Proximity to the target market is deemed desirable for tourism destinations, including wine-tourism. Yet, it also translates into a range of problems. While research into wine regions has exponentially grown over the last two decades, the majority of research in wine tourism focuses on the demand side with little attention to supply side dynamics that impact development. This paper considers the realities of the supply side of a wine tourism region, i.e. the perspectives of business owners, service providers and authorities, and reports on the perceptions and challenges as noted by a range of stakeholders in the Swan Valley in Western Australia as a distinct wine tourism area. The study highlights how proximity to an urban market can be a major challenge for an industry based on agri-business in a rural setting. The research has policy implications for local and state authorities, particularly in terms of alignment relating to land-use and infrastructure.