Economic Impact 2012

wine geek blog-01I’m a Wine Geek, I’ll admit it.  But I’m not alone, so I’ve decided to take this opportunity to write blog posts specifically for geeks like me.  Keep your eyes open and keep coming back to Iowa Decanted – unlike our regular content which is updated at the beginning of the month, this blog will be a continual work in progress and you’ll be able to find new content more often.  I’ll be talking about pretty much anything that comes to mind in regards to the wine industry of Iowa, so I hope you’ll join me in this new adventure.  First up?  An interesting study brought to my attention by Mike Vincent of Wooden Wheel Vineyards.

This study, commissioned by Iowa State University, was released in March of 2014 – and it’s a report that every true wine geek should know about (false wine geeks need not continue!) and one about which every locavore should be proud.  This report, which sports the titillating title ‘The Economic Impact of Iowa Wine and Wine Grapes – 2012’, states that the full economic impact of Iowa wine and grapes during the year 2012 was $420 Million.

Wow, huh?

We are, of course, currently living in the year 2014, so if you’re like me you’ll be wondering what this report from 2012 means for 2013 and today.

According to the report, this total economic impact increased 79% from the year 2008, which to this wine geek seems an incredible and wonderful leap in the right direction.  Winery visit estimates were up as well at a whopping 51% from the year 2008.  The total number of wineries in the state rose from 74 in 2008 to 99 in 2012.

What can we infer from this information – can we assume that this explosive growth will continue into the future?

Well, no.  I think not.

Don’t get me wrong, this is great news, but given the realities of the industry I don’t believe (and this opinion is shared among many players) that this trend in growth can or will continue.  Iowa is a difficult place to grow grapes – talk to any vineyard manager and she will confirm this.  Agriculture is a time consuming and risky venture, in general, and it’s safe to say that despite the growing popularity of native wine, vineyard managers will be hesitant to pursue rapid expansion without certain assurances.  According to this report 90% of the wineries in Iowa could be considered small producers, with only 5 wineries producing more than 5000 gallons of wine in 2012.  Small producers generally experience (and pursue) tactful expansion given their lack of access to equity.  They grow as they see fit and only as much as they feel comfortable with.

Winemakers experienced this firsthand in 2012.  According to the economic impact report planted acreage experienced only moderate growth which led wineries to look elsewhere to find grapes/juice to fulfill their demands.  These imported grapes are, of course, more costly and if this trend continues the increased cost of wine production is likely to hamper future growth and expansion.

Taking into consideration the market as a whole, we can safely say there is plenty of opportunity to grow and expand operations and capture market share.  While Iowa was listed as the 25th largest wine producer in the United States for the year 2012, California topped the list boasting 88.58% of total wine production.  Iowa produced only 0.03%.

As we can see – plenty of opportunity for the future.

So what can we expect for the future of Iowa wine?

While I don’t believe we can expect the same level of growth, I think we can safely assume we can see a steady, gentle increase in economic impact as time goes on.  Industry members are beginning to find their rhythm and consumers are beginning to pay attention, so rather than focusing on quantity I speculate we’ll see a higher concentration on the quality of Iowa wine.  Consumers are slowly learning the nuances of the wines which can be produced in this region and as their knowledge-base and palates develop they’ll begin demanding a more elevated product.  In other words, I think the future of wine in our state will increasingly depend on its acceptance by a quality-centric consumer.

We have a lot to look forward to.

Until next time, I raise my glass to all my fellow Wine Geeks.  Cheers!

PS – you can find the economic report from 2012 here.