GREENSBORO – Could North Carolina’s Haw River Valley become the next Napa Valley? According to researchers from The University of North Carolina at Greensboro and N.C. A&T State University, the potential is ripe.
Faculty from Greensboro’s two public research universities teamed up to examine the growth of North Carolina’s nascent grape and wine industry and ways the business side of the trade could be strengthened. Their results, published earlier this year, identified a burgeoning industry that’s already making an impact on North Carolina’s economy and has the potential to be a key crop as the trade develops and matures.
The wine industry has a history of being a job creator, producing economic waves that ripple through other business areas, including transportation, retailing and hospitality and tourism. “A bottle of wine sold is a lot more than just one bottle,” said Dr. Joyendu “Joy” Bhadury, the associate dean for graduate programs and research at UNCG’s Bryan School of Business and Economics. “You have to buy the bottle; a label needs to be made. There are wholesalers who’ll sell to retailers, hotels, bed and breakfasts, art museums. There are huge multipliers.”
A 2006 study, commissioned by the N.C. Department of Commerce and the North Carolina Wine & Grape Council, showed the industry’s economic footprint included 5,700 related jobs and a total economic impact of $813 million. “Studies show that grapes are the only cash crop that can replace tobacco,” said Victor Ofori-Boadu, a research assistant with the Department of Agribusiness, Applied Economics and Agriscience Education at N.C. A&T.
But struggles on the business side can hinder wineries and the growth of the industry. “If you look at it from the standpoint of a business, they are mini conglomerates,” said Samuel Troy, the Bryan School’s executive-in-residence. Winery owners are in charge of growing the raw materials, making and selling the wine, self-distributing and cross marketing their products, he said.
Key findings from the UNCG-N.C. A&T wine 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 the proposed business development center dedicated to their industry at Surry Community College.
The report also identified an overall need for better education and marketing to promote North Carolina’s locally produced, hand-crafted vintage, as well as areas of opportunity, such as the state’s need for more grapes than are currently being produced.
The team of researchers is already compiling information to address one of the findings, conducting a benchmark study on the state’s alcohol regulations and how they compare to other states in the nation.
The seeds for the UNCG-N.C. A&T study were planted in the fall of 2007, when project coordinators Bhadury and Troy arrived at the Bryan School. While brainstorming industries they might be able to positively impact with local expertise, they quickly honed in on the state’s young but growing wine industry.
“We identified the fact that Greensboro was within driving distance of a majority of the wineries in North Carolina,” Bhadury said. “We found that the wine industry had help when it came to viticulture and oenology,” referring to the study of grapes and making wine, “but little evidence existed of similar help available from the business side. That’s where we came in.”
They teamed up with other academics from the Bryan School and the schools of business and agriculture at N.C. A&T who were versed in transportation, international export, marketing, research and agribusiness, and started the yearlong process of researching the wine industry. In addition to Bhadury, Ofori-Boadu and Troy, the team includes Dr. Osei-Agyeman Yeboah, associate professor and interim director of N.C. A&T’s International Trade Center; Dr. Nicholas Williamson, associate professor of business administration at UNCG; and Dr. Kathryn Dobie, professor and director of N.C. A&T’s Transportation Institute.
The group conducted multiple phone and face-to-face interviews and visited vineyards over the course of their study, logging miles from Boone to Duplin County. They found an industry that’s attracting attention, is in high demand and has great potential. “If you look at current trends, people are consuming less hard liquor and moving to wine,” Yeboah said. “This is not an enterprise that will fail. The demand is there.”
Wine isn’t all. Studies rank North Carolina third in wine-related tourism behind New York and California, Williamson said. And grape byproducts can be used to produce lotions and other commodities. “Even if grapes don’t become wine, they can become other products,” Dobie added.
But researchers also realized that the majority of the state’s wineries are young – less than 10 years old – and were not looking to export their products internationally yet. The help owners need at this point is more basic.
“We learned the grape industry, except for muscadine grapes, is not at the stage where it can think about exporting,” Bhadury said. “We are at the stage of thinking about business development.”
The researchers have been happy to oblige.
“Part of the concept that they’ve brought forth is to assist smaller wineries and vineyards with understanding basic business practices, providing some resources from the business school in order to help them generate or improve their business plan and educating the industry in supply chain partnerships,” said Margo Knight Metzger, executive director of the N.C. Wine & Grape Council. “It can be overwhelming as a small winery understanding the complexities of doing business through a wholesaler and the benefits as compared to selling everything yourself. That’s their goal, to educate our industry about supply chain, which is helpful.”
The state’s wine industry has experienced exponential growth in the past five years. Since 2004, the number of wineries has grown from 35 to 85, Metzger said. “I would say by the end of this decade, we’ll have 100 at least,” she added.
“Our wine industry ranks 10th in the nation in terms of size and it continues to grow every year at a pretty impressive clip. We’re happy to have the university system here in North Carolina involved with our burgeoning industry.”
To read the full report, visit http://www.uncg.edu/bae/or/WIBDC_Results_Final_Report.pdf.
Wednesday, August 26, 2009
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