’s fruit at a lower price point? It is the kind of question that does not surface until you are tracking grape costs at the block level.
If you grow your own grapes and also sell to outside buyers, you have a market reference point that most wineries do not. Use it. Knowing what your grapes trade for externally gives you a real anchor for your internal costing decisions, rather than an estimate you have to defend without data.
The rosé dilemma: how to cost a by-product from Saignée production
One of the more nuanced cost accounting decisions wine producers face involves rosé made using the Saignée method, where juice is bled off from a red wine fermentation rather than pressed from grapes grown specifically for rosé.
The question Frances poses is straightforward: if that juice would otherwise go down the drain, does it carry any cost? And if you use it to make rosé, how should that affect the cost of both the rosé and the red wine it came from?
There are two defensible approaches. The first treats the juice as essentially free, a by-product that had no value until you decided to capture it. Under this framework, your rosé only needs to cover its marginal costs (bottling, packaging, direct production) to be worth making. It will look highly profitable because you have assigned almost no raw material cost to it.
The second approach allocates a portion of the Pinot Noir’s juice cost to the rosé. This is technically more accurate from a GAAP standpoint because there is real cost embedded in that juice. But it also means the rosé needs to carry a higher price to appear profitable, and if the market will not support that price, the analysis might incorrectly suggest you should not make it at all.
As long as you can exceed those marginal costs, it probably makes sense to use that juice, even though looking at the actual costing, it might not look like it's going to make sense for the rosé alone.
Frances Spangler , CFO
Bricoleur Vineyards
Frances recommends looking at both lots together rather than in isolation. The decision about whether to make rosé from Saignée juice is not purely a rosé question. It is a question about the total economics of your Pinot Noir production, and the answer can shift year over year based on yields, market conditions, and what
your label can realistically support at retail.
Whatever costing method you choose for by-products, consistency matters more than perfection. Your GAAP books need to handle this the same way every year. The real analytical work happens in your managerial accounting, where you can run the numbers differently each year to see if your assumptions still hold given current conditions.
Financial accounting versus managerial accounting for winery decisions
One of the most useful frameworks Frances brings to winery finance is the distinction between financial accounting and managerial accounting, and knowing which one to reach for depending on the question you are trying to answer.
Financial accounting follows GAAP and produces your formal financial statements: the balance sheet, income statement, and cash flow statement. Its purpose is historical record keeping and external reporting. It is consistent, auditable, and essential, but it is a backward-looking picture of what already happened.
Managerial accounting is where the forward-looking work lives. Budgeting, forecasting, scenario analysis, and operational decision making all fall here. The underlying data is often the same data sitting in your general ledger or accounting software. You are just using it differently, to answer specific business questions rather than to produce a compliant financial statement.
What you see in QuickBooks, or whatever your general ledger is, that is a take on what costing is telling you. But if you're wanting to understand what you should do, there really are other ways you can take that same data and repurpose it, and look at it in different ways to understand what the right operational decision is.
Frances Spangler , CFO
Bricoleur Vineyards
For a winery owner or finance professional, this distinction matters because the same cost information can tell a very different story depending on how you frame the question. Your GAAP barrel depreciation number tells you what to report. A managerial analysis of barrel cost versus quality contribution tells you whether to keep using that oak program at all. Both answers come from the same underlying data. They are just answering completely different questions.
Frances recommends developing the habit of asking which kind of answer you actually need before pulling a report. If you are preparing for an audit, a bank conversation, or investor reporting, you need the GAAP number. If you are deciding whether to add a new SKU, change your fruit sourcing, or evaluate whether a rosé program makes sense, you need the managerial view. Knowing which lens to apply keeps you from drawing the wrong conclusion from accurate data.
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Frequently Asked Questions about Winery Cost Accounting
What is cost accounting for wineries? +
Cost accounting for wineries is the process of capturing all production costs, both fixed and variable, and applying them to finished case goods inventory. It tracks the true cost of making each bottle of wine so that expenses can be matched to revenue when the wine is sold. This supports pricing decisions, profitability analysis, and long-term financial planning. Unlike other manufacturing industries, wine lacks a dedicated GAAP guide, so wineries typically rely on industry-specific accounting firms and peer networks to establish best practices.
How do wineries calculate COGS (cost of goods sold)? +
Winery COGS includes all direct production costs: grape costs (farmed or purchased), winemaking labor and facility expenses, barrel and vessel costs, overhead allocated to production, and packaging. Wineries track these costs by lot or SKU and apply them to inventory as wine moves through production. The challenge is that wine's long aging cycle means costs are often captured months or years before revenue is recognized, which makes accurate cost matching more complex than in most manufacturing businesses.
What goes into the cost of a bottle of wine? +
The five core components in winery cost accounting are: grape costs (whether farmed in-house or purchased from a grower), winemaking costs (in-house production or custom crush), storage and aging costs (barrels, tanks, and related depreciation), overhead (labor, utilities, and facility expenses), and packaging (bottles, labels, corks, capsules, and other materials). Each component requires its own tracking methodology, and the accuracy of your bottle cost depends on how well you account for all five.
How should wineries handle barrel depreciation in their cost accounting? +
Barrels are typically depreciated using the straight-line method over four years. The limitation of this approach is that a new oak barrel delivers significantly more quality benefit in year one than in subsequent years, creating a mismatch between the cost allocated and the value actually received. Straight-line depreciation is appropriate and consistent for GAAP financial statements. For internal decision making, it helps to analyze barrel costs alongside the actual contribution the barrel is making to the wine rather than relying on the depreciation schedule alone.
What is the difference between financial accounting and managerial accounting for wineries? +
Financial accounting follows GAAP and produces historical financial statements for external reporting: balance sheets, income statements, and cash flow statements. Managerial accounting uses the same underlying data to support internal decisions, including budgeting, forecasting, and operational analysis. Financial accounting tells you what happened. Managerial accounting helps you decide what to do next. Both matter for a winery, but they answer different questions, and using one when you need the other leads to decisions based on an incomplete picture.