Thursday, February 09, 2012

Wines & Vines: Virginia Industry Doubled in Last 5 Years

Virginia Wine Industry Doubles in Five Years
Bucking economic trends, employment and revenues soar
by Hudson Cattell

Virginia has 15 wine regions.

Richmond, Va.—How much does the wine and winegrape industry contribute to the Commonwealth of Virginia each year? Almost three-quarters of a billion dollars, in terms of economic impact, according to a new study. Even more impressive during a period of economic downturn, the figure has more than doubled in the last five years, from $362 million to $747 million. While unemployment soared nationally, in Virginia, the number of wine industry jobs increased from 3,162 to 4,753 between 2005 and 2010.

The economic impact study for 2010, updated in this month, was performed by St. Helena, Calif.-based Frank, Rimerman & Co., which conducted the 2005 study under its former name, MKF Research. Commissioned by the Virginia Wine Board, both studies were carried out by the same analyst.

The report, which displays key economic impact figures for both 2010 and 2005, dramatically exhibits the industry’s growth.

The entire report is online at the Virginia Wine Board website, including much more detail and explanation.

Most industry growth came from the addition of small wineries producing less than 10,000 gallons per year. As wineries increased in quantity, so did the number of tourists visiting them; the number of employees and the amount of wages paid. More than 80% of the wine produced in Virginia came from grapes grown in the state; both the number of growers and vineyard acreage increased. While growth has been steady, yields and crop values have fluctuated.

Annette Boyd, director of the Virginia Wine Board, told Wines & Vines she is very pleased with the results. “We knew that there would be an increase in growth, but we didn’t know by how much. We’ve had three years of double-digit growth, and we know that we need to have more people growing grapes.”

Reaping the benefits of growth
Virginia’s production of 1 million gallons of wine in 2010 made Virginia No. 12 in U.S. wine production. Its 2,700 total grape-bearing acreage made it No. 8 in the nation. The state currently has 210 wineries, for a No. 5 ranking, and it’s also fifth in tons of grapes produced. The growth continues.

Taxes paid to federal, state and local governments have risen from $36 million in 2005 to $85 million in 2010. Governments are certainly appreciative of the tax revenues that the industry brings in each year, but an economic impact study more loudly calls attention to the industry’s value.

When the Virginia study was released this month, both Virginia Gov. Bob McDonnell and Todd P. Haymore, secretary of agriculture and forestry, were moved to comment. Gov. McDonnell stated, “This study clearly quantifies that growth with empirical data, and shows the significant economic impact that the industry is having across the Commonwealth.”

Haymore commented: “The study shows what powerful economic drivers agriculture and tourism, two of Virginia’s largest industries, can be for the overall economy.”

The grape and wine industries of many states have performed similar economic impact studies; they have been credited with influencing legislatures and administrations to help and promote the industry in their states.

As Annette Boyd told Wines & Vines, “For the past two years, we’ve had to use 2005 figures. It’s very nice to have fresh data on hand.” The Virginia industry expects to reap material benefits from the money it spent to revise the study.

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