The Washington Wine Commission’s board has approved a long-term strategic plan that will require significant increases in assessments from grape growers and wine producers over the next five years.
This is the first long-range strategy ever adopted by the Wine Commission, which is charged with marketing and promoting Washington wines. The plan involves promoting Washington wines internationally, while increasing the industry’s commitment to research and education. Assessments collected from grape growers and wine producers could increase from $1.6 million in fiscal year 2007 to $4.7 million in fiscal year 2011.
The commission’s 2007 budget, approved at the board’s June meeting, is $2.8 million. Besides assessments from growers and wineries, the Wine Commission receives funding from a tax the state collects on every liter of wine sold in Washington State ($210,000 in 2007), and from a legislative appropriation ($145,000 in 2007).
It funds activities like a test-marketing campaign completed this spring in Tampa, Florida, the annual Taste Washington expos, and the annual Washington Wine Month promotion. If industry members approve the plan, that budget would grow to $6 million by 2011.
Washington’s wine industry contributed about $3 billion to the state’s economy in 2004, the most recent year for which statistics are available.
As the state’s wine industry expands, Wine Commission Executive Director Robin Pollard told the board, “We are at a critical juncture. We must look five years out to sustain the growth.” The plan projects increased expenditures on consumer and trade marketing from $582,000 in 2007 to $4.2 million in 2011.
In February 2006, the commission launched a three-month test-marketing campaign in Tampa designed to promote Washington wines as a branded product, centered on the slogan “Washington—A Perfect Climate for Wine.” The group chose Tampa because it reflects the demographics of the nation. Results from that campaign showed the kind of sales the Wine Commission hopes to nurture through similar campaigns, both in the United States and internationally.
During the test period, dollar sales for Washington wines climbed 45 percent for a retail gain of nearly $448,697. Total cost of the campaign, which included radio advertisements, billboards, and print ads, as well as promotions like wine tastings, media events, and point-of-sale promotions like posters and bottle hangers, was $385,000.
“Rarely do you spend money on advertising, and in the period of the campaign get a return on investment of more than 100 percent,” said Commissioner Ted Baseler, chief executive officer of Chateau Ste. Michelle. “The ads became a rallying cry to get the product on the shelf and get the retailers to promote it.”
Commissioner Rick Small of Woodward Canyon Winery said the Florida campaign gave Washington wineries a launching pad. “I saw growth in sales in south Florida as well as north Florida,” he said, adding that the test campaign merely opened the doors to a new market.
“Every one of us who has a winery is obligated to keep the ball rolling,” he said.
Targeted ad campaigns will continue under the five-year plan, with a repeat campaign in Florida next year, expanding to Orlando in 2008. The commission may expand to other cities after that.
Before approving the five-year plan, commissioners heard comments from Paul Champoux, chairman of the Washington Association of Wine Grape Growers. That group’s board, he said, will encourage its members to approve the plan and the accompanying increase in assessments.
The five-year plan also calls for an increased commitment to wine education and research. The Wine Commission’s budget for those activities will grow from about $10,000 in 2007 to about $272,400 in 2011.
Champoux said the increase in research expenditures is essential. Washington wines largely fit into the ultra-premium category, he said, where quality is valued. As the industry continues to move into international markets, research that improves the quality of Washington grapes will translate to higher prices for growers.
Pollard said the money collected from grape growers in Washington is one of the state’s lowest assessments on a commodity. Grape growers currently pay $6 a ton for marketing and research, while cherry growers pay $22 a ton. Apricots are assessed at $13 per ton, pears at $16.46 per ton, and peaches at $13 per ton. Competing wine regions also collect a larger assessment from their grapes. Oregon, for example, collects $25 per ton.
The five-year plan lists six priorities:
• to increase consumer awareness and preference for Washington wines;
• to increase wine trade awareness of Washington wines;
• to strengthen the state’s wine industry;
• to increase awareness of the wine industry’s value to local and state economies;
• to foster development of viticulture and enology education and research; and,
• to foster a positive environment for Wine Commission programs and finances.
Wine industry members must approve the plan through a referendum, and Pollard said balloting should be completed by the end of August. “We’ll be meeting with regional groups and as many individual wineries as we can,” she said. “We want to make ourselves available to answer questions and explain directly where the money would go.”