/
Challenges Facing Wineries in “Undiscovered” Wine Regions Challenges Facing Wineries in “Undiscovered” Wine Regions

Challenges Facing Wineries in “Undiscovered” Wine Regions - PowerPoint Presentation

alexa-scheidler
alexa-scheidler . @alexa-scheidler
Follow
343 views
Uploaded On 2019-06-29

Challenges Facing Wineries in “Undiscovered” Wine Regions - PPT Presentation

Results from Michigan Missouri and NW New York R Brent Ross Michigan State University Fabio R Chaddad University of MissouriColumbia Miguel I Gómez Cornell University NCRCRD Webinar February 15 2012 ID: 760622

industry wine 100 wineries wine industry wineries 100 strategies winery grape regions challenges nifa afri start michigan missouri cool

Share:

Link:

Embed:

Download Presentation from below link

Download Presentation The PPT/PDF document "Challenges Facing Wineries in “Undisco..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.


Presentation Transcript

Slide1

Challenges Facing Wineries in “Undiscovered” Wine Regions: Results from Michigan, Missouri and NW New York

R. Brent Ross, Michigan State UniversityFabio R. Chaddad, University of Missouri-ColumbiaMiguel I. Gómez, Cornell UniversityNCRCRD WebinarFebruary 15, 2012

Slide2

Number of Wineries in the U.S.

Source: U.S. Tax and Trade Bureau and Wine

Institute.

Slide3

KEY DRIVING FORCES

Food Curiosity

Growing Interest in Wines for Non-Traditional Regions

Local Food MovementFood Tourism

OPPORTUNITIES

Vector of Regional Economic Development

Economic Clustering

Slide4

Agenda

NCRCRD Project Survey Results

Collect information about wineries

Identify challenges affecting “undiscovered” wine regions

New Project

Funded by NIFA/AFRI

Research Objectives and Scope

Slide5

NCRCRD ProjectObjectives and Scope

Identify the challenges faced by rural wine entrepreneurs in “undiscovered” wine regions

Firm-level vs. Industry (region)-level

Focus

on:

Economics of

W

ineries

Business

and

Marketing Management Practices

Collective Action

METHOD: exploratory comparative analysis

Literature review

Interviews

Industry Survey

Slide6

New Business Ventures

Sources: U.S. Department of Agriculture, Alcohol and Tobacco Tax and Trade Bureau, Michigan Grape and Wine Industry Council, Missouri Wine and Grape Board, and New York Wine and Grape Foundation.

MichiganMissouriNew YorkNumber of Wineries (2009)10097240(up from 17 in 1995)(up from 31 in 2000)(up from 113 in 2000)Wine Volume (2009, in million gallons)1.41.128.7Number of Grape Growers7113931438Wine Grape Acreage2,1001,60011,000Wine Grape Production (in tons)5,3004,400172,000Wine Industry Economic Impact $790 million (in 2005)$1.6 billion$2.5 billion

Slide7

Michigan Wine Industry

Slide8

Missouri Wine Industry

Slide9

NY-Penn Wine Industry

Slide10

Data Collection

Joint mail survey conducted during May-June 2011.

Michigan

Missouri

New York (Lake Erie Region) and Pennsylvania

Target:

winery owner

Supported by interviews with winery owners, extension specialists, and industry experts

Slide11

Overview of ResultsWinery Characteristics

State

Wineries

Respondents

Response Rate

Michigan

80

26

33%

Missouri

94

32

34%

NY/PA

70

28

40%

TOTAL

244

86

35%

Slide12

VARIABLENMEANMEDIANMINMAXWinery Age (Years)     ALL8511.97.00.047.0MICHIGAN2514.19.00.041.0MISSOURI3211.97.80.540.0NY-PENN289.95.02.047.0Wine Production (Cases)     ALL847,749 2,000 100 200,000 MICHIGAN245,622 2,450 100 20,000 MISSOURI3212,596 1,500 100 200,000 NY-PENN284,032 2,000 100 32,000 Wine Production Growth (%, 2008-2010) ALL6838%20%-50%408%MICHIGAN2617%10%-50%300%MISSOURI2163%25%-25%408%NY-PENN2138%40%10%100%Non-Vinifera Grapes (%)     ALL8664%80%0%100%MICHIGAN2638%34%0%100%MISSOURI3284%100%0%100%NY-PENN2864%80%0%100%

Slide13

% Under 10 Years Old

ALL 65%

MI 55%

MO 65%

NY_PENN 80%

Slide14

Slide15

Slide16

OverviewWine Owner/Manager Characteristics

ALL 76%

MI 87%

MO 75%

NY_PENN 69%

Slide17

OverviewWine Owner/Manager Characteristics

ALL 53%

MI 50%

MO 58%

NY_PENN 49%

Slide18

OverviewWine Owner/Manager Characteristics

FREQUENCYCHALLENGEALLMIMONY_PENNBusiness Opportunity (GW+diversify)9036Passion for Food/Wine/People (Wine+Other)49172111Quality of Life (2) (qual+retire+adv)38121610Hands in Dirt (2) (dirt+satisf)3213127Family (Family Business + Fun)6231Community (Tourism, EcDev)20785Other3003

Motives for Entry into Wine Industry

Slide19

Challenges Faced in “Undiscovered” Wine Regions: At the WINERY

FREQUENCYCHALLENGEALLMIMONY_PENNGrape Production3213127Winemaking277128Marketing46151615Finance251087Managing the Winery247134Labor Related Issues19487Environmental Issues 0000Regulatory Issues299911Quality11353Access to Resources10154Competition6042Other5203

Slide20

Challenges Faced in “Undiscovered” Wine Regions: In the INDUSTRY

FREQUENCYCHALLENGEALLMIMONY_PENNGrape Production245811Winemaking21588Marketing3812314Finance11182Managing the Winery7142Labor Related Issues251564Environmental Issues 0000Regulatory Issues25889Quality254138Access to Resources8521Competition10244Other211713

Slide21

Specific ChallengesMarketing

FREQUENCYCHALLENGEALLMIMONY_PENNSetting Prices2911126Developing new wines4211Branding wine18099Identifying the appropriate promotion strategy0000Managing distribution channels45141714Dealing with competition15393Segmenting the market9135Understanding consumer needs/wants190127Other8323

Slide22

AFRI/NIFA Grant AwardAward Number: 0031130Description: 2011-68006-30815 Chaddad, Fabio

Slide23

Goal: To increase the success rate of start-up wineries and thereby foster the development of wine-hospitality-tourism clusters in emerging cool climate regions in three states – Michigan, Missouri and New York.

Rural Entrepreneurship in the Wine Industry:Identifying Success Factors Among Start-Up Wineries in Emerging Cool Climate Regions 

Situation

Inputs

Knowledge

Outcomes

Outputs

Activities

Actions

Conditions

Increased success rate of start-up wineries in cool climate regionsDevelopment of wine-based clusters in cool climate regions

Growing number of new wineries in cool climate wine regions.Start-up wineries face a complex set of challenges to survive and grow.Start-up wineries need knowledge input and extension efforts to overcome challenges.If successful, new wineries will be the basis for regional cluster development.

Wine industry stakeholder needs & assetsResearch and extension staff with industry knowledgeThree graduate students in Agric. Econ.Network of collaborators in three statesIntegrated conceptual frameworkDatabases and expert modelersExisting wine cluster analysesAFRI Funding

Stakeholder input on conceptual framework Lit. review on procurement and distribution strategiesSurvey wineries and build panel data setEconometric analyses of data across 3 statesWorkshops with industry stakeholdersStudy tour to developed wine regionPrepare educational materials

Hypothesis: we can identify strategies for wineries to overcome survival challenges and for industry leaders to develop wine-based regional clusters in cool climate regions.

External Factors: industry conditions that affect start-up winery survival and growth; willingness of industry participants to develop and engage in collective action strategies.

Statistical analysis of survey resultsEconometric model resultsPractical knowledge for wineries and industry leadersScientific and educational publicationseXtension CoP on Cool Climate Wine RegionsStrategic outreach plan for wine cluster developmentEducational materials

Factors that affect winery survival and growthEfficient grape procurement strategiesMarketing strategies to overcome lack of legitimacyExtent and impacts of inter-firm collaborationEffective collective action strategies for cluster development

Start-up wineries will:

Adopt more efficient grape procurement strategies

Develop marketing strategies to access non-local markets

Build more relationships with other wineries and related local industries

Industry leaders will adopt collective action strategies for wine cluster development

Slide24

AFRI / NIFA ProjectThe Team

Fabio

R. Chaddad (University of Missouri)Michael LeonardelliRandy WestgrenGraduate students

R. Brent Ross (Michigan State University)Paul JenkinsGraduate students

Miguel I. Gomez (Cornell University)Nelson BillsGraduate students

Slide25

AFRI / NIFA ProjectConceptual Framework

Network-level Resources

Inter-winery collaborationCollaboration with related industries

Business-level ResourcesHumanFinancialOrganizationalEntrepreneurial orientation

LegitimacyRegulativeNormativeCognitiveIndustry

Individual-level ResourcesHuman capitalEducationExperienceSkills

SurvivalCross survival threshold

GrowthSalesMembers

Slide26

AFRI / NIFA ProjectIntegrated Project

Research Objective 1:

Examine existing contractual mechanisms in buyer (winery) – supplier (grape) relationships and help the industry develop procurement strategies to reduce transaction costs, increase grape and wine quality, and winery performance.

Slide27

Detailed ResultsProcurement Strategies

Slide28

Detailed ResultsProcurement Strategies

Slide29

Determinants of Vertical Integration

Vertical Integration

Transaction Attributes

Asset specificity

Uncertainty

Collaboration

To produce grapes

Relationship with grape growers

QualityGrape qualityWine quality

Winery Characteristics

Experience

Time commitment

Slide30

Determinants of Vertical Integration:Logit Model Estimates

Slide31

AFRI / NIFA ProjectIntegrated Project

Research Objective 2:

Identify strategies to overcome distribution challenges of start-up wineries and increase their access to non-local markets

.

*Legitimacy:

distributors and consumers.

Slide32

% of WineriesCHANNELALLMICHIGANMISSOURINY_PENNAt the Winery100%100%100%100%Liquor Store41%57%45%25%Restaurant52%61%35%64%Farmers Markets10%4%0%25%Direct Shipments56%83%35%57%Through Distributors29%65%26%4%Festivals or Community Events48%35%35%71%Other13%22%16%4%

Detailed Results

Distribution Channel Strategies

Slide33

Detailed ResultsDistribution Channel Strategies

Other Channels:

Wine ClubsOwn RetailCustom Wine and CoPackingDirect Retail (SM + Gift Shop)

Slide34

ALLMIMONY_PENNArrangements with Bus Tour Co.36%46%16%50%Promotions for Returning Customers60%54%66%57%Customer Database86%88%78%93%Club Promotions38%54%41%21%Website100%100%100%100%Newsletter68%75%66%64%Social Media (Facebook, Twitter, Groupon, etc.)95%100%94%93%Price Discounts94%96%94%93%Other4%0%9%0%

Detailed Results

Other Marketing Strategies

Slide35

Channel Choice Determinants

Distribution ChannelChoice

Horizontal Integration

Inter-winery collaboration

Vertical Integration

Share of own grape in the production

Marketing Efforts

Promotion intensity

Marketing challenges

Winery Characteristics

S

ize

Years in

business

Slide36

Channel Choice Determinants:Fractional Logit Estimates

Slide37

AFRI / NIFA ProjectIntegrated Project

Research Objective 3:

Examine the extent of inter-firm collaboration in emerging wine regions and develop collective action strategies to foster the development of regional clusters, including inter-winery collaboration and collaboration with supporting and related industries.

Slide38

Wine Trails

N

Member of a Wine Association

Member of Chamber of Commerce

Is there a Food/Wine Trail in Your

Region?

Member of Food/Wine Trail

ALL

82

69

65

64

54

MI

22

19

18

18

16

MO

32

25

25

24

19

NY_PENN

28

25

22

22

19

Slide39

Detailed ResultsCollective Action Strategies

Produce GrapesProduce WineMarket WinePromote Wine RegionShare Information and ResourcesALL4635376871MI161691921MO1711162727NY_PENN138122223

Reasons to Collaborate with Other Wineries

No InterestView Others as CompetitorsDifferent Business PhilosophyNot a PriorityLack of TrustDistanceOtherALL36351961716MI1276027MO12148595NY_PENN12145164

Challenges to Collaborate with Other Wineries

Time

5

None

5

Lack of motivation of others

2

No equal wineries in region1"Rising Tide Floats All Boats"1

Slide40

AFRI / NIFA ProjectIntegrated Project

Extension Objectives:

Disseminate knowledge and research insights generated to engage winery owners and managers, wine industry leaders, wine grape producers, policy-makers and other wine industry

stakeholders.

Approaches

: Workshops with industry participants, and educational materials

.

Slide41

Thank you!

AFRI/NIFA Grant AwardAward Number: 0031130Description: 2011-68006-30815 Chaddad, Fabio