To the average wine lover, their favorite alcoholic beverage is an important part of their quality of life. But does opening a bottle of Cabernet at dinner contribute to the health of the U.S. economy? You bet. A new study released today by WineAmerica, the National Association of American Wineries, measured the economic impact of the wine industry in all 50 states, and found that it will generate close to $219.9 billion in 2017.
The study, conducted by John Dunham & Associates and commissioned by WineAmerica, measured the economic impact of jobs, wages and taxes. For the organization, which lobbies Congress and state legislatures for public policy that will be beneficial to the wine business, the report means one thing: leverage. "It's very self-serving; it was not out of idle curiosity," WineAmerica president Jim Trezise told Wine Spectator, explaining his reasons for conducting the study. "This gives us some real, fact-based data to say: This is what we mean to your economy."
Data from the overall study takes into account direct impact, supplier impact and induced impact. To take a winery as an example, direct impact refers to the jobs and wages directly attributable to the winery, as well as the money generated by tourism spending related to winery visits. Supplier impact refers to the goods and services the winery purchases from other industries, such as paying rent, buying corks, hiring shippers or paying consultants, as well as output created by wine retailers and wholesalers. Induced impact refers to the income received from the direct and supplier impacts as it is spent elsewhere and recirculated across the economy.
Wine-focused economic-impact studies have been done in individual states before; Trezise conducted one when he was the president of the New York Wine and Grape Foundation, and he believes that's when people started paying attention to the industry. "[There is] strong growth everywhere," observed Trezise. "That's what's really exciting about it."
Nationwide, the industry directly employs close to 1 million people who will earn over $33.5 billion in wages in 2017. Adding in supplier and induced impact, the study found that the industry creates and supports 1.7 million jobs, generating $75.8 billion in wages.
The industry will also pay $31.3 billion in federal, state and local business taxes in 2017, and an additional $5.2 billion in consumption taxes, which includes excise and sales taxes. As for tourism, wineries will attract 43 million tourists in 2017, who will contribute $17.7 billion to local economies.
"Even though we could be considered a small industry, the total economic impact is huge," said Trezise. The wine industry affects many different sectors, such as agriculture, manufacture, tourism, advertising, education, research and so on. Every state has an economic stake in these activities.
The study released individual data for all 50 states. Although the big five of the wine business—California, New York, Washington, Oregon and Virginia—are among the highest for economic impact in their states, there are some surprises. Texas ($13 billion total economic impact), Florida ($11 billion), Illinois ($6.9 billion), Ohio ($6.1 billion) and Michigan ($4.9 billion) are also at the top of the list, based on how much the wine industry generates for their state.
The study does not provide a comparison of these figures to the overall economy of the state. That being said, the wine industries in 29 states each generate more than $1 billion in total economic impact for their states.
Trezise also points out that the growth of the wine industry over time has been a positive one. Whereas restaurants can lose a lot of money for their investors and owners, and close within a few years of opening, it hasn't been so with wine. "They start, they stay, they grow and they keep growing," he said. "It's really a growth industry for the U.S., for sure."
Moving forward, Trezise wants to bring this data to lawmakers. Bills related to alcohol introduced in Congress and in state legislatures can either hurt or help the wine industry. WineAmerica works closely with the beer and spirits industries to lobby for the latter. "Just as you need a good climate to grow good grapes to make great wine, you need a good business climate to grow an industry," he said.
One federal bill, a current focus for the organization, is the Craft Beverage Modernization and Tax Reform Act, which currently has 49 cosponsors in the U.S. Senate and 270 in the House of Representatives. Among other things, the bill would alleviate the tax burden on wineries. When it starts getting traction and gets out of committee, the data from this study can be used to convince lawmakers to vote in favor.
"What this study does is just to remind people how economically important our industry is," Trezise said, just like the auto and oil industries do. "And we have not had this tool until now."