A Marketer's perspective on the Virginia wine industry

Having previously reported on the technical aspects of the Virgina wine industry, I turned to Ms. Annette Ringwood Boyd, Director of the Virginia Wine Board Marketing Office (VWBMO), to gain insight into the marketing issues that the industry confronts at the macro level and the types of initiatives and assistance available to aid in advancement of the cause.  I report on my discussion with Ms. Boyd in this post.

The Virginia Wine Board, founded in 1984, is the facility within the Commonwealth's Department of Agriculture and Consumer Services that is tasked with "promoting the interests of the vineyards and wineries in the Commonwealth through research, education, and marketing."  The  members of the Board -- to include nine voting members (three growers, six wineries) and one non-voting member (the Secretary of the Deprtment of Agriculture and Consumer Services) -- are appointed by the Governor and serve four-year terms.  According to Ms. Boyd, one-third of the Board's budget is allocated to research targeted at the viabilty and sustainability of the wine industry and the remaining two-thirds is targeted at marketing and promotion.

The VWBMO assists the Board in meeting the marketing aspect of its mandate through its focus on four key areas: (i) driving individuals to Virginia wine; (ii) increasing regional and national awareness of Virginia wines; (iii) trade promotion; and (iv) expanding the footprint of Virginia wine.
As it relates to driving people to Virgina wine, Ms. Boyd points to Virginiawine.org and the VA Wine Guide as important arrows in the quiver.  Virginiawine.org has the tagline "your guide to everything Virginia Wine" and does a pretty good job of meeting that requirement.  It is a one-stop shop for information on wineries, wine-related events, wine regions and AVAs, wine news, and other relevant topics.  The Virginia Winery Guide seeks to facilitate winery visits by providing "a detailed map and listing of each winery, with tour hours, amenities and directions."  In addition, VWBMO works with Virginia Tourism to target national media for promotion of the benfits of touring the Virginia wine region, set as it is in beautiful countryside with rolling hills dotted with  horse farms, grape vines, and lush meadows.  Their efforts have been rewarded by Harper Travel recently ranking Virginia as one of the top 10 wine destinations in the country and it being ranked as one of the five up-and-coming wine regions by Travel and Leisure Magazine.

There are two significant trade-related VA-wine events that occur during the course of the year.  The first of the two is the week-long celebration of Virginia Wine that is called Love by the Glass.  This event is held in April and features VA wine by the glass at participating restaurants and wine shops.  The second is an October-long celebration of VA wines with restaurants, wine shops, wineries and events all serving the wines by the glass.

VWBMO is working with an agency to expand the footprint of VA wines in a systematic manner beginning with neighboring states and the District of Columbia, and then expanding outwards to more distant locales.  The team recently conducted consumer and trade tastings in Raleigh, NC, and is attempting to get DC excited about the wine industry that is thriving in its backyard.

In terms of success of the VWBMO promotional programs these will be measured by increases in VA wine sales growth over the long haul.  In the short term, success will be measured by media-attention garnered and requests for sales support.

In response to a question about the market for VA wines, Ms Boyd posited a number of markets, rather than a single market, with a message for each.  There is a market which encompasses VA, DC, and contiguous states and the message for this market comes in two parts: (i) the quality is here and (ii) we are the local option.  The wine has been shown in London and the message for that market is "We are the US wine region with the climate and soil to produce old-world-style wines."  New York is a very attractive market -- given its, size, proximity, and sophistication -- but the message there has to be carefully tailored because, unlike other regional states, it has a viable local option.  For that state the message is "VA has up-and-coming, interesting wines that are worthy."

It is hard to get a truly accurate handle on the amount of VA wine that is sold because VWBMO only has access to figures on VA wine sold within the state.  Last year 463,00 cases of VA wine were sold in the Commonwealth (4.6% of all wines sold in the state) and, at an average cost of $200 per case, this amounts to total sales of $92.6 million.  If a further assumption is made that the VA wine sold outside the Commonwealth is 5% of the in-"state" sales, that figure would increase to $97.23 million.

The industry has experienced three years of double-digit growth and, while these rates will not be achieved this year, Ms. Boyd sees sustained, steady growth tied to increasing acreage.  The Governor has provided tax credits for individuals willing to invest in vineyards and that has had a positive impact on the acreage but Virginia is an older "state" and does not have much available land or, more specifically, enough land that is suitable for wine-grape growing (Even when the land is suitable, grape vines have to compete with other agricultural options for its use.).  The average farm is 25 acres in size and the average production is between 2500 and 5000 cases.  Fo the most part, the industry makeup will continue to be the small, niche farm; the wineries like it that way and so does the Commonwealth.

With respect to the state's wineries, Ms. Boyd sees each one of them as a client to be represented.  Each winery has its own business plan and objectives so VWBMO seeks to develop and implement programs that will have the greatest benefit for the large majority.

In our opening discussions I queried Ms. Boyd about the role that the Governor has played in the ascendancy of the Virginia wine industry.  Ms. Boyd was emphatic in asserting that Governor Bob McDonnell has had an inordinately positive impact on the trajectory of the Commonwealth's wine industry.  Accorrding to Ms. Boyd, then candidate McDonnell spoke to the potential of the industry and how a McDonnell administration would seek to improve its profile.  Once in power, he worked with the General Assembly to ensure that 100% of the excise tax paid by the wineries went back to the Wine Promotion Fund and, as a result, the Wine Board budget went from $580,000 to $1.6 million.  The Governor has, by his personal actions, increased the visibility of VA wines.  For example, on his trade missions -- to locales inclusive of Beijing, Shangai, Tokyo, Stockholm, among others -- the Governor only serves VA wines.  For events where visitors come into the Commonwealth, the Governor promotes and serves VA wines.

Overall, Ms. Boyd is very pleased with the direction of the industry and is especially pleased with the support that the industry continues to receive from the Governor and the General Assembly.  For the future she will continue to focus on expanding the footprint of VA wines.  Most of the internal hurdles have been addressed and the message has been getting out locally (aided in large part by a loyal band of citizen bloggers); the next hurdle to be surmounted is to drive the recognition of the wines beyond Commonwealth boundaries.  It is a big wine world out there with a lot of wine sources with a lot more resources than we have today.

I engaged Ms. Boyd on the Wine Bloggers Conference held in Charlottesville one year ago and got her thoughts as to the benefits that accrued to VA wine as a result.  I will report on that aspect of our conversation in a subsequent post.


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