Business Basics for N.C. Wine Industry
Study defines areas for improvement; state regulations to be evaluated
The number of North Carolina wineries has quadrupled since 2000, but newcomers to the industry need more grounding in basic business practices, a new study reveals.
Greensboro, N.C. -- North Carolina today has 87 wineries, more than four times the 21 existing in 2000. The grape and wine industry has been growing fast, and now grapegrowers and winery owners have some additional help in a part of the industry that is sometimes neglected: the business aspect.
During 2008, a group of researchers at the University of North Carolina at Greensboro and the North Carolina Agricultural and Technical State University focused on the growth of the industry and ways to strengthen its business side. The result was a study, released earlier this year, that profiled the industry, identified the primary barriers to profitability and what could be done about them, and suggested how the industry could benefit from a business development center.
The impetus for the business study came in the fall of 2007, when Dr. Joyendu Bhadury, the associate dean for graduate programs and research at UNCG's Bryan School of Business and Economics, and Samuel Troy, the executive-in-residence at the Bryan School, both arrived in Greensboro. Part of UNCG's mission is to further knowledge and to foster regional economic development. With these goals in mind, Bhadury and Troy identified the wine industry as a young, growing industry with an increasing economic impact on the state.
A study of that impact by the N.C. Department of Commerce and the North Carolina Wine & Grape Council in 2006 demonstrated that the wine industry in North Carolina had generated 5,700 jobs and had a total economic impact of $813 million, with economic ripples throughout other business areas including tourism, hospitality, retailing and transportation.
Bhadury and Troy realized that the industry had assistance in viticulture and enology from Surry Community College in Dobson, N.C., but no similar support on the business aspect of growing grapes and making wine. They then enlisted colleagues at Bryan School and at the schools of Business and Agriculture at N.C. A&T who were knowledgeable about areas such as marketing, research, agribusiness, transportation and international export, and began a yearlong process of researching the wine industry.
The group developed surveys for grapegrowers and for wineries, conducted both phone and face-to-face interviews, and visited vineyards and wineries. Most of the wineries have been in business for fewer than 10 years, and the researchers found that the business assistance they need most is to understand basic business practices. The main findings of the industry report show that winery owners are held back by a lack of time and capital, feel burdened by the state's alcohol regulations, would benefit from using wine distributors instead of self-distributing their products, and would profit from a proposed business development center for grapes and wine at Surry Community College.
One recommendation of the report that is already being addressed is the need for a benchmark study on the state's alcohol regulations and how they compare to other U.S. states. Margo Knight Metzger, executive director of the N.C. Wine & Grape Council, told Wines & Vines, "Implementing all the recommendations in the study would take a lot of manpower and expense, which the state doesn't have at this time. However, we are going ahead with the benchmark study and will be sending out a basic survey to stakeholders in the wine industry this fall. We want to identify how other states regulate their wine industries and what systems work the best."
If the wine industry continues to expand -- having the economy turn around would also help -- the possibilities improve for the implementation of some of the other recommendations in the report. Bhadury noted, "The MBA program at UNCG was involved in writing the organizational plan for the new North Carolina Center for Viticulture and Enology at Surry Community College that is currently under construction. We hope the industry will grow, and that the Center will offer courses that meet the business needs of the wine industry."
The key recommendations of the report include:
The state legislature should ensure that there is consistent state support for the wine industry through:
• Enacting a statewide regulation to ensure the use of N.C. wine at all state-supported events where alcoholic beverages are allowed;
• Undertaking a study of the regulations governing the N.C. wine industry, and how they compare to similar regulations in other wine-producing states;
• Developing incentives and programs to support marketing of N.C. wines domestically and internationally.
The N.C .Wine & Grape Council should educate state citizens, especially legislators and elected officials, about the economic impact of N.C. wine; work on branding and marketing NC wine as a "locally produced, hand-crafted" product; build a database on the "best practices" in grapegrowing and winemaking; and conduct research on growing grapes tolerant of high humidity and resistant to mildew;
• Develop an organizational structure that facilitates the ability of smaller wineries to use the services of distributors who are committed to promoting N.C. wine;
• Promote and develop collaborative relationships between groups of wineries and grapegrowers, and establish effective supply-chain partnerships;
• Address the scarcity of time issue faced by winery owners through the outsourcing of non-core activities, and use of technology tools to facilitate time and cost management as well as product management;
• Develop an accessible -- possibly online -- curriculum to address development needs of small wineries that self-distribute the ir wine.
This could be through the N.C. Center for Viticulture and Enology at Surry Community College, and should address subjects such as time and cash flow management, accounting, marketing and distribution.
To read the full report, visit: uncg.edu/bae/or/WIBDC_Results_Final_Report.pdf.
The complete research team included Bhadury, Troy, Victor Ofori-Boadu, a research assistant with the Department of Agribusiness, Applied Economics and Agriscience Education at N.C. A&T; Dr. Osei-Agyeman Yeboah, associate professor and interim director of N.C. A&T's International Trade Center; and Dr. Nicholas Williamson, associate professor and director of N.C. A&T's Transportation Institute. For more information, contact Dr. Joyendu Bhadury at (336) 334-5338 or by e-mail at joy_bhadury@uncg.edu. PRINTER-FRIENDLY VERSION »
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