Interpreting the New Minnesota Winery Study

A new Minnesota wine industry study, partially funded by the Northern Grapes Project, is attracting a lot of attention.  Media outlets as far away as San Francisco and Chicago have reported recently about Minnesota wine.  While these reports paint a favorable picture of Minnesota as a wine producer, a deeper interpretation of the study reveals the challenges of maintaining the rapid growth of the past five or so years.

The main thrust of the study by Brigid Tuck, Extension Center for Community Vitality, and Dr. William Gartner, Department of Applied Economics, both at the University of Minnesota, is that the Minnesota wine industry is now firmly established.  In 2011, the grape growing and winery industries contributed $59 million in economic activity in Minnesota. Of this, $16.4 million was generated by vineyards, $22.1 million by wineries, and $20.5 million by winery tourists.

However, the study revealed very different levels of optimism expressed by grape growers and winery owners. Only 17% of vineyard owner respondents said their vineyards will ‘substantially increase” in the next two years. Winery owners are far more optimistic. 44% of winery owners said they plan to expand significantly in the next two years.

The disparity in growth plans between grape growers and winery owners demonstrates that while consumer demand for local wine is growing, producing wine grapes on a large scale in the Upper Midwest remains difficult.  Despite recent advances in viticultural techniques and cold hardy wine grapes, disease, pests and insects are the biggest problems reported by Minnesota grape growers.

In contrast, the study said that the biggest challenge for Minnesota winery owners was “government policies and regulations.” Could winery owners’ frustration with “government policies” be a reflection of public concern about the growth of Minnesota wineries which have increased from two in 1990 to well over 40 currently?

(And more wineries may be coming. The number of TTB licenses for Minnesota wineries grew 19% for the year ending April 30th, 2013, the largest increase in federal winery licenses in the Midwest.)

The “government policies” that challenge largely rural Minnesota winery owners may now be increasingly coming from local jurisdictions.  State and federal reporting is onerous for wineries, but local regulations, which can vary greatly, are more difficult to navigate.  The study implies that the growth of wineries in Minnesota might be contributing to a “not in my back yard” mentality in regard to issues like winery events and winery hours.

With over two-thirds of Minnesota winery sales occurring in tasting rooms, according to the study, winery owners run the risk of having their establishments viewed as bars. As is the case all over the Midwest, Minnesota winery events are successful at attracting customers, but they also generate traffic, noise and concerns about driving under the influence.  According to the study, the most popular promotions for drawing visitors to Minnesota wineries are live music followed by ‘grape stomps.”

See related story:  Are Wineries Neglecting an Important Message? 

Even if not all Minnesota residents support having more wineries, the study shows strong support for University of Minnesota bred wine grapes:

• Frontenac and Marquette represent 75% of the total planted cold hardy red wine grape vines in Minnesota.
• Since being released in 2006,  Marquette has come to represent over half of planted cold-hardy red cultivars. (Surprisingly, red wine production in Minnesota surpassed white wine production by a small margin, according to the study.)
• Frontenac Gris and La Crescent comprise 49% of reported white grape vines in Minnesota.

The domination of the four licensed University of Minnesota wine grapes in Minnesota is unusual compared with other Midwestern states.  In contrast, the top planted grape in Illinois, Chambourcin, is only 12% of grape acreage.  In Wisconsin, the top planted grape is also Marquette, but it accounts for less than 20% of the state’s wine grape vines.

Other findings of the report:

• Survey results, extrapolated out to the entire population of vineyards, indicate there are 2,000 acres of grape vines in Minnesota.  This is twice the grape acreage of both Iowa and Illinois individually, and about two-thirds of the wine grape acreage in Michigan, the largest Midwestern wine grape producer.
• Survey results, extrapolated to represent all growers in the state, reveal Minnesota grape growers produced approximately 2,100 tons of fruit in 2011. (Many Minnesota vineyards are young and not yet bearing fruit.)
• Average yield on producing acreage was 4.7 tons per acre.
• The average participating vineyard has 1,600 planted vines. Over one-third (35 percent) of vineyards have 1,001 to 3,000 vines in the ground.
• Interestingly, Frontenac Blanc is 7% of reported vines. The wine made from this grape is hard to find and virtually unknown to consumers.
• In 2011, the grape growing and winery industries supported 3,250 employees in Minnesota. Employees received $19.7 million in labor payments.
• Estimated winery and vineyard employment in Minnesota is 1,800 workers.
• Wineries view their own wine branding as their most important marketing strategy.
• The majority of responding vineyards (60 percent) are less than 2.0 acres in size.
• Less than 20 percent of the vineyards reported having more than 5 acres planted in grapes.
• The largest responding vineyard had 20 acres planted.
• 44% of Minnesota wineries were established after 2007.
• The percentage of Minnesota wine sold to restaurants in less than 1%, an area where there is certainly room for improvement.