Crunching the numbers for Virginia wine

Crunching the numbers for Virginia wine

In January the Virginia Wine Marketing Office sent a survey to Virginia’s wineries to gauge how well the state’s industry is faring, and how good a job the VWMO is doing at selling it. “We hear a lot of things anecdotally throughout the year,” director Annette Boyd told me over the phone: “Sales are up, sales are down.” They needed some hard data. About half of the wineries in the state responded, and the numbers paint a relatively cheery picture in these grim times.

“The fact is the economy is driving people to us right now,” says Chad Zakaib, the sales manager at Jefferson Vineyards. Virginia wineries sold more last year—and sold more directly from tasting rooms—in part because people are staying local for vacations and leisure.

Extrapolating for Central Virginia, 57 percent of local wineries saw an increase in sales from the tasting room last year over 2007. Moreover, 64 percent reported that wholesale wine sales also went up in ’08 over ’07 (although that number was certainly affected by the introduction last year of the Virginia Wine Distribution Company, which meant some wineries were using a wholesaler for the first time). Overall sales in 2008 increased or stayed the same for 81 percent of our local wineries, and 72 percent statewide.

To give some context, world wine consumption dropped last year for the first time since 2004. American beverage giant Constellation Brands (the world’s largest wine company, and largest multi-beverage alcohol supplier in the United States) just reported a loss of $407 million. Americans are buying more wine, but spending less per bottle; most of the growth in sales has been in the under-$10 range. Napa Valley, where wines tend to be a bit pricey, was hit hard last year. Meanwhile, Wal-Mart’s wine sales increased by 34 percent. How then did Virginia wineries, with a reputation for being expensive, manage to sell more wine in 2008?

“The fact is the economy is driving people to us right now,” says Chad Zakaib, the sales manager at Jefferson Vineyards. Virginians looking for cheaper vacations last year picked local wineries instead of, say, the Bahamas. “When gas prices got so high last summer,” Boyd says, “I think that actually played in [our] favor.” It also didn’t hurt that Virginia Wine got a ton of press in ’08 and ’07, like the Travel + Leisure article that named the state one of the top five wine destinations in the world.

But even with a lot of wineries reporting higher sales in 2008, it’s still hard going. “The downward price pressure is tremendous right now,” Zakaib says, and already a few wineries have dropped their prices. Nelson County’s Lovingston Winery lowered its prices across the board to bring its whole range in under $20. Co-winemaker Stephanie Puckett said that retailers and restaurants have been “happy to see that a winery is willing to take it on the chin.”

A big part of Virginia wine’s success is simply that it’s still growing. “Everyone’s getting better at what we’re doing,” Veritas winemaker Emily Pelton says. “We’re starting to get forward motion.” Pollak Vineyards, which opened in 2008, had a blockbuster first year. “[Wine is] flying out the door,” manager Nick Dovel reports. Is 2009 looking better so far than their first year? “Definitely,” Dovel says, “big time.”