Economics of Idahos Grape and Wine Industry

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Economics of Idahos Grape and Wine Industry
Stacie Woodall Garth Taylor
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Three Integrated Studies!
A. Costs of Establishing a Vineyard
B. Grape and Wine Impacts
C. Valuing Idahos Wineries as Tourism
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The Economic Feasibility of Growing Wine Grapes
in Idaho
Capital Investment for a 35-acre vineyard
Equipment and Machinery 181,600 Other
investments 561,960 Total Capital
Investment 743,560
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Costs and Returns for Red Wine Grapes (Full
Production)
/acre
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Contribution of the Grape and Wine Industry to
Idahos Economy

• Size
• Jobs
• Total Sales
• Taxes

• Impact
• Driven by exports (new money)
• Base and non-base industries
• Multiplier effect

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Size

• Grape production

• Wine production

• Wine consumption

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Wine Consumption
Tasting Room Sales
4.2 M on sales of 26,300 cases
All Other Sales
10.7 M on sales of 116,600 cases
In-State Sales
7.9 M on sales of 73,000 cases
Exports
7.0 M on sales of 70,000 cases
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Size

• Grape production

• Wine production

• Wine consumption

• Employment

• Taxes

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Impacts of Idahos Grape and Wine Industry

• As an agribusiness industry
• As tourism or recreation
• The Napa Valley Effect
• Tourism is a category of exports

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What is Wine Agribusiness?
Farm Suppliers

• Agribusiness Examples
• Dairy and Cheese
• Beet farmer and sugar
• Wine Agribusiness foundation The Grape Grower
• Backward links
• Forward links
• Excluded
• Wholesale
• Safeway

Backward Linked
Forward Linked
Wineries
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Canyon County Impacts
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Idaho Impacts

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Wineries mean tourists!
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Idahos Wine Tourists

• Typically drinks wine on a regular basis
• 14 Every day
• 36 Two three times a week
• 33 Weekly

• 60 come from inside the state

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Idahos Wine Tourists

• Source of winery information
• Word-of-mouth, Own knowledge, Road Signs
  Brochures

• Which wines to purchase?
• Tasted wine, Word-of-mouth, Sale Reputation

• Wine purchases
• Wineries, Grocery Stores, and Specialty Stores

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Canyon County Tourism Impacts

• Canyon County
• Tourism Multiplier 1.89
• Job Multiplier 17.51

• Scenarios
• Festival (650 groups) 81 from outside
  Canyon County
• 125,000 sales impact 1.2 jobs
• Annual Visitors (5,000 groups)
• 960,000 sales impact 9 jobs

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Idaho Tourism Impacts

• Idaho
• Tourism Multiplier 2.12
• Job Multiplier 24.88

• Scenarios
• Festival (650 groups) 40 from outside Idaho
• 82,000 sales impact .98 jobs
• Annual Visitors (10,000 groups)
• 1.3m sales impact 15 jobs

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Impact Conclusions
Canyon County Impacts LARGER than Idaho Impacts
!
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The Recreational Value of Idaho Wineries

• The value of wine tourism, not impact!
• Price or willingness-to-pay for the wine
  recreational experience
• Demand for wine recreation
• Imputed from visitors travel costs to wineries
• Winery visitors tastes preferences,
  substitutes, income, marketing, etc . . .

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Advantages of Winery Tourism

• ? Build brand loyalty
• ? Alternative distribution outlet
• Source of marketing intelligence for wines
• Educational Opportunities
• Explain the demand for wine as a recreational
  experience

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In Conclusion . . .