Calwineries

$162 Billion in Wine, Grape and Grape Products and Growing!

January 17th, 2007 – The MKF Research LLC of St Helena released the results of their study on the economic impact of wine, grapes, and grape products. The outcome? It turns out that these products contribute $162 billion annually to the United States Economy.

The news was delivered today in Washington D.C. by the Congressional Wine Caucus, a 182 member coalition of Congressmen and women from around the country. The study was titled “The Impact of Wine, Grapes and Grape Products on the American Economy: Family Businesses Building Value.” It took into account a almost every major contributing factor from the wine, grape, grape juice, table grape and raisin industries, including; agricultural statistics, employment, taxes, and product revenues.

The MKF modeled their research after IMPLAN, which was developed by the U.S. Forest Service and University of Minnesota. They measured the direct, indirect, and induced economic impact of wine, grapes and grape products. It seems that the MKF covered all of their bases in this study, which is considered by many to be “fully comprehensive.”

> Congressman Mike Thompson of St. Helena, co-chair of the Congressional Wine Caucus said “Grapes, wine, and other grape products are truly an economic catalyst with tremendous growth potential in all 50 states. Policymakers can maximize these economic benefits by supporting legislation that enhances the wine and grape-product industry. Our support will ensure that this all-American industry continues to produce superior products and provide a strong contribution to our economy.”

Congressman Thompson is right about the potential of grape and grape products potential across the country. The number of U.S. wineries increased from 2,904 in 2000, to 4,929 in 2005. According to the study, they contributed over $11 billion in revenue from winery sales alone. In addition to winery sales; distributor revenue contributed $2.7 billion, restaurant wine revenue was just under $10 billion and wine tourism generated over $3 billion.

As you can see, the American wine industry is booming, and is a major contributor to the U.S. economy. But what does this mean for the wine industry and their surrounding communities? Congressman Randanovich of Mariposa Ca, noted that the wineries and vineyards have contributed over $129 million to charitable causes. And the wine, grape and grape products industry generated over 1.1 million full-time jobs nationwide.

However, there are challenges facing the wine and grape industry, which were examined in the report. Some of the most important, included; scarcity of skilled labor, climatic risks, volatile and ever-changing market for wine grapes, shortage of certain types of wine grapes, highly competitive market, increasing pressure from imports, price-value pressure, continuing restrictions on market access reflecting the legacy of Prohibition.

Looking beyond these challenges, there is hope. The study also revealed several opportunities for the wine industry, including; growth of wine tourism, a growing market for wine in the U.S., research documenting many positive health benefits of wine and grape products, and direct-to-market wine shipments within and between many states.

These opportunities are the sparkle in the eye of California’s wineries and vineyards; seeing that roughly 90% of the nations wine production occurs in California. The closest competitors are Washington State and New York, each with a 3% contribution. Even with the inherent limitations of the wine industry, this growth doesn’t seem like its going to stop or slow anytime soon. With any phenomenon, the wine industry will eventually reach its carrying capacity, but since the wine consuming market is growing at a relatively proportional rate, this carrying capacity is not anywhere in sight.