The Wine Institute

Jun 22, 2004

Report Indicates Nearly 40 Percent Growth In Four Years

SAN FRANCISCO — The California wine industry has an annual impact of $45.4 billion on the state's economy, growing nearly 40 percent from 1998 to 2002, and producing the number one finished agricultural product in the state, according to an 81-page report released today by the Wine Institute and California Association of Winegrape Growers at the World Trade Club in San Francisco. The two organizations commissioned the wine business consulting firm, MKF Research, to prepare the comprehensive study entitled, "Economic Impact of California Wine 2004," which updates the original economic impact report published in 2000.

"Our great California wine industry creates more than 200,000 jobs, billions in economic activity, and preserves agricultural land and the family farm. It is very generous in charitable giving and brings joy and pleasure to millions of people," said Wine Institute President and CEO Robert P. Koch. "Despite the challenges of intense global competition, trade barriers, agricultural pests and the constant threat of increased taxes and regulations, the state's wine industry is strong and a major contributor to the economic vitality of California."

"This study offers a concrete understanding of how California's wine industry influences the state's economic, export, employment and tax revenue picture," says California Association of Winegrape Growers President Karen Ross. "On the other side of the coin are the intangibles that we cannot assign a dollar amount to Ð stewardship of natural resources and the environment, preservation of agricultural land and open space, and overall enhancement of Californians' lifestyles. All of these stem from the innovation and entrepreneurial spirit of winegrape growers working hand-in-hand with vintners to filter California's unique climate, land and character into a remarkable beverage."

The MKF research indicates that the California wine industry and its affiliated businesses provided 207,550 full-time equivalent jobs, with a total of $7.6 billion in gross wages. More than 62,500 jobs were added at a compound annual rate of more than nine percent during a period of rising unemployment in California.

California received $1.9 billion in taxes and other business licenses and fees in 2002, compared to $1 billion in 1998. The federal government, other states and local municipalities collect an additional $3.7 billion in tax revenues a year from the California wine industry. The report shows that wine generates higher taxes than most industries because, as a regulated industry, it pays excise taxes to state and federal governments.

The wine regions of California are an increasingly popular tourist destination. Visitors to California wineries have increased from 10.7 million to 14.8 million, with tourism expenditures of $1.3 billion. Actual tourist spending rose more slowly than the number of tourists, as local travel has increasingly replaced long distance tourism in the post 9/11 era.

California is the fourth largest wine producer in the world after France, Italy and Spain. It accounted for $643 million in wine exports in 2003 from $537 million in 1998.

The MKF report points out that the achievements of California's wine industry are particularly impressive because growth occurred during a weak economy and an increasingly competitive environment stemming from aggressive pricing of imports, grape production outpacing consumption, and wholesaler/retailer consolidation, among other reasons. Ongoing challenges continue as many industry members make capital investments to transition their operations for the production of the growing category of premium wines.

Wine Institute and the California Association of Winegrape Growers commissioned the economic impact study to provide solid data on the state's industry to use in public policy discussions with state and federal legislators and other key officials. Already, U.S. Congressman Mike Thompson (D-St. Helena) and fellow California lawmaker, Congressman George Radanovich (R-Mariposa), who are co-chairman of the Congressional Wine Caucus, plan to use the report for discussing wine policy issues.

"As one of the signature industries of our state, California wine is vital to the state's economy, which helps drive the national economy," said Congressman Thompson. "This report will help demonstrate to our colleagues the importance of the wine industry."

Congressman Radanovich said, "California wine has international appeal and attracts tourism from all over the world. As such, the California wine industry is a key element in our state economy, and the industry helps to expand the state's agricultural exports abroad. This report will give us a better understanding of California wine and will provide concrete information that we can use as members of Congress."

The California Association of Winegrape Growers (CAWG) was founded in 1974 with the mission to provide industry leadership to advocate public policies, research and education programs and trade positions that enhance the business of growing California winegrapes. CAWG's membership represents the growers of approximately 60 percent of the total annual grape crush.

The Wine Institute is the association of 839 California wineries and affiliated businesses dedicated to initiating and advocating state, federal and international public policy to enhance the environment for the responsible consumption and enjoyment of wine. Wine Institute's membership accounts for about 90 percent of California's wine production and 80 percent of U.S. wine.

Full Economic Impact* Of Wine On The California Economy = $ 45.4 Billion

The Number 1 Finished Agricultural Product from California (retail value) Revised March 2005

California Wine Economic Impact

Number of Grape Growers = 4,805

Full-time Equivalent Jobs = 207,550

Wages Paid = $7.6 billion

Wine Produced (750ml Bottles) = 3.12 billion

Retail Value of California Wine = $15.2 billion+

Wine Sales Growth Rate = 5.4% (Compound Annual Rate 1998-2002)

Tourism Expenditures = $1.3 billion

Number of Visitors = 14.8 million

Taxes Paid (California/Total) = $1.9 billion / $5.6 billion

Charitable Contributions = $73 million

Statistics based on 2002 data
+ Excludes exports
* Sum of total spending