(FORTUNE Magazine) – Want a hobby that enables you to learn a craft, spend time outdoors, and impress your friends? You have a lot of company. The number of wineries in the U.S. has doubled in the past 20 years to more than 2,100, and many have been started by people who hold down demanding day jobs. Among the better known are T.J. Rodgers, CEO of Cypress Semiconductor; Joseph Antonini, former CEO of Kmart; Houston Rockets owner Leslie Alexander; and Michael Lynne, co-CEO of New Line Cinema.

Owning a winery can mean putting your name on the label, hanging out in places like Napa Valley or the Hamptons, and leading a Falcon Crest lifestyle. One caveat: Bring plenty of money. As hobbies go, winemaking ranks with polo playing and yacht racing as a financial sinkhole. You must be prepared to invest lots of capital up front and sustain years of losses before seeing any kind of payback.

"I think most people enter the wine business because it's an adventure," says Oregon businessman Robert Pamplin, who made a fortune in the sand-and-gravel and textile businesses before buying Chateau Benoit, one of the state's oldest wineries. "But unless you've inherited a 500-year-old vineyard, it's very marginal in profitability, and worse when you look at the return on investment."

Some people have found ways to limit the investment and still have fun. Bill Murphy, who retired as head of Internet marketing at Hewlett-Packard last year, started planting grape vines behind his home in Saratoga, Calif., in 1987. He bottled his first vintage five years later, and was producing a couple of hundred cases of chardonnay annually when he decided to turn his hobby into a business. Rather than raise capital to buy more vineyards, Murphy persuaded neighbors like Bill Krause, former CEO of 3Com, and Inktomi CEO David Peterschmidt to plant vines in their backyards and let him harvest the grapes.

Now Murphy has about 20-plus vineyards in Silicon Valley supplying him with fruit, enabling him to bottle 17,500 cases annually at his Clos LaChance winery. "Winemaking is very seductive, but to be a success, you have to take it seriously as a business," he says. Recently he decided to add another 50,000 cases of capacity, and he's bracing himself for more losses. "Anytime you increase production, the cost will be greater than the revenue you generate for a couple of years." Eventually, he hopes to net about an 8% return on sales.

After years of work, Walter Channing Jr., proprietor of Channing Daughters Winery on Long Island's East End, finally sees signs of profitability ahead. Channing, a New York venture capitalist specializing in medical startups, began in the 1970s to accumulate farmland in the Hamptons as an investment. When the region's winemaking potential started to ripen (Long Island now has 47 vineyards), he bought 500 vines to plant on his property. He produced his first vintage in 1987: 19 cases of chardonnay, which he served to friends amid "thunderous applause."

Channing and his wife, Molly, spent the '90s learning more about winemaking before deciding to turn their hobby into a moneymaking enterprise. Says he: "One of my rules is, Don't spend money until you know the business." He hired a full-time winemaker, designed a label, and registered a name. "I've got four girls, and I thought Channing Daughters would have more family appeal than something like Osprey's Domain." With a full-time staff of seven and 30 acres of grapes under cultivation, Channing expects to produce about 5,000 cases this year. He'll sell about half of them at the winery for $13 to $19 a bottle and distribute the remainder through restaurants and wine stores. For extra income, he leases out his vineyards for weddings and charitable events.

While Channing has developed a fully integrated operation, other part-timers limit their financial exposure by taking smaller sips. Sara Peterson, a partner in a big San Francisco law firm, started cultivating vines with her husband on 15 acres that they owned in Sonoma Valley to forestall development pressures. "We weren't quite sure whether it would be a hobby or a business, but it turns out our grapes are really quite special," she says. Rather than produce and market wine themselves, they sell their grapes to Ravenswood, one of the area's premier wineries, which markets it as Cooke Zinfandel. Demand for the wine is so high--even at $35 a bottle--that Peterson is limited in the amount that she can buy back for herself.

Another lawyer, Seattle environmental attorney Paul Beveridge, started bottling wine made from other people's grapes as part of a restaurant that he operated with his wife. Although they eventually tired of the food-service business, they kept the winery open and expanded it to 1,000 cases a year. "It was a hobby that got out of hand," he says."We've made a profit on paper but always dumped it back into the business." Beveridge, who takes time off from his law practice to help with the winery, will soon be accepting more duties because his wife has quit winemaking to become a professional bicycle racer.

So many well-heeled amateurs are getting into the wine business that a backlash has developed. Serious winemakers complain about "vanity vintners" who treat their boutique wineries as another rung for social climbing, like joining the board of the Getty Museum or racing ocean yachts. True enthusiasts, though, won't be dissuaded from their vines and vats. "For a reasonable investment, meaning several hundred thousand to a million dollars, you can produce a wine that will compete in the world marketplace," says Bill Nelson, vice president of the American Vintners Association. "Of course, everything is easier if you're fabulously wealthy."

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