It’s important to note that, as the name implies, COGS only refers to the cost of wines sold during a given period-not the costs incurred in the process of making wine during that period.Ĭonsistent with best practices, when a wine is sold, the cost of having made that specific wine is recorded as COGS, concurrently with recording the revenue from the sale of that wine. COGS. This is the cost-COGP-previously incurred in making the specific wines that were subsequently sold during a given period, such as a month, quarter, or year.It includes the raw materials, services, labor and overhead-direct and indirect costs-costs incurred up to, and through the point of bottling the finished wine. COGP. Also known as wine in process (WIP), this encompasses all costs involved in the process of making wine.Here’s how they’re defined in the context of wineries: In order to know your cost of goods sold (COGS) in a period you must first know what it cost you to produce those wines-this is referred to as the Cost of Goods Produced (COGP). In this article, we’ll break down how to obtain the information you need to understand your profits and costs-including relevant accounting basics and strategies to categorize various production costs. This includes determining what expenditures to include in production costs and how to allocate them as well as accurately tracking the costs and movement of your wine inventory throughout the winemaking process by varietal as well as by vintage and blend. While this might sound simple, there are many challenges associated with calculating the final cost of your wine. This is why knowing what it costs to make your wine is so important. The greater understanding and control you have over your costs, the greater your chance for running a profitable winery. The market generally determines what someone is willing to pay for your wine, so the cost of making and selling that wine largely determines how much profit is left over. Your winery’s profitability is driven by two things–what you can charge for your wine and what it costs to make and sell it.

To evaluate your winery’s performance, it’s essential to have insight into its profit margins.

Cogs accounting wine production