Virginia Wine Trumps Recession

By Posted on Jan 06 2011 | By

Chairman of Fauquier County Chamber Explains How

The recession is long over.  Skeptical?  It’s understandable.

But according to the Bureau of Economic Research, the downturn that began in December 2007 ended its nosedive in June 2009.  Of course, try explaining that to folks still in danger of losing their homes or unable to land a job.

Nonetheless, it appears the economy is slowly beginning to right itself.  And while the economic landscape is littered with disrupted lives and portfolios, the United States, as well as Fauquier County, is looking forward to ringing in more than just good wishes in 2011.  Cash registers would be a nice start.

With twenty-four wineries in the county, it’s timely to take a beginning of the year assessment of the industry.  Perhaps no one is better positioned to opine on the subject than the newly elected Chairman of the Fauquier County Chamber of Commerce and managing partner at three county wineries, Chris Pearmund.

We caught up with Pearmund at his eponymous winery, hovering over his keyboard. He seemed eager to take a break and provide some perspective on an industry he knows well.

How has Virginia wine fared over the last two years?

Chris Pearmund

Exceptionally well.  I can’t speak for individual wineries but the industry at large has exhibited robust growth during a difficult period. Total wine sales in the state increased almost 13% in 2009 over the previous year.  And growth this year will be even greater.  The number of wineries continues to increase, with 189 statewide.  Back in 2007 there were some 140.  This dramatic growth occurred during the worst recession in decades.

Today, the industry employs over 3,000 people and contributes almost $350 million to the state’s economy, selling close to 450,000 twelve-bottle cases a year.  It’s also the fastest growing agricultural segment in the state, generating $1.6 million in taxes for the state’s coffers; Fauquier County receives 20 percent of that revenue.

We are now the fifth largest wine producing state in the Nation, behind California, Washington, Oregon and New York. Speaking just for my three wineries, the recession has had zero impact.

Having said all that, running a winery is difficult, time consuming work.  Most of us are operating small businesses. So while the industry is doing very well, I’m not implying fortunes are being made.  An owner must be proficient in a number of disciplines to make a success of it and struggle to keep liabilities in balance with assets.  It’s not a business for the faint-hearted.

What makes the industry so resilient?
I think it’s our customer demographics.  Research has shown that people who enjoy wine are middle-aged, prosperous, well-educated and responsible drinkers.  Added to that is an emerging wine loving group called Millennials, roughly aged 20 to 30, who are among the fastest growing segment of wine drinkers in the country.  I think wine fits today’s lifestyle, including the growing interest in locally produced fare and support for a green environment.  Taken as a whole these are customers any business would court.  Their success as an economic force has propelled our industry forward.

Any growth areas?
Absolutely.  If you’re not evolving, you’re likely fading.  Stagnation is not a healthy business condition.  One of my challenges is to increase weekday sales.  Weekends are a busy time at most wineries but if you elect to keep your doors open seven days a week generating customers Monday through Friday can be difficult.  I’m working on that opportunity now.

Like what?
Well, I think we are discussing the industry at large not proprietary business plans. I’m sure many full time wineries are focusing on ways to build weekday guest traffic.  You can be certain whatever actions I take it will respect my neighbors and the community at large.

Virginia Wine is perceived by some as too expensive.  How do wineries sell pricey wine in a tough economy?
Well first off, I take exception to the idea that our wines are overpriced.  Virginia wine is a hand-crafted, artisanal product produced from locally grown fruit.  We do not operate wine factories selling millions of cases a year.  The cost of producing our wine is higher and it’s reflected in our pricing.  But the end product is superior.  The state’s anticipated double-digit sales figures this year prove that customers are willing to pay for quality.

If you look at any wine region in the world, you will find similar situations; small wineries creating excellent wines at fair, but not giveaway prices. The reality is Virginia is equal to, and in many cases better than, most of these niche producers.

It’s also interesting to note that nationally, wine in the $20-plus category enjoyed a 22% gain in dollar sales this November over the previous month.  That surge is expected to continue through December.  Even more intriguing, wine club sales from California averaging over $50 per bottle are one the hottest selling wine categories today.  Wine lovers everywhere are willing to pay for quality and that’s why Virginia is doing so well.

Is the growth in the number of wineries sustainable?
Yes. I don’t think we have reached a saturation point.  Less that five per percent of all wine sold in the state is Virginia wine.  We can double that volume over the next decade. I do think some marginal producers are hurting the cause of national recognition.  We’ve achieved much in the past decade but everyone in the business must strive to further increase quality.  We are coming ever closer to a tipping point of national appreciation for producing fine wine.  New entrants in the industry need to be committed to advancing our cause.  And they need to sell beyond just their tasting rooms.

The bottom line is new wineries don’t hurt existing ones; a rising tide does float all boats.  Visitors from both the DC metro area and out of state continue to swell tasting rooms around the state.  I think the continued growth of quality-focused wineries will help all of us.

Would you consider ever selling any of your wineries?
I would and I am.  The Winery at La Grange is currently on the market. But you might ask, if I’m so pumped about Virginia wine why would I consider selling?  First, I think most owners of a business would be willing to sell at the right price.  But for me other considerations also come into play.  I’m not getting any younger.  I have been in the wine business for over twenty years and it’s physically and emotionally demanding work.  I’m beginning to think about my retirement, even though it’s years away. Everyone should carefully plan for their golden years but, truthfully, I haven’t.  Now’s the time to start.

If I did sell my businesses, I would prefer staying on in some capacity.  I love the world of Virginia wine and have considerable knowledge I can pass on to the next generation of owners.  Consulting would be considerably less demanding than being a full time proprietor.

Categories : WINE ARTICLES