September 2016 Issue of Wines & Vines

Economic Impact of California Wine: $114B

by Paul Franson
National Economic Contribution of the California Wine Industry
* FTE = Full time equivalent. Source: John Dunham & Associates/Wine Institute

San Francisco, Calif.—The California wine and wine grape sector and allied businesses delivered an economic contribution of $57.6 billion to the state’s economy in 2016 and $114 billion to the overall U.S. economy, according to a new report commissioned by Wine Institute and the California Association of Winegrape Growers.

The figure represents about $98.90 billion in total economic output without taxes, or roughly 0.55% of the U.S. 2015 GDP of $18.2 trillion.

The report, “The Economic Impact of California Wine and Grapes 2015,” prepared by John Dunham & Associates of New York, was presented Aug. 4 at a joint informational hearing of the California Assembly Committee on Agriculture and Assembly Select Committee on Wine held at the University of California, Davis.

The study defines the California wine industry as wine grape growing, wine production and wine-related tourism in the state of California as well as the wholesaling, retailing and direct-to-consumer sales of California wine in all 50 states, plus the District of Columbia.

Wine producers, wholesalers and retailers directly employed 447,982 Americans in 2015. These workers earned more than $16.32 billion in wages and benefits. When supplier and induced impacts are taken into account, the California wine industry is responsible for 786,387 jobs in the United States and $34.92 billion in wages as well as $14.14 billion in direct federal, state and local taxes, not including state and local sales taxes imposed on California wine. The combined totals for economic output, wages and California wineries and vineyards directly and indirectly generated 325,000 jobs in California and 786,000 jobs across the nation last year.

Independent California growers employ 34,614 in growing wine grapes, and California wineries and the vineyards they own directly employ 30,823 people in the state. California wine tourism is directly responsible for 47,552 jobs in the state.

    California wine profile 2015



     • 85% of U.S. wine production is from California. (The state is the world’s fourth leading wine producer after France, Italy and Spain.)

    • 229 million cases in the U.S. market

    • 51 million cases sold in 138 export countries

    • 5,900 wine grape growers with 608,000 acres in 138 AVAs

    • 3.7 million tons of wine grapes (110-plus wine grape varieties)

The report shows growth of 17% in statewide impact (from $49.2 to $57.6 billion) and 19% in national impact (from $96.0 to $114.1 billion) in the past seven years.

This strong growth during a period that started with the Great Recession in 2008 and continued with slow recovery shows the strength and resiliency of the nation’s No. 1 wine-producing state as a positive economic force across the country.

Nevertheless, the growth in economic impact didn’t match the value of retail wine sales growth, according to figures from the Wine Institute. It did exceed the volume shipped to U.S. markets, however.

California shipments to the U.S. market grew from 201.6 million cases in 2008 to 229 million in 2015, a 13.6% increase. Retail value increased from $26.1 billion to $31.9 billion, a 22.2% rise.

Dunham said that this results from the economic model including some items like tourism that don’t correlate directly with wine sales. “They’re different models, and some are measured differently.”

Associations comment
“Our predominantly small, family-owned businesses create jobs, pay significant taxes and give back generously to charities and communities,” said Wine Institute president and CEO Robert P. (Bobby) Koch. “These are significant accomplishments when the strong dollar and pressure from imports make the U.S. the most competitive wine market in the world, and we continue to face the threat of increased taxes and regulation at every level of government.”

“Vineyards and wineries are iconic images of the California landscape, but today’s report reminds us that wine and wine grapes are also integral to a vibrant state economy,” said California Association of Winegrape Growers president John Aguirre.

“The scenic views and tasting rooms found in wine country attracted nearly 24 million tourist visits in 2015, and the commitment of California growers and vintners to sustainable practices forms a foundation that supports 325,000 jobs while also promoting important social and environmental benefits.”

A new impact model
John Dunham & Associates used new IMPLAN methodology for the 2015 report and also adjusted the 2008 economic impact numbers so that the comparison in growth would be comparable.

The report measured the full economic impact of the wine and grape industries in terms of employment, wages, taxes, tourism spending and visits and charitable giving. The data came from industry sources, government publications and Dun & Bradstreet Inc.

It uses a standard and widely used methodology that includes direct, indirect and induced economic impact in order to present the full picture.

The IMPLAN model, developed by the U.S. Forest Service and the University of Minnesota, is used by many companies around the world as well as government agencies such as the National Agricultural Statistics Service, Economic Research Service and Federal Reserve Bank.

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