ECONOMIC IMPACT OF THE INDUSTRY

The results are in: the Washington State wine industry affects the state economy by $2.4 billion annually, employs more than 11,000 people statewide and between the wine grape growers and wineries directly paid $34 million in wages. A statewide economic impact study, the first of its kind for Washington, provides the wine and wine grape industry a benchmark to measure our growing economic strength.

While we're relatively young, (even though the first wine grapes and wineries have been recorded as far back as the mid-1800's, we got serious about this business in the early 1980's) Washington's wine industry has more than doubled in size during the past decade and as a result ranks second nationally in total wine production. According to the Washington Ag Stats Service, there are more than 24,000 acres of wine grapes...although rumors say we're pushing 30,000 acres. The Wine Commission tells us there are now 162 wineries producing 59 million bottles of wine with a retail value of $576 million.

The wine industry is vertically integrated. A valued-added agricultural commodity that keeps the majority of its profit margin within state boundaries. From vineyard development and grape cultivation to crushing grapes for premium wine production plus sales and marketing, the wine and wine grape business impacts numerous resources, compounding the statewide economic impact. Some of the indirect effects of the wine business ripple throughout the state's economy including the distribution, retail, and export of wine which totaled $982 million in sales revenue, and employed thousands of people.

Further economic effects of the wine industry are felt throughout the state in tourism, marketing and promotion, financial institutions, and in government tax revenues and license fees. Just the wine-related taxes and licensing fees bring government institutions $60 million in revenue!

WINE GRAPE CROP
 
Our crush this year beat all previous records with 90,000 tons harvested. In the past decade, the state's annual wine grape crop increased by 64 percent, with a current value of $64 million. Nearly 300 Washington wine grape growers differentiate themselves by focusing on higher-margin, higher-quality 100 percent viniferous wine grapes, resulting in greater returns and increased profitability margins.

Our leading red wine varietals include Merlot, Cabernet Sauvignon, Syrah, Cabernet Franc, and Sangiovese.

Leading white varietals include Chardonnay, Riesling, Sauvignon Blanc, Semillon, and Viognier.

These leading varieties and many other minor varieties are grown in seven designated viticultural appellations in the state, with two additional appellations proposed:

1.) Yakima Valley established in 1983
2.) Walla Walla Valley established in 1984
3.) Columbia Valley established in 1984
4.) Puget Sound established in 1995
5.) Red Mountain established 2001
6.) Columbia Gorge established 2004
7.) Horse Heaven Hills established 2005
8.) Wahluke Slope established 2006

Proposed:
Rattlesnake Hills 

The Yakima Valley and the Walla Walla Valley are located within the larger Columbia Valley appellation and Red Mountain is located within the Yakima Valley appellation.

WINERIES
 
Producing high quality grapes allows our wineries to focus on the premium market segment (wines marketed in 750 ml bottles retailing over $6), the fastest growing global segment of table wines. Washington State wineries sold 5 million cases of wine for revenues of $289 million. In addition, wineries spent approximately $127 million on supplies and services within the state.

CONSUMER CONSUMPTION
 
Increased wine production is a direct result of global consumer demand. More and more consumers are developing a passion for wine as the baby boomer generation gets older and has more disposable income. Since the mid-1980's, consumption rates have increased by double-digits for the premium wine segment. Wine sales are growing at a compounded annual growth rate of 12 percent, which is double the general economy's growth. And, consumers taste preferences are changing as demand has shifted from white to red varietals and, as luck and planning would have it, Washington state now has more red than white varieties and the trend looks to continue that way.

More than 75 percent of the wine produced in Washington State, a value of $225 million, is shipped out-of-state, which positions the Washington wine industry as a global leader. It also helps us explain to non-west coast consumers that wine grapes are not grown on the banks of the Potomac but rather in a state called Washington where great wines are made.

THE BOTTOM LINE

And the bottom line is: as the Washington State wine and wine grape industry continues to focus on producing premium, quality wine grapes for premium, quality wine and continues to explore untapped markets, our economic impact on the state of Washington will continue to flourish.

The Washington Wine Commission, Washington Association of Wine Grape Growers and the Washington Wine Institute jointly commissioned the economic study done by the wine industry economic research firm of Motto Kryla & Fisher based in St. Helena, California. Data was collected in early 2001. Most calculations were based on 1999 data, the most current year complete information was available.