Ohio Grape & Wine Economic Impact Study

The grape and wine industry has been a long standing industry of Ohio with more than 2,200 acres of grape vineyards and 100 wineries. A 2007 survey by the Orbitz Worldwide travel company 1 ranked two Ohio regions in its top ten wine destinations ( Grand River Valley at No. 6 and Lake Erie at No. 9).

To date, no comprehensive study has been conducted to determine the economic impact of the grape and wine industry in the Ohio . To help determine the economic value of the industry, three organizations (Ohio State University Extension, Ohio Wine Producers Association, and Lake County Soil & Water Conservation District) collaborated to conduct the Ohio Grape and Wine Economic Impact Study and the Ohio Wine Lover’s Survey. These studies examined demographic data, grape production, wine sales, capital and variable investments, future operational concerns, spending habits of winery visitors and the economic multiplier effect of the grape and wine industry.

In the spring of 2007, the research team developed the methodology and surveys to conduct this comprehensive study. The team developed a fifty-three question survey for the Ohio Grape and Wine Economic Impact Study and a twenty-nine question interview for the Wine Lover’s Survey. Both surveys were pilot tested utilizing input from the Ohio grape industry and reviewed by the Institutional Review Board at The Ohio State University.

The Ohio Grape and Wine Economic Impact survey consisted of fifty-three questions. These questions examined demographic, wine and grape production, expense data, sales, future operational concerns and the economic ripple effect of the industry. One-hundred forty-nine (n=149) vineyard and winery operations were mailed a survey in July, 2007 with a second mailing in October to non-respondents.

Seventy-seven total producers (51.6%) responded to the survey. Sixty-one percent (n=32) of the grower-only group responded and forty-six percent (46.4%) of the winery operations responded. A total of 842 acres of grapes were reported by survey respondents. Sixty-eight percent (68.4%) of the respondents were from operations located in northeast Ohio , nine percent (9.2%) from northwest Ohio , twelve percent (11.8%) from southeast Ohio and eleven percent (10.5%) from southwestern Ohio .

The average age for the principal manager was 52.76 years with fifty-four percent (53.9%) between the ages of 50-69 years old. Forty-five percent (45.3%) of all the vineyard operations were sole proprietor, twenty-three percent (22.7%) limited liability companies, nineteen percent (18.7%) corporations and five percent (5.3%) partnerships. Wineries who own a vineyard were more inclined to use a limited liability company or corporation as their vineyard business structure. The business structure for Ohio wineries was reported as forty-eight percent (47.7%) limited liability companies, thirty-four percent (34.1%) corporations, nine percent (9.1%) sole proprietor, seven percent (6.8%) partnership and two percent (2.3%) responded as not applicable.

Respondents were asked to estimate how many people visit their business each year (winery and/or vineyard). Respondents were asked to select the range of visitors per year. A total of 806,850 visitors were reported by respondents (n=75). The majority of these visitors were reported by winery operations as the grower-only group reported only 17,000 visitors per year. Based on survey response data, it is estimated the total number of visitors to Ohio winery and vineyard operations to be over 1.7 million visitors per year.

It is estimated 724 persons work in Ohio vineyards and 785 persons in Ohio wineries. The grower-only group reported very few benefits for their employees. The only benefit offered by three percent (3.1%) of the operations was stock or ownership options. About one-half of the winery respondents (52.3%) do not provide benefits. However, some wineries offer benefits, Twenty-percent the winery respondents offer medical insurance, nine percent (9%) offer dental insurance, and five percent (4.5%) offer eye insurance.

Managers were asked to report ranges for their winery and vineyard capital and variable expenses. Total capital investment for Ohio vineyards was estimated at almost $10 million for the past five years. An additional $7.5 million of capital expenditures will be made during the next five years in Ohio vineyards. It is estimated Ohio wineries made $20.1 million of capital expenditures during the past five years and $12 million will be made in the next five years. Annual variable expenses for Ohio vineyards were estimated at $4.3 million and $13 million for Ohio wineries.

Respondents were also report the percentage of their annual expenditures that are made with Ohio Businesses. Respondents indicated on average they conduct fifty-eight percent (57.6%) of their annual expenses with Ohio businesses. Thirty-three percent (33.0%) of the operations spend over eighty percent (80%) of their annual expenditures with Ohio businesses.

A total of 842.59 acres of grapes were reported by 59 respondents. Respondents reported producing 2,365 tons of juice grapes valued at $511,000. An estimated 4,500 tons of juice and table grapes valued at $1,000,000 are produced each year in Ohio .

Winery operations were asked to report the gallons of wine they produced each year. A total of 592,500 gallons are produced for the respondents with sixty-one percent (60.5%) of the respondents producing less than 5,000 gallons per year. An estimated 1.33 million gallons are produced by Ohio wineries. An average of sixty-two percent (61.9%) of Ohio wines sales are marketed retail.

Ohio wine sales are estimated at $43.50 million, $1.45 million for gift sales, $1.2 million for special events, $33,000 for lodging, and $1.44 million for other non-wine sales. An additional $15.84 million is estimated to be spent on food and restaurant sales each year.

What is the Ripple Effect of the Industry

OHFOOD, an acronym for Ohio food, is a sophisticated input-output model developed by Dr. Tom Sporleder from The Ohio State University’s Farm Income Enhancement Program. This model is based on the IMPLAN estimation procedure developed by the U.S. Forest Service. By utilizing the OHFOOD multipliers, estimations can be made of the ripple effect on Ohio ‘s economy from the Ohio grape and wine industry.

Multipliers utilized for this study were output, gross state product, income and for employment. The output multiplier measures the total change in output generated by a $1.00 change in final demand. Gross state product (GSP) is a measure of the final market value of goods and services produced by labor and property located in a state. It is the state counterpart to the nation’s gross domestic product (GDP). The income multiplier measures the total change in personal income resulting throughout the economy from a one dollar change in a sector. The employment multiplier examines the ripple effect to employment in the state. This multiplier examines the number of full time employee positions which are generated in jobs outside of the grape and wine sector as a result of this industry.

The following table shows the results of placing the different sectors of the Ohio grape and wine industry into the OHFOOD model. This table shows the ripple effect this industry has on each sector of Ohio ‘s economy. An annual economic output of $64.4 million dollar results in a $105.5 million impact on Ohio ‘s output, $133.4 million to its gross state product and $151.7 million to Ohioan’s income. In addition, 198 jobs are created in non-grape and wine businesses as a result of the Ohio grape and wine industry.

OHFOOD Multiplier Impact of the Ohio Grape & Wine Industry

Ohio Grape &

Wine Industry Output Sectors

Estimated Economic Output of Ohio Grape & Wine Industry (million $) OHFOOD

Output

Multiplier

(million $)

OHFOOD Gross State Product

Multiplier

(million $)

OHFOOD Income

Multiplier

(million $)

OHFOOD

Employment Multiplier

(F.T.E.)

Juice Grape Sales $1 $1.4 $1.3 $1.5 1
Wine Sales $43.5 $69.7 $96.7 $117.6 171
Gift Sales & Other Non-Wine Sales $4.1 $6.7 $6.3 $6.3 6
Meal & Restaurant Sales $15.8 $27.7 $29.1 $26.3 20
Total $64.4 $105.5 $133.4 $151.7 198

Assumes no decline in other sectors of Ohio ‘s economy due to grape & wine economic impact

Our stated in another manner, every $1 change in the Ohio grape & wine industry will have a $2.35 impact on the income of Ohioan’s, $2.07 on gross state product, and $1.64 on the state output. In addition, 198 jobs are created in non-grape and wine businesses as a result of the northeast Ohio grape and wine industry. Every $1 million dollar increase in the northeastern Ohio grape & wine industry will create 3.07 full time jobs in other sectors

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