The University of Georgia

Transcription

1 The University of Georgia Center for Agribusiness and Economic Development College of Agricultural and Environmental Sciences Wine Industry Survey CR January, 2009 Prepared by: Kyle Watts, Kent Wolfe, Archie Flanders and John McKissick 1

2 Introduction The Center for Agribusiness and Economic Development (CAED) conducted two surveys in the summer and fall of 2008 to obtain detailed information on both wine operators and winery visitors. There has been limited economic research into Georgia s wine industry even though there are 24 wineries currently in operation and a number more in the planning phase or scheduled to open over the next couple of years. Given the size of the industry and its level of growth, there has been little research into its economic impact on local and state economies as well as winery visitor demographics. Unlike several other states that have completed economic impact studies, Georgia does not have a detailed analysis of the wine industry, with the exception of a 2005 overview study completed by Tom Tanner, Carl Vinson Institute, for the Winegrowers Association of Georgia. Given the number of wineries and acres of grapes in Georgia, the industry s economic and employment impact on local and state economies is significant. California, Texas, Colorado, and other states conducted research to provide information on the wine and grape industry. Impact studies typically provide brief historical information, a current summary of the industry, and finally data on both the grape industry and the wine -making industry. More importantly, impact studies provide an economic evaluation of all levels of the industry, from growing grapes to agritourism. Georgia wineries are broken into a northern region and a southern region due to differences in climates. Pierce s disease prevents lower elevations from growing viniferous grapes. Generally, Georgia s northern wineries produce more traditional vinifera wine in addition to muscadine wine, whereas the wineries in the southern region of the state generally produce wine and other products derived from muscadines or other fruits. Methodology Two surveys were created to collect detailed information on the industry. The first survey, entitled Georgia Winery Survey, focused on collecting cost figures for operating a winery while providing additional descriptive information regarding winery operations. A second survey, Georgia Winery Visitor Survey, was created to obtain detailed expenditure data as well as demographic characteristics from Georgia winery visitors to help understand their importance. The expenditure information will be used to estimate the economic impact of Georgia s winery visitors. The Georgia Winery Survey contains questions regarding visitor totals, marketing, grape acquisition, expenditures, revenues and future plans as well as listing any obstacles encountered by winery operators. Less than one-third of the questions in the winery survey are required for impact analysis. The other questions pertain to marketing, traffic patterns, obstacles faced by operators, and expansion plans and are included in the winery survey to provide descriptive statistics of Georgia winery operations for potential winery operators and winery analysts. Georgia wineries were identified using the Georgia Alcohol and Tobacco Tax Division list. The winery survey had a cover page created on the CAED letterhead thoroughly explaining the study objectives and how the information obtained through the surveys will be used. The cover letter also solicited cooperation from wineries in completing the survey and describes the 2

3 importance of the survey in defining the economic impact of the industry on both the state and local levels. The survey packet included a consent form explaining the participant s rights under Federal Law and the University of Georgia s Human Subjects Policy. One significant component associated with wineries is visitors. Winery visitors can have a significant impact on the local economy as they spend money on food, crafts, gas, lodging and other products and services in the area. The second survey, Georgia Winery Visitor Survey, was implemented to capture the impact of winery visitors and their expenditures associated with the various activities they participated in as a result of coming to the area and visiting the winery. The Georgia Winery Visitor Survey was created to captures per-person per-day spending in the area surrounding the survey. This allows the derivation of an average expenditure per person dollar amount. This figure can be used to estimate the total number of visitors at a winery (winery visitor totals for 12 month period) and how much they spend. The participating wineries were given 50 surveys to be administered to visitors. The wineries could request more if needed. The survey had a page explaining the project as well as a consent form relaying the respondent s rights to not participate. The survey, cover page, and consent form were made available to winery visitors. These materials will hopefully explain any questions or concerns the respondent may have, but contact information for the CAED was included in the event any further questions arose. The Georgia Winery Visitor Survey was also distributed to participating wineries that are not members of WAG. Winery festival visitors were surveyed to determine how similar or different festival visitors were from those at non-festival winery visits. A total of 248 Georgia Winery Visitor Surveys were completed by visitors. The Georgia Winery Survey started on June 27, 2008 and ended on October 24, The Georgia Winery Visitor Survey began on July 9, 2008 and ended on October 26, A total of 17 Georgia wineries completed surveys and a total of 246 winery visitors participated in the study. 3

4 Section I. Georgia Winery Survey Results This section of the report provides descriptive information regarding the wineries that participated in the research project and their associated activities and operations which are derived from the Georgia Winery Survey. Of the 24 wineries that were identified and sent surveys, a total of 17 participated in the study, a 71% response rate. Table 1 presents a summary of the results obtained from winery operators. The results are presented in terms of all of Georgia s wineries, the North Georgia Wine Highway (NGWH) wineries and non-ngwh wineries. Table 1. Georgia Winery Survey Summary Results Variable All GA Wineries NGWH Wineries Non-NGWH Wineries Number of Wineries Surveyed Years in Operation Mean Median Experience Seasonality Yes 94% 100% 87% No 6% 0% 13% Seasonal Traffic Patterns Summer 23% 29% 19% Fall 37% 38% 36% Winter 20% 11% 27% Spring 19% 22% 18% Annual Visitors at Each Winery Mean 9,863 35,943 15,271 Median 4,639 8,000 3,500 Visitor Percentage by Category Winery visitors 70% 68% 73% Special event visitors 14% 17% 10% Gift shop visitors 9% 0% 17% Restaurant visitors 7% 15% 0% Lodging or other amenities 0% 0% 0% Total 100% 100% 100% 4

5 Table 1. Georgia Winery Survey Summary Results - Continued Variable All GA Wineries NGWH Wineries Non-NGWH Wineries Number of Wineries Surveyed Out-of-State Visitors Where most out-of-state visitors come from (1 being most important and 6 being least important) Florida South Carolina North Carolina Alabama Tennessee Other Instate Visitors Where most in-state visitors come from (1 being most important and 6 being least important) Metro Atlanta North Georgia Savannah Augusta Other Website Yes 88% 100% 71% No 13% 0% 29% Percent of Business Derived From Website Mean 39% 42% 27% Median 35% 50% 20% Winery Visitor Draws Scenery 27% 27% 23% Events 24% 20% 31% Culture 18% 23% 8% Outdoor recreation/camping 27% 23% 38% Other 4% 7% 0% Work Individually With Local Businesses to Promote Winery Yes 65% 88% 50% No 35% 13% 50% 5

6 Table 1. Georgia Winery Survey Summary Results - Continued Variable All GA Wineries NGWH Wineries Non-NGWH Wineries Number of Wineries Surveyed Total acreage (mean, median) 89.9, , , 31.0 Individual Vineyard Characteristics Acreage in grapes (mean, median) 29.5, , , 11.0 Year vineyard was established (mean, median) 1995, , , 1994 Acreage expansion plans in next 1 year (mean, median) 4.9, , , 5.0 Acreage expansion plans in next 5 yrs. (mean, median) 14.9, , , 25 Wineries That Stock and Sell Wine From Other GA Wineries Yes 19% 38% 0% No 81% 63% 100% Number of cases sold annually by each winery (mean, median) 42, , 50 0, 0 Wineries That Would be Interested in Selling Other GA Wine Yes 30% 25% 33% No 70% 75% 67% Retail Wine Sales Price Ranges Less than $10 per bottle 12% 0% 24% $10 - $15 per bottle 42% 26% 58% $16 - $25 per bottle 35% 53% 18% Above $25 per bottle 11% 21% 0% Production Capability for Maximum Number of Cases (Annually) at Each Winery Mean 6,418 7,625 5,954 Median 5,000 6,250 5,000 Winery Expansion Plans For Selected Categories (mean) Wine processing equipment 8% 21% 10% Wine storage equipment 18% 19% 17% Bottling equipment 26% 25% 15% Acreage devoted to grapes 17% 4% 33% Retail facility 23% 14% 33% Event facility 20% 13% 29% Gift shop facility 7% 13% 0% Restaurant facility 21% 26% 14% Lodging or other amenities 33% 38% 29% Support Having American Viticulture Areas in State Yes 80% 100% 57% No 20% 0% 43% Seasonality Ninety-four percent of participating wineries reported seasonality in customer traffic and sales. Figure 1 presents the visitor traffic by seasons. The figure indicates breakdown of visitors by season for all the wineries. Fall is the busiest season and winter and spring are the slowest. In north Georgia, the increased visitor traffic can be partly attributed to autumn activities found in 6

7 the north Georgia mountains. These activities include fall festivities, leaf color observation; and other autumn events. In contrast, a number of the wineries reported that they close their tasting rooms during the winter season because of low visitor traffic levels. Figure 1. Seasonal Traffic Patterns Annual Visitors The survey asked the wineries to provide an estimate of the total number of visitors they host annually. On average, the wineries reported that they had 9,863 people visit their winery in However, this figure may be skewed because of the range of annual visitors reported by each winery. The median may offer a better representation. The median number of visitors to Georgia wineries was estimated to be 4,639 annually. The mean value will be used to represent the number of visitors non-responding wineries entertain annually. Extrapolating the mean annual visitors calculated from the participating wineries to the non-participating wineries, it is estimated that Georgia s 24 wineries had 236,723 visitor days in The 236,723 figure was calculated by using the mean visitor days reported by the 17 participating wineries then multiplying that value (9,863) by 24 to represent all of Georgia s wineries. A visitor day represents each time a person visits a winery. Georgia wineries range significantly in size from less than 1,000 visitors to 50,000 or more visitors. Table 2. Annual Visitation Variable < 1,000 1,000 < 5,000 5,000 < 10,000 10,000 < 20,000 All GA Wineries NGWH Wineries Non-NGWH Wineries Visitor Origins 7

8 Table 2 displays the percentage distribution which winery operators reported their customers traveled. The table indicates that a majority (81.8%) of visitors are traveling up to 100 miles to the winery. Nearly four out of ten (36) visitors are traveling 50 miles or less. A small but significant number of visitors (18.2%) travel 100 miles or more to patronize the wineries. The results indicate that visitors are not traveling moderate distances to visit Georgia wineries. Table 2 Distance Customers Traveled to Winery Miles Percentage 20 miles or less miles miles miles miles or more 4.6 Total 100 The survey asked winery operators to rank five selected states and another category in which they could add a state, in order of visitors origins. The question is used to examine where most of the out-of-state visitors are coming from according to the winery operator. Florida is perceived as the origin of most out-of state visitors to Georgia wineries. This ranking is true among the NGWH wineries and those outside this designation. The ranking of the states providing the most visitors, excluding Georgia, are listed in Table 3. The order of importance (starting with most important) is as follows: Florida, South Carolina, North Carolina, Alabama, Tennessee, and Other. The results for the NGWH wineries and the non-ngwh wineries are similar with the exception of a few entries. Non-NGWH wineries indicated more visitors came from Alabama as opposed to North Carolina. Similarily, winery operators were asked to rank different regions of Georgia with regard to visitor residences as a measure of in-state visitor importance. For all Georgia wineries, most visitors reside in metro Atlanta, North Georgia, Savannah, and Augusta These are major population centers in the state and the results are not unexpected. Non-NGWH wineries specified Savannah was more important than north Georgia regarding visitor volume. Outside of North Georgia wineries, the next largest group is located in south Georgia near Savannah. Figure 2 is a map of home locations of winery visitors obtained from the visitor survey zip codes. The map illustrates that Florida visitors are the most significant. The map indicates that Georgia visitors are likely from metro Atlanta and north Georgia. 8

9 Table 3 Importance of Surrounding States and Regions Within Georgia All GA Wineries NGWH Wineries Non-NGWH Wineries Out-of-State Visitors Where most out-of-state visitors come from (1 being most important and 6 being least important) Florida South Carolina North Carolina Alabama Tennessee Other Instate Visitors Where most in-state visitors come from (1 being most important and 6 being least important) Metro Atlanta North Georgia Savannah Augusta Other

10 Figure 2. Home Location of Winery Visitors 10

11 Marketing Marketing plays a significant role in attracting customers and increasing sales through distribution channels. Table 4 shows the most common marketing strategies used by the wineries that responded to the survey. Marketing through the internet is clearly the most popular marketing activity, followed by the use of brochures. Internet marketing includes both the use of a website and electronic mailing. The wineries use ing databases to keep visitors informed of upcoming events and specials. Eighty-seven percent of the participating wineries reported having a website. Of the wineries using a website, the wineries attribute 39.2% of their business to their website. Table 4. Marketing Techniques Reported by Winery Percentage Internet 32.7 Brochures 24.5 Magazines 14.3 Travel Guides 12.2 Radio 10.2 Other 4.1 Television 2.0 Area Attractions Table 5 shows winery responses on attractions that draw visitors to the area other than the winery. Scenery, events, and outdoor recreation/camping were all important factors in attracting visitors to a winery. North Georgia offers a wide variety of tourism activities and attractions which lures large numbers of people from metro Atlanta and surrounding areas. Fall is the busiest season due to all of the colorful autumn scenery and many events offered throughout the state during that time of year. Table 5 Winery Visitor Draws Attraction Percentage Scenery 26.7 Outdoor Recreation/ Camping 26.7 Events 24.4 Culture 17.8 Other

12 Georgia Winery Facts The wineries were asked the date the facility was created. Those wineries responding to the survey are on average 6.6 years old. Given the range of years wineries were open, a better indication may be the median number of years a winery has been in operation which is 4.8 years. This provides insight regarding the relatively new growth in Georgia s wine industry 1. The average Georgia winery has a total of 89.9 acres. Of the 89.9 acres of property, 29.5 acres are devoted to grape production. The survey results found that the average vineyard was established in This does not reflect the average age of the winery (6.6 years). Many wineries started out as vineyards prior to the addition of a wine-making facility. This is typical as grape vines do not start producing significant fruit for three to five years. Interestingly, the study found that over the next year, wineries plan to expand the acreage devoted to grapes by an average of 4.9 acres and an additional 14.9 acres in the next five years. Seventy percent of wineries reported purchasing grapes from other wineries or vineyards to meet the demand for wine production. Respondents who acquired grapes or grape juice from outside of Georgia purchased from California and New York. Twenty-four percent of wineries reported selling grapes or grape juice to other wineries. Wineries selling grapes or grape juice out-of-state sold their product in Alabama, North Carolina, South Carolina, Tennessee, and Virginia. Wineries were asked about the contractual agreement they had for purchasing grapes. Twenty-two percent of wineries reported purchasing grapes using long-term contracts (3+ years), 22% using short-term contracts (less than 3 years), and 56% purchased using the spot market. Interestingly, the results found no correlation between the size of a winery and the use of contractual agreements. Nineteen percent of participating wineries reported stocking and selling wines from other Georgia wineries. One out of five Georgia wineries carries and sells wines from other Georgia wineries. The wineries that sold other winery products sold an average of 42 cases of wine produced elsewhere in Georgia.. The 81% of wineries that do not sell other winery products were asked if they would be interested in stocking other Georgia produced wines. Thirty percent of indicated that they would be interested in carrying other Georgia wines at their winery. Interestingly, none of the non-ngwh wineries reported selling other Georgia wines. When non- NGWH wineries were asked if they would be interested in selling other Georgia wines, 33% indicated they would be interested in selling other Georgia wines. Table 6 provides the percentage of wine sales at specified price ranges. Nearly 75% of the wine sold at Georgia wineries sells for between $10 to $25 per bottle. The NGWH wineries sell over half of their wine in the $16 to $25 per bottle price range. The non-ngwh wineries sell 58% of their wines between $10 to $15 per bottle. 1 The Tax and Trade Bureau reported only 9 wineries in

13 Table 6. Retail Wine Sales at Given Price Ranges All GA Wineries NGWH Wineries Non-NGWH Wineries Less than $10 per bottle 12% 0% 24% $10 - $15 per bottle 42% 26% 58% $16 - $25 per bottle 35% 53% 18% Above $25 per bottle 11% 21% 0% When asked about production capabilities, on average, participating wineries reported the capability to produce a maximum of 6,418 (median 5,000) cases of wine annually with their present equipment and facilities. Interestingly, there were differences in maximum capacity by region of the state. On average, the NGWH wineries reported being able to produce 7,625 (median 6,250) cases of wine annually with their equipment and facilities. The non-ngwh wineries reported an average of 5,954 cases. Currently, Georgia wineries production capacity ranges from a low of 675 cases annually to a high of 18,000 cases annually. Table 7 presents anticipated expansion plans for selected aspects of wine production and facilities. The percentages represent the mean percentage that participating wineries plan to expand over the next three years. All Georgia winery operators plan to expand lodging or other amenities by 33%. They also plan to expand bottling equipment by 26% over the same time period. The smallest expansion plans are for gift shop facilities which are expected to expand less than 10%. Results are similar between the NGWH wineries and the non-ngwh wineries except for acreage devoted to grapes and the expansion of gift shop facilities. The non-ngwh wineries reported expansion plans of 33% for acreage devoted to grapes while NGWH wineries reported a 4% increase. Non-NGWH wineries do not anticipate expanding their gift shop facilities over the next three years. Table.7. Winery Expansion Plans for the Next Three Years Percentage All Wineries NGWH Wineries Non-NGWH Category Wineries Lodging or other amenities Bottling equipment Retail facility (wine tasting and retail) Restaurant facility Event facility Wine storage equipment Acreage devoted to grapes Wine processing equipment Gift shop facility Support for Viticulture Designation An American Viticulture Area is a designated grape-growing region in the United States distinguishable by geographic features, with boundaries defined by the United States Department of Treasury Alcohol Tax and Trade Bureau (TTB). Georgia currently does not have any American Viticulture designation areas. The wineries were asked if they would support having 13

14 American Viticulture Areas in Georgia and the vast majority (80%) supported the idea with a minority (20%) not supporting such a designation. The wineries that did not support the idea of a viticulture designation were located outside of the NGWH region. Among the non-ngwh wineries, 57% supported having an area designation, while the other 43% did not support the idea. Obstacles facing Georgia s Wine Industry Conversations with Georgia winery owners and operators along with responses from Question 29 in the Georgia Winery Survey indicate several obstacles faced by Georgia winery operators. The question present in the survey is an open-ended response which allowed for operators to express their opinions. The responses were very similar throughout by all participants in the study. The biggest obstacle indicated by nearly 60% of wineries is the lack of support from the local and state government. Acknowledgement of the benefits generated by winery visitor expenditure and a greater push to promote the industry by government would help the wineries economic growth. Although Senate Bill 155, (passed in 2001), provided some aid to the industry, operators believe more should be done to support the industry. Senate Bill 155 allowed for the designation of areas for the placement of winery signs. The bill also allowed for wineries to sell and promote other Georgia wines (Georgia Wine Country 2007). A greater push by the government to promote the industry in the form of public awareness would greatly benefit the industry. States such as North Carolina, Virginia, and Illinois promote the industry through the use of signage. Signage has been put in place in Georgia, but operators feel a greater push would benefit the industry. With 24 wineries throughout the state, a greater support from the government would greatly promote the industry. Respondents also reported a lack of educational viticulture and enology programs. Twenty-five percent of respondents reported weather and climate as their main obstacle. Weather and climate have a direct impact on the production of grapes. In 2007, a late frost on Easter weekend severely dampened grape production. Grape juice was imported from other states, including California, to offset the lost crop. Climate patterns such as drought and milder temperatures have a dramatic effect on grape production. In addition to weather and climate, disease is also another obstacle faced by grape growers and wineries. Pierce s Disease has a significant impact on the production of vinifera grapes. Pierce s Disease is a deadly disease which can cause devastating damage to grapevines by the bacterium Xylella fastidiosa. The disease is carried by xylem-feeding leafhoppers and is responsible for killing plants. The disease kills the plant by blocking the water-conducting vessels of the plant (Medley 2003). Pierce s Disease is a problem for several states including Georgia; primarily (central and south Georgia). The mild winters do not kill off the disease as it does in higher elevations. This problem significantly limits the grape varieties that can be grown in the state. There are hybrid varieties that are resistant to the disease. Muscadines, a native grape, are also available in resistant varieties (Omahen 2005). Actions to Help Develop Georgia s Wine Industry A question in the Georgia Winery Survey examines actions that could be taken to help grow Georgia s wine industry. Responses to the question parallel responses given to the obstacle question. Winery operators feel government involvement and support is the number one action that could help promote the industry. Marketing in the form of signage would help to attract a 14

15 greater number of visitors. Although much of the data suggests that visiting a winery is their primary reason for the visit, a significant number of people visit the winery as a secondary reason associated with other activities. Signage would attract more people who are traveling through the area. Roughly 20% reported education as a main concern. Public awareness could do a lot to help educate people and encourage them to learn more about the wineries. Some respondents suggested television programs, possibly aired on a station similar to PBS, would go a long way towards providing insight into the industry. This would help to portray the industry in a much better light and even promote the health benefits of wine. Education for winery operators and vineyard operators would also be very beneficial. Programs in the form of viticulture and enology would be an asset for the industry. 15

16 Section II. Georgia Winery Visitor Survey Results The purpose of this section is to provide descriptive statistics on information from the Georgia Winery Visitor Survey. Wineries were asked if they would be willing to administer the surveys to visitors. A total of eight wineries participated in administering the surveys or allowed the CAED to survey on their premises. Participating wineries asked visitors if they would be willing to fill out a short survey. A total of 246 Georgia winery visitors were interviewed for the data used in the study. In order to provide an accurate estimate for the impact of winery visitors, winery festival visitors were also surveyed to determine if the results of winery festival visitors were similar or different than those of non-festival winery visitors. Of the 246 completed surveys, 33 were conducted at two different winery festivals. Table 8 is a summary table of the visitor survey results. These results should be interpreted with caution due to the small sample size. Demographic Profile of Winery Visitors The average age of the respondents was 47.9 years old with respondents ranging frm 21 to 78 years of age. The respondents tended to be more female (56%) than male (44%) which is in line with the findings from the Adams Wine Handbook 2007, which reported that wine drinkers are 42.4% male and 57.6% female. Nearly 63.5% of the respondents reported being employed full-time with 26.2% being retired. Approximately ten percent were either employed part-time (6.4%) or were students (3.9%). All of the respondents reported having at least a high school degree. Forty-two percent reported having completed a 4-year college degree, 33.2% have a graduate or professional degree, and 16.8% had a 2-year college degree or technical degree. The final 8.4% had a high school degree. 16

17 Table 8 Demographic Information for Georgia Winery Visitor Survey Statistics Variable Georgia Winery Visitor Age Mean 47.9 Median 49.0 Gender Male 44% Female 56% Household Income Less than $25,000 2% $25,000 - $34,999 2% $35,000 - $49,000 8% $50,000 - $74,999 17% $75,000 - $99,999 15% $100,000 - $124,999 15% $125,000 - $149,000 16% $150,000 or more 27% Median $112,500 Education Less than high school degree 0% High school degree 8% 2-year college/tech/associates degree 17% 4-year college degree 42% Graduate/professional degree 33% Race and Ethnic Composition of Winery Visitors Table 9 compares the percentage of wine drinkers based on ethnicity. There is a similar distribution between Adams Wine Handbook and results obtained from the Georgia Winery Visitor Survey. A majority of the Georgia winery visitors surveyed where of white ethnicity (93.1%). The race and ethnicity of the respondents were slightly different than the results reported by the Adams Wine Handbook 2007 study. The Georgia wine visitors were more likely to be white and less likely to be non-white than the respondents in the Adams Wine Handbook. Other ethnicities made up the remaining 1%. Table 9 Race and Ethnic Origin Distribution of Wine Consumers by Category Percent US Georgia White Black Asian Hispanic Source: Adams Wine Handbook 2007 and 2008 Georgia Winery Visitor Survey Wine Visitor Household Income Figure 3 displays percentages for ranges of annual household incomes before taxes for survey participants. An average income of $105,000 (median of $112,500) indicates that winery visitors tend to be more affluent. The visitors affluence may be attributed to their being well educated and older which is generally correlated with increased household income. From an economic 17

18 standpoint, higher income households may have more disposable income to spend on traveling which is clearly evident by the average income of Georgia winery visitors. Although, the median household income for the typical winery visitor is relatively high, lower household incomes visit wineries as well. Figure 3. Income Distribution of Georgia Winery Visitors Wine Consumption Frequency Table 10 shows the drinking frequency of winery visitors. The typical winery visitor does not consume wine on a daily basis (78.5%). Those who consume wine 2-3 times per week (35.2%) represent the largest percentage. Next largest is daily (21.5%), weekly (18.6%), 2-3 times per month (11.3 %), and a small group consuming monthly or less than monthly (13.4%). Georgia and Colorado have a similar distribution of drinking frequency. As found in both states, approximately one-third of respondents reported drinking wine 2-3 times per week. Table 10 Drinking Frequency of Winery Visitors Georgia (%) Daily times per week 35.2 Weekly times per month 11.3 Monthly 7.7 Less than monthly 5.7 Wine Consumption Occasions Visitors were asked for what occasion they usually drink wine and were asked to include multiple responses. Table 11 presents the occasions the respondents reported in which they consume wine. Meals, socializing and special occasions are events that nearly one-quarter of respondents reported they consume wine. Interestingly, only 9.5% reported drinking wine at bars. Drinking wine with meals at home was the most popular choice (23.8%). 18

19 Table 11 Drinking Occasions Percentage Meals at home 23.8 When socializing 22.0 At restaurants 21.5 Special occasions/holidays 21.4 At bars 9.5 Other 1.9 Wine Preference Winery visitors preferred drinking dry wine over sweet wine. However, this question may not reflect the true sugar content classification of dry or sweet wine. It was up to the respondent to identify what he or she chose as dry or sweet. Sixty-seven percent preferred dry wine while 33% preferred sweet wine. Table 12 shows the wine preferences based on wine type. Nearly half of the respondents (46.1%) preferred red wine. The next largest category was white wine at 33.8%. Muscadine, other fruit flavored wine, and sparkling wine made up the smallest group (11.8%). However, as mentioned earlier, it may be possible that respondents may have confused muscadine and other fruit flavored wine with the red, white, and blush wine choices due to the color of the wine rather than the wine type. Responses from the Georgia Winery Survey indicate muscadine wine sales make up a significant portion of sales for Georgia wineries. Table 12 Wine Preference Wine Type Percentage Red wine 46.1 White wine 33.8 Blush wine 8.4 Sparkling wine 4.2 Other fruit flavored 3.9 Muscadine wine 3.7 Wine Purchases Table 13 reveals where surveyed visitors purchase wine. When participants were asked to answer where they most purchase wine, a majority (37%) bought from a grocery store or supermarket. Nearly half purchased from a package store (25.9%) and from a winery (21.9%). Surprisingly, internet purchase made up only two percent. Table 13 Locations Where Visitors Purchase Wine Percentage Grocery Store/Supermarket 37.1 Package Store 25.9 Winery 21.9 Restaurant/Bar 11.4 Internet 2.0 Other 1.7 Total

20 During the past month, respondents reported purchasing an average of 8.79 bottles, 0.13 boxes of wine and 2.19 glasses of wine. Table 14 indicates the price ranges for bottled wine purchases reported during the last month. It is clear that a majority (42.9%) of respondents spend $10-$15 for bottled wine. The less than $10 and $16-$25 price ranges have similar percentages of roughly 25% each. Another important question was included to find out how much visitors spend on wine each month. The average visitor surveyed reported spending approximately $95.80 on wine during a typical month. Table 14 Price Ranges for Bottled Wine Less than $10 $10-$15 $16-$25 Above $25 Percentage

21 Origin of Wine Purchased Figure 4 indicates the regions from which respondents reported purchasing wine in the previous month. California and international purchases make up a majority of the graph. A significant amount (22%) reported purchasing Georgia wines. Figure 4 Georgia Winery Visitor Wine Purchase by Region Reason for Visiting Winery One important question from the visitor survey asks people what brings them to visit the winery. Table 15 presents reasons why Georgia residents and non-georgia residents visit wineries. Forty-four percent of visitors were visiting a winery as the primary reason. The other 56% were visiting the winery as part of an overall trip to the area. People who fall into this category may have been planning on a road trip to visit the scenery and subsequently stopped off at the winery. The results indicate that 75% of out-of-state visitors are coming to the winery as a secondary reason. Nearly half of Georgia resident visitors are visiting as a primary reason. Table 15 Reason for Visiting Winery Percentage Georgia Resident Non-Georgia Resident All Visitors Primary Reason Secondary Reason Table 16 indicates how familiar participants are with Georgia s wine industry. Almost half of all visitors (44.5%) reported Not Very as their choice. Georgia residents are more familiar with the industry than out-of-state residents. A majority (72.2%) of out-of-state visitors are not very familiar with Georgia s wine industry. This statement reflects some of the statements made by winery operators for obstacles faced by Georgia wineries. As mentioned in the previous section, several operators felt there was a need for better public awareness and education on Georgia s wine industry. Table 16 Georgia Wine Industry Familiarity Percentage 21

22 Georgia Resident Non-Georgia Resident All Visitors Very Somewhat A Little Not Very Forty-eight percent of respondents visited another winery while on their trip. Those who visited another winery visited anywhere from one to five (mean 2.0) wineries during their trip. Several of north Georgia s wineries are located on the Georgia Wine Trail which is a useful guide for visiting multiple wineries. The remaining 52% did not visit any other wineries while on their current trip. Out-of-state residents visited a mean of 2.0 wineries while instate residents visited a mean of 2.1 wineries during their current visit. The survey results indicate that residency does not have any significant impact on the number of wineries visited. Many respondents reported their visit as being their first to a Georgia winery. Thirty-two percent of visitors reported their current visit as being the first visit. Sixty-eight percent of the visitors had reported visiting a winery within the last year. Of those who had visited a winery prior to their current visit, they reported visiting a winery an average of 2.8 times per year. Wine festival attendance was significantly less than the non-festival winery attendance. Twenty-six percent of visitors reported attending a wine festival. Of those who had reported attending a festival, they reported attending an average of 1.5 festivals per year. Seventy-four percent of visitors had never attended a wine festival in Georgia. 22

23 Distance Customers Traveled Table 17 indicates that the typical Georgia winery visitor travels 100 miles or less. In fact, 65% of visitors come from 100 miles or less. Twenty-five percent traveled miles. A handful (9.7%) of visitors traveled 500 miles or more. Respondents reported an average visit of 2.9 days to the area. Fifty-eight percent of visitors indicated that they were staying overnight for their visit. The other 42% were visiting for a day trip. Table 17 Distance Customers Traveled Miles Percentage Over Lodging Table 18 indicates where customers were likely to stay during their overnight visit. Parties lodged primarily at a hotel/motel, followed by a bed and breakfast, or stayed with a friend. Those that reported Other identified their lodging choice as a cabin or in a timeshare. Table 18 Lodging Places Percentage Hotel/Motel 33.3 With a friend or family 25.7 Other 22.2 Bed and Breakfast 13.2 RV park /Camping 5.6 The typical visitor party size was 2.71 people. Respondents reported spending an average of 67% (median 80%) of their time within a mile radius of the winery their party was currently visiting. The next set of tables (Tables 19-21) was derived from the visitor survey. The visitor expenditure data is required to estimate the economic impact of visitor expenditure. 23

24 Table 19 Survey Lodging Results Percent Visitor Days at Facility Type Category All Visitors NGWH Visitors All Visitors NGWH Visitors Hotel/Motel ,548 36,547 Bed & Breakfast ,030 14,466 RV/Camping ,591 6,091 Other ,365 24,364 Friends/Relatives ,110 25,126 Total , ,594 Table 20 Visitor Lodging Results $/Person/Day Total ($) Category All Visitors NGWH Visitors All Visitors NGWH Visitors Hotel/Motel ,960,259 1,572,855 Bed & Breakfast ,193, ,616 RV/Camping , ,373 Other , ,539 Friends/Relatives NA NA NA NA Total 4,241,658 3,403,383 Table 21 Other Visitor Spending Results $/Person/Day Total ($) Category All Visitors NGWH Visitors All Visitors NGWH Visitors Restaurant ,202,917 2,394,060 Grocery , ,317 Souvenirs ,564,392 1,125,099 Fuel ,688,117 1,982,475 Entertainment ,017, ,986 Total 9,231,016 6,813,937 24

25 Section III. Economic Impact of Georgia s Wine Industry on the State of Georgia The impact of grape production represents the value of grapes produced at the wineries and the value of grapes grown by other Georgia growers which are used for wine production at Georgia wineries. A few wineries purchased grapes from out-of-state which are not included in this study because they do not apply to the state impact. The mean value of grapes produced by the winery for its own production is $97,971. This value is multiplied by 24 wineries to represent the total value of grapes produced by all Georgia wineries that are used for the wineries own production needs. This value is $2,351, 304. Wineries also purchase grapes from other Georgia growers. A mean of $33,689 represents the value of grapes purchased by each of the 24 wineries. The total of purchased grapes is $808,545. Combining the value for both categories, grapes produced at own winery, ($2,351,304), and grapes produced by other Georgia grape growers, ($808,545), indicates the direct impact of grape production is $3,159,841. Table 22 presents results of the impact of grapes produced in Georgia for Georgia wineries. The direct impact of $3.2 million worth of output estimated from the responses in the winery survey is similar to the $3.1 million represented in the Georgia Farm Gate Fruits and Nuts Report for Grape production operations generate $3.2 million worth of output (sales) which accounts for the direct impact. The indirect output impact is $3.5 million. Summing the direct and indirect impacts generates a total state output impact of $6.6 million. Labor income represents wages and benefits for employees and proprietary income. A total of $3.0 million in labor income is generated from those who work directly in grape production or are associated in an indirect way. Fifty-seven jobs are directly involved with wine grape productions and adding indirect employment leads to a total employment impact of 92 jobs because of grape production. A total value-added impact of $2.3 million is generated by grape production for Georgia wineries. The direct impact of value added is $215, 608. Value added is output minus purchase inputs therefore, the value $215,608 appears to be low according to the definition. However, value added consists of profits, net equity exchange, and property income. Property income is a negative value in IMPLAN for fruit farming which explains why the value added component is low. Grape production generates $160, 401 in state taxes and an additional $154,613 for local governments throughout the state. Table 22 Georgia Economic Impact of Grape Production for Georgia Wineries Direct Impact Indirect Impact Total Impact Output ($) 3,159,841 3,465,724 6,625,565 Labor Income ($) 1,706,075 1,281,004 2,987,079 Employment Value Added ($) 215,608 2,041,895 2,257,499 State Taxes ($) 160,401 Local Taxes ($) 154,613 Sum of Taxes ($) 315,014 The second component of the three part analysis is the impact of the winery itself. The first component accounted for the grape production alone used by wineries, therefore the impacts presented in Table 23 do not include grape production. Wineries generate a significant impact to the state economy through visitor expenditures. Table 23 does not account for the visitor expenditure impact generated by the wineries. A direct impact of $11.1 million worth of output 25

26 is calculated as generated by the wineries. Secondary effects generate an indirect impact of $6.7 million worth of output. When summing the direct and indirect impacts, $17.9 million worth of total output is generated. Labor income accounts for $3.9 million for a total employment of 141 jobs generated because of wineries. The wineries generate $27,787 worth of labor income for each worker. The total value-added component generates $5.6 million. Wineries generate $377,998 worth of tax revenue for the state and $363,148 of tax revenue for the local government for a total of $741,146 worth of tax revenue. Table 23 Economic Impact of Georgia Wineries Excluding Grape Production Direct Impact Indirect Impact Total Impact Output ($) 11,148,881 6,736,007 17,884,883 Labor Income ($) 1,688,747 2,229,160 3,917,907 Employment Value Added ($) 2,098,841 3,532,857 5,631,699 State Taxes ($) 377,998 Local Taxes ($) 363,148 Sum of Taxes ($) 741,146 Winery visitor expenditures are presented in Tables Table 24 presents the results of the economic impact generated by winery visitors. The direct impact of output from the visitors is $13.5 million which generates an indirect impact of $6.8 million. A total impact of $20.3 million worth of output is generated because of the visitor expenditures. A total labor impact of $5.7 million in wages and benefits to employees and proprietary income is created. A total of 197 jobs are involved which generates $29,136 worth of labor income to each worker. A total value added impact of $9.1 million is generated from expenditures associated with winery visitors. Finally, winery visitors generate $631,750 worth of state taxes and an additional $545,271 worth of tax revenue for local governments for a total tax revenue of $1.2 million. Before presenting the visitor impact, it is worthwhile to mention import substitution and exports. As indicated by the visitor survey results, 83.7% of respondents are Georgia residents. This is known as import substitution which captures the spending that would otherwise be spent in other states if Georgia wineries did not exist. The other 16.3%, which are out-of-state residents, are exports. Exports capture the out-of-state visitors. The goal of the wineries is to capture as much spending as possible. 26

27 Table 24 Economic Impact From Winery Visitors Direct Impact Indirect Impact Total Impact Output ($) 13,472,674 6,807,242 20,279,916 Labor Income ($) 3,498,666 2,241,078 5,739,744 Employment Value Added ($) 5,231,672 3,850,391 9,082,056 State Taxes ($) 631,750 Local Taxes ($) 545,271 Sum of Taxes ($) 1,177,021 Table 25 presents the total economic impact for Georgia wineries and associated operations. The overall impact was presented in the form of three components: grape production, wineries less grape production and winery visitor expenditure, and lastly visitor expenditure. The reference to wineries less grape production and winery visitor expenditure will be referred to as winery or wineries in future references for ease of reporting. The total impact represented in Table 25 is the sum of total impacts for the three components. It is important to understand that the direct impact accounts for the initial revenue generated by the three components of the winery industry. A total impact of $40.8 million worth of output is generated because of the wine industry in Georgia. A total labor income of $12.6 million represents the wages and benefits for employees and proprietor income. A total of 430 jobs exist because of Georgia wineries and the associated operations. Total value added accounts for $17.0 million. The total impact generates $1.1 million worth of tax revenue to the state governments, and an additional $1.0 million worth of tax revenue to the local governments creating a total of $2.1 million worth of tax revenue. Table 25 Total Economic Impact of Grape Production, Wineries, and Visitor Expenditures Total Impact Output ($) 44,790,364 Labor Income ($) 12,644,730 Employment 430 Value Added ($) 16,971,254 State Taxes ($) 1,101,521 Local Taxes ($) 1,032,640 Sum of Taxes ($) 2,134,161 Wineries have the greatest output impact of $17.9 million, followed by a visitor output impact of $20.3 million, and lastly grape production with $6.6 million. Although the numbers are useful in representing the total impact, they are extremely helpful for decision makers. Winery operators reported that signage could help increase the output of wineries. By using a ratio of the output to state taxes, a dollar value is generated to represent how much tax money is generated from output. In the case winery total impact for all 24 wineries, a total output of $17.9 million generates $377,998 in state tax revenue. The ratio indicates that for every $47.31 of output generated, $1 is generated in state tax revenue. For example, if state taxes were used to purchase and install signs for a total cost of $10,000, it would require an additional $473,148 of output for the tax money to pay for all of the signs. 27

28 Economic Impact of North Georgia Wine Highway Counties The previous section identified the impact that all 24 wineries have on the state of Georgia. This section defines the impact that the North Georgia Wine Highway counties 2 (NGWH) have on Georgia s economies. Ten of Georgia s wineries are present in these counties. Several of the state s largest wineries are found in this region. Table 26 is the impact of grape production for NGWH wineries. It is important to understand that this impact accounts for grapes produced in NGWH for NGWH wineries. The calculations used to determine the state impact of grape production were also used to determine the grape value for the NGWH wineries. The mean value of grapes produced by the winery for its own production is $94,098. This value is multiplied by 10 wineries to represent the total value of grapes produced by Georgia wineries that are used for the wineries own production needs. This value is $940,984. Wineries also purchase grapes from other Georgia growers. A mean of $50,657 represents the value of grapes purchased by each of the 10 wineries. The total of purchased grapes is $506,576. Combining the value for both categories, grapes produced at own winery, ($940,984) and grapes produced by other Georgia grape growers, ($506,576), indicates the direct impact of grape production is $1,447,560. Grape production operations generate $1.5 million of annual revenue. The secondary effects create an indirect impact of $1.6 million. Summing the direct and indirect impacts generates a total state impact of $3.1 million. Labor income represents wages and benefits for employees and proprietary income. The total of $1.4 million is labor income for those who work directly in grape production or are associated in an indirect way. Twenty-six jobs are involved because of the direct impact and when combining the indirect impact, a total of 42 jobs are involved with grape production in NGWH. A total valueadded impact of $1.0 million is generated by grape production in NGWH. The same value-added explanation applied to the state impact of grape production applies to the NGWH wineries. The value added direct impact is low because of the negative property income value in IMPLAN. The grape production generates $73,482 in state taxes and an additional $70,830 for local governments throughout the state, creating a total tax revenue of $144,312. Table 26 Economic Impact of Grape Production for 10 NGWH Wineries Direct Impact Indirect Impact Total Impact Output ($) 1,447,560 1,587,687 3,035,249 Labor Income ($) 781, ,838 1,368,411 Employment Value Added ($) 98, ,408 1,034,187 State Taxes ($) 73,482 Local Taxes ($) 70,830 Sum of Taxes ($) 144,312 A direct output impact of $7.904 million is generated by the NGWH wineries. Secondary effects generate an indirect output impact of $4.8 million worth of output. When summing the direct and indirect impacts, $12.7 million worth of total output is generated. Labor income accounts for $2.8 million for a total employment of 99 jobs involved with NGWH wineries. The total value added component is $4.0 million. NGWH wineries generate $267,995 worth of tax revenue for 2 Jackson, Hall, Lumpkin, Union, Towns, White, Habersham, and Rabun Counties. 28

29 the state and $257,467 of tax revenue for local governments leading to a total of $525,462 worth of tax revenue. Table 27 Economic Impact of 10 NGWH Wineries Excluding Grape Production Direct Impact Indirect Impact Total Impact Output ($) 7,904,383 4,775,723 12,680,104 Labor Income ($) 1,197,295 1,580,447 2,777,742 Employment Value Added ($) 1,488,046 2,504,747 3,992,787 State Taxes ($) 267,995 Local Taxes ($) 257,467 Sum of Taxes ($) 525,462 North Georgia Wine Highway winery visitor expenditure impacts are presented in Table 28. The direct output impact from visitors is $10.2 million which generates an indirect impact of $5.2 million. A total impact of $15.4 million worth of output is generated because of the visitor expenditures. A total impact of $4.4 million in wages and benefits to employees and proprietary income is created. A total of 151 jobs are involved with NGWH winery visitors. A total value added impact of $6.982 million is associated with winery visitors. Lastly, winery visitors generate $481,581 worth of state taxes and an additional $415,828 worth of tax revenue for local governments for a total tax revenue of $897,409. The import substitution for NGWH counties is 83.9% which is represented by Georgia residents. The other 16.1% is exports which represents out-of-state visitors. The NGWH counties have 172,250 visitor days annually while 106,594 visitor days (61.9%) represent overnight stays. Table 28 Economic Impact of Visitor Expenditure Generated by NGWH Winery Visitors Direct Impact Indirect Impact Total Impact Output ($) 10,217,320 5,232,534 15,449,854 Labor Income ($) 2,683,060 1,725,056 4,408,116 Employment Value Added ($) 4,021,695 2,960,504 6,982,186 State Taxes ($) 481,581 Local Taxes ($) 415,828 Sum of Taxes ($) 897,409 Table 29 represents the total economic impact for NGWH wineries and the associated operations. The overall impact was divided into three components: grape production, wineries less grape production and winery visitor expenditure, and lastly, visitor expenditure. A total impact of $31.2 million worth of output is generated from the NGWH wine industry. A total labor income of $8.6 million represents the wages and benefits for employees and proprietor income. A total of 292 jobs are involved with NGWH wineries and associated operations. Total value added accounts for $12.0 million. The total impact generates $823,059 worth of tax revenue to the state government, and an additional $744,124 worth of tax revenue to the local governments creating a total of $1.6 million worth of tax revenue. 29

30 Table 29 NGWH Total Impact of Grape Production, Wineries, and Visitor Expenditures Total Impact Output ($) 31,165,207 Labor Income ($) 8,554,269 Employment 292 Value Added ($) 12,009,160 State Taxes ($) 823,059 Local Taxes ($) 744,124 Sum of Taxes ($) 1,567,183 Conclusion From analyzing the operational characteristics of Georgia s wineries, one can conclude that Georgia s wineries are not that old, and attract 5,000 visitors on average. An analysis of Georgia winery visitors indicates that visitors are likely to be years of age, well-educated, and will have a high income. Georgia wineries generate $ million and $ million in output and total value added, respectively, while creating 430 jobs throughout the state s economy. NGWH wineries generate $ million in output and represent $ million in total value added. 30

31 Appendix A Demographic Profile of Wine Visitors 31

32 Table A Summary of Georgia Winery Visitor Survey Statistics Variable Georgia Winery Visitor Age Mean 47.9 Median 49.0 Gender Male 44% Female 56% Household Income Less than $25,000 2% $25,000 - $34,999 2% $35,000 - $49,000 8% $50,000 - $74,999 17% $75,000 - $99,999 15% $100,000 - $124,999 15% $125,000 - $149,000 16% $150,000 or more 27% Median $112,500 Education Less than high school degree 0% High school degree 8% 2-year college/tech/associates degree 17% 4-year college degree 42% Graduate/professional degree 33% Race/Ethnicity White 93% Black 4% Asian Less than 1% American Indian Less than 1% Hispanic 2% Other 1% Occupational Status Full-time 64% Part-time 6% Student 4% Retired 26% Wine Drinking Frequency Daily 21% 2-3 times a week 35% Weekly 19% 2-3 times a month 11% Monthly 8% Less than monthly 6% Wine Drinking Occasions Special occasions/holidays 21% At restaurants 21% Meals at home 24% When socializing 22% At bars 10% Other 2% Preference of Wine Sugar Content Dry 67% 32

33 Sweet 33% Preference of Wine Type Red wine 46% White wine 34% Blush wine 8% Muscadine wine 4% Other fruit flavored wine 4% Sparkling wine 4% Wine Purchases Over the Past Month Bottles (mean) 8.8 Glasses (mean) 2.2 Region in Which Wine was Produced For Wine Purchase Over the Past Month Georgia 22% Southeast 3% International 25% Northeast 1% Midwest 2% New York 1% California 43% Washington/Oregon 4% Southwest 0% Facility Where Respondent Purchases Wine Grocery store/supermarket 37% Package store 26% Restaurant/bar 11% Internet 2% Winery 22% Other 2% Price Range of Bottled Wine Purchase Less than $10 24% $10 - $15 43% $16 - $25 26% Above $25 7% Wine Expenditure for Typical Month Mean $95 Median $60 Reason for Visiting Winery Primary reason 44% Part of an overall attraction 56% Familiarity of Georgia Wine Industry Very 15% Somewhat 24% A little 17% Not Very 45% Distance Traveled to Visit Winery % % % % % Over % Residency 33

34 Georgia 84% Out of state 16% Number of Days Visiting Area Mean 2.9 Median 2.0 Planning on Lodging Overnight Yes 58% No 42% Overnight Percentages By Facility Hotel/motel 33% Bed & Breakfast 13% RV park/camping 6% With a friend or family 26% Other 22% Lodging Rates ($/Person/Day for Overnight Visitors Only) Hotel/motel $43 Bed & Breakfast $66 RV park/camping $17 With a friend or family $0 Other $32 Other Visitor Expenditures ($/Person/Day for All Visitors) Restaurants $14 Grocery $3 Souvenirs $7 Fuel $11 Bottles of Wine $10 Entertainment $4 Party Size Mean 2.7 Median

35 The Center for Agribusiness and Economic Development The Center for Agribusiness and Economic Development is a unit of the College of Agricultural and Environmental Sciences of the University of Georgia, combining the missions of research and extension. The Center has among its objectives: < To provide feasibility and other short term studies for current or potential Georgia agribusiness firms and/or emerging food and fiber industries. < To provide agricultural, natural resource, and demographic data for private and public decision makers. To find out more, visit our Web site at: Or contact: John McKissick, Director Center for Agribusiness and Economic Development 301 Lumpkin House The University of Georgia Athens, Georgia Phone (706) caed@uga.edu The University of Georgia and Fort Valley State University, and the U.S. Department of Agriculture and counties of the state cooperating. Cooperative Extension offers educational programs, assistance and materials to all people without regard to race, color, national origin, age, gender or disability. An equal opportunity/affirmative action organization committed to a diverse work force. CR January, 2009 Issued in furtherance of Cooperation Extension Acts of May 8 and June 30, 1914, the University of Georgia College of Agricultural and Environmental Sciences, and the U.S. Department of Agriculture cooperating. J. Scott Angle Dean and Director 35