HomeNorthern Grapes Project Owner’s ManualChapter 4: The Consumers and Markets

Chapter 4: The Consumers and Markets

Objective 4: Identify strategies to support sustainable development of business based on cold climate cultivars, from the individual winery to regional agri-tourism.

Identify the consumers.  

Information about consumer behavior and preferences is essential for marketing and product development of cold climate wines. It also provides benchmarks for future studies to assess project impacts and industry changes.

Upper Midwest Winery Tasting Room Visitor Study
Surveys of 1,345 tasting rooms were completed in Wisconsin, and 667 were completed in Minnesota.  This data set was useful for understanding tasting room visitors and their perception of cold climate wines.  
Dan Holecek and Dan McCole
Department of Community Sustainability, Michigan State University

The tasting room experience and winery customer satisfaction.
Visitors to two Iowa and two New York wineries were surveyed in 2012-2013 to determine how different tasting room attributes influenced customer satisfaction and wine purchases.  Changing customer perception from ‘satisfied’ to ‘highly satisfied’ resulted in $10 in additional purchases.
Miguel Gomez and Erin Kelley. 2013
Dyson School of Applied Economics, Cornell University

Resources

Branding research.

Improve branding of cold climate wine regions and individual wineries, and create a long-term image that appeals to target markets.

Impact of different types of information on value of cold hardy wine
Because consumers typically have less experience with cold-hardy wine, wineries must inform consumers about them.  This study examined 145 subjects who participated in experimental auctions to determine how information about cold-hardy wines impacted their value.
Dan McCole, Michigan State University

Cold hardy wine branding
Research groups of approximately 200 wine testers were given different red and white cold-hardy wines, with differing information about the wines, and asked to compare desired characteristics.
William Gartner, University of Minnesota

Resources

Complete a production economics study and develop an online tool for producers.

Brigid Tuck, University of Minnesota
Brigid Tuck, University of Minnesota

Small-scale startup vineyards have different cost structures than well-established commercial vineyards.  An integrated research-extension approach was used in collaboration with stakeholders to provide benchmarks of production costs and returns.

Cost of establishment and operation cold-hardy grapes in the Thousand Islands region
Cost studies for various cold-hardy grape varieties were established in the growing grape and wine industry in the Thousand Islands region, New York.
Miguel Gómez, Dayea Oh, and Sogol Kananizadeh, Cornell University

Extension

Resources

Baseline and End-of-Project Surveys*.

One of the goals of the Northern Grapes Project is to understand how the economics of the cold-hardy grape industry are changing. To accomplish this goal, University of Minnesota conducted two surveys – the first in 2012 (baseline survey) and the second in 2016 – which allow the opportunity to compare the industry at two distinct points in time. *Adapted from Lessons Learned – Northern Grapes Baseline and Economic Contribution Study by Brigid Tuck, University of Minnesota

Here are a few of the key observations.

  • Cold-hardy grapes are a significant driver of growth in the vineyard and winery industry. Results indicate economic output generated by cold-hardy grapes was 34 percent higher in 2015 than 2011. Output from the vineyard and winery industry as a whole, including traditional and cold-hardy grapes, was only 6 percent higher.
  • There are continued signs of an industry moving towards maturity.  A notable increase in the number of vineyard employees shows a shift from volunteer to paid labor in vineyards. This could be a reflection of the growing size of vineyards, but also a sign that vineyards are becoming more profitable. Wineries are also showing this maturity trend by increasingly growing their own grapes or planning contracts with vineyards.
  • Total cold-hardy wine production dipped slightly in 2015 as compared to 2011. An increase in new wineries which had limited or no production in 2015 led to lower production per winery in 2015. Also, a severe winter in 2014 led to a poor growing season, which feeds into wine produced in 2015. Despite the decline, sales at wineries using cold-hardy grapes were higher in 2015.
  • Tourism remains a critical component of winery success. Tasting rooms remain the primary source of a winery’s sales. Wineries selling wines from cold-hardy grapes also tend to be located in rural areas, creating a need to draw customers to the site.
  • Tasting room operations are more sophisticated. In the early days of the industry, wineries were more concerned with attracting customers to taste wines, rather than making a large profit off the tasting room. Our latest survey indicates an uptick in wineries charging for tastings and selling food.

By the Numbers: How Northern Grapes Vineyards and Wineries have Changed
Changes in acreage, expenditures, sales, and employment from surveys conducted in 2012 and 2016 across 12 states.

Vineyard

  • Cold-hardy grape acreage increased from 5900 to 7580 (28%)
  • Production increased by 17% (despite arctic vortex)
  • Average yield decreased by 9% (from 3.5 to 3.2 T/acre)
  • Vineyard expenditures from 68.6M to 92.2M (34%)
  • Labor costs from $19.4M to $30.2M (56%)
  • Average labor costs per vineyard $5K to 9.3K (86% more in 2016)
    • Significant shift from “free” owner-operator labor to paid labor

Winery

  • Average tasting room visits per winery from 8,000 to 10,500 (31%)
  • Cold-hardy grape purchases from 21.2M to 22.7M (7%; total grapes purchased rose 26%)
  • Total winery sales from 492.9M to 449.5M (2% decrease )
  • Sales of Cold-hardy wines: 9M to 167.0 M (11%)
  • Winery employment 5,800 to 8,500 (47% increase)
  • Labor costs winery $56M to 70.9M  (27% increase)
    • Shift to more part-time year round employment (versus seasonal)

Economic impact

Note only those attributed to cold-hardy varieties and wines made from them are reported. Many wineries also source fruit from standard varieties grown elsewhere.

  • Vineyard Economic contribution: from $46.0 to $80.2 million (75% increase)
  • Vineyard employment: 5900 to 7800 jobs (32% increase)
  • Winery Economic Contribution: $215 to $255 million (19%)
  • Winery employment: 5000 to 8400 (68% increase)
  • Economic contribution Winery visitors: $140 to 203.6 million (45% increase)
  • Winery visitor-associated jobs 1500 to 2526 (49% increase)
  • Total Economic contribution of cold-hardy grapes and wine $401 million to $539 Million (34% increase)
  • Total employment from 12,600 jobs to 18,736 jobs. (49% increase)

End-of-Project Surveys

Baseline Surveys

Resources