Study shows potential of Arkansas wine industry

by The City Wire staff ([email protected]) 297 views 

The grape and wine industry claims a $173 million economic impact in Arkansas, according to a new study from Frank, Rimerman & Co.

Using 2010 financial data, the California-based accounting firm determined that the industry generated $130.991 million in revenue and $42.196 million in wages during a 12-month period.

And according to Ken Warden, chief business and community outreach officer for Arkansas Tech University-Ozark (ATU-Ozark), the state’s industry has plenty of room for growth. ATU-Ozark commissioned the study through an Arkansas Agriculture Department specialty crop block grant.

“We think this goes a long way in promoting the industry,” Warden said. “I think our bordering states – Oklahoma, Missouri, Texas – have blossomed in the last 10 years. We haven’t seen the same growth as our neighboring states, but I think it (the grape and wine industry) is a presence with a lot of room to grow. Several years ago, Oklahoma had just a few wineries. Now they’re at 45 to 50. Arkansas has had some slow growth to state it mildly, so the potential for grapes and wine is tremendous.”

In 2010, the Alcohol and Tobacco Tax and Trade Bureau ranked Arkansas No. 21 on its list of top states for annual wine production. Of the 701.822 million gallons produced, Arkansas claimed just 0.04% with 289,786 gallons.

To further place Arkansas’s potential in perspective, Warden said that “in pre-Prohibition America,” Franklin County alone claimed a total of 45 active wineries. Today, Franklin has the Post Familie Vineyards, Wiederkehr Wine Cellars, Chateau aux Arc and Mount Bethel Winery.

According to the study, the state’s active wineries total 13 and add $11.4 million in direct-to-consumer wine sales, more than half the $20.3 million retail sales revenue.

“Wine, grapes and related industries also accounted for approximately 1,668 jobs in Arkansas with an associated payroll in excess of $42 million,” the report stated. The wineries themselves employ 78 full-time equivalency positions, showing total payroll of “approximately $3.6 million.”

The study also finds that the grape and wine industry adds $23.7 million in federal, state and local tax revenue and $21 million in tourism revenue with approximately 306,000 visitors to Arkansas wineries each year (average tourism dollars of $68.62 per person).

Close to half the economic impact totals were attributed to indirect and induced revenues (approximately $61.9 million) and indirect and induced wages (approximately $20.2 million).

“All economic activities have ‘ripple’ effects: employment of one person creates economic activity for others, whether the salesman who sells the employee a car or the restaurant where she eats lunch,” the report explains. “Economic impact studies endeavor to measure those ‘ripples’ as well as the direct activity, to help assess the impact of the potential gain or loss of an industry.”

The study defines indirect effects as “economic changes – income created through job creation in industries that supply goods and services to the directly affected industries…For example, the purchases of electricity and gasoline by wineries and of cash registers purchased for a tasting room.”

Induced effects are defined as “the effects of these new workers spending their new incomes, creating a still further flow of income in their communities and a flow of new jobs and services. Examples are spending in grocery and retail stores, medical offices, insurance companies, and other non-wine and grape related industries.”

“I think it’s important to note the people who performed the study,” Warden said. “They have a track record with third-party independent study for the wine industry. This is not a study that was conducted by Arkansas Tech or the wineries of Arkansas, and I think in this case, that adds to the strength of the study and the validity of the numbers.”

Warden said ATU-Ozark had “put this (study) out through industry contacts we have and through the Arkansas Association of Grape Growers (AAGG).”

Warden hopes the study will draw positive attention to the grape and wine industry in Arkansas and pointed out that “anyone interested in growing grapes or wine production” should attend the Nov. 2 AAGG inaugural conference from 8 a.m. to 9 p.m. at the Lawrence Hall on St. Mary's Mountain in Altus, Ark.

Link here for the PDF report from Frank, Rimerman and Co.

Also, link here for more information, provided by the Arkansas Department of Parks & Tourism, on Arkansas wineries.