Turning Tobacco into Wine: The Miraculous Economic Impact of Virginia Wine

When retired Navy captain Bill Hatch purchased farmland in Loudoun County, Virginia to start a family-run dairy farm in 1950, he could not have envisioned that a half-century later it would evolve into one of the most celebrated wineries in the region.  Still a fully working farm, Zephaniah Farm Vineyard, named after the owner’s grandfather, is also a boutique winery that produces about 1,200 cases per year.  The metamorphosis of the Hatch family farm mirrors the transformation of wine production in Virginia over the same period of time.

“On March 26th, it will be exactly 16 years since we’ve been in business,” reflected Bonnie Archer, co-owner of Zephaniah and wife of Bill Hatch.  “For perspective, we got our license to produce and serve wine in 2007.  We just planted and grew grapes before then. When we started, we were the 17th winery in this county.  People were so excited because they thought there might eventually be as many as 20 vineyards here. Now, there are 62 licensed vineyards.”

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Grapes on vines at Veritas Vineyard and Winery – Photo by Joan Zimmermann

Virginia’s wineries have become a flourishing and vital part of the state’s economy.  The industry’s success was not an overnight sensation.  It has been a long time coming, with many fits and starts.

In 1619, the Jamestown settlers signed into law a requirement for each male settler to plant and tend at least ten grape vines.  The vision for Virginia wine dates back four centuries, and even includes Thomas Jefferson, who grew grapes on the famous Monticello estate.

It is the past three decades, however, that have seen those early grape growers’ vision for Virginia wine come to fruition as a thriving industry.

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Veritas Vineyard and Winery in Afton, VA – photo by Joan Zimmermann

It All Started with a Simple Idea

In the early 1970’s, some industrious and pioneering farmers identified specific varietals that matched the unique growing conditions of the Virginia countryside.  The resultant increase in Chardonnay, Viognier, Cabernet Franc, and Merlot grapes started an escalation in wine production that has not slowed since.

The opening of several new wineries followed in 1975.  The next 30 years ushered in a transition of Virginia viniculture.  The industry changed from being a local farmers’ hobby to a statewide industry that is creating job growth, tax revenue, and an opportunity to extend the agricultural roots of Virginia.

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Breaux Vineyards, Purcellville, VA – photo by Howard Fletcher

The Virginia Wine Board was established in 1984 because the state officials saw the strong potential wine production as a profitable commodity.  It took a few decades to develop, but their vision was accurate.

The growth has been explosive.  In 1979, there were only 6 wineries in the state. By 1995, that number had risen to 46. There were 97 wine-producing vineyards at the end of 2005. Now, Virginia boasts over 276 wineries, the sixth largest number of producing facilities in the United States, according to Wine Vines Analytics.

An economic impact study commissioned by the Virginia Wine Board in 2005, 2010, and again in 2015 revealed not only growth in production and international recognition, but a significant economic impact to the state of Virginia that has been recognized publicly by Governor Terry McAuliffe. (link) YouTube: https://youtu.be/P_XbWXMxssA  (VA Governor’s Cup 2018) – courtesy of Virginia Wine Board

“Since the beginning of my administration, one of our top agriculture goals was to make Virginia the preeminent East Coast destination for wine and winery tourism, and I am pleased our efforts are helping make this a reality,” said McAuliffe. “The Virginia wine industry has continued to see tremendous growth over last five years, which has bolstered tourism across the Commonwealth.”

Virginia Wine Grapes: A tricky learning curve.

In fiscal year 2016, the Virginia wine industry had another reason to toast itself — wine sales reached the highest point ever for Virginia wine. Nearly 556,500 cases — each case representing 12 bottles, up from about 524,800 cases the previous year, representing a 6-percent increase, according to numbers released by Virginia state officials. “Virginia wine is about the experience, the adventure, excitement and story of visiting a winery and tasting the ‘fruits’ of grape grower’s and winemaker’s labor in the midst of a vineyard and beautiful Virginia countryside,” says Mark Malick, Co-owner and primary vigneron of Maggie Malick Wine Caves in Purcellville, VA.  (link) YouTube: https://youtu.be/7Ugid2QA97E  (Malick interview)

The Economic Impact of VA Wine

The experienced winemaker appears to be correct. The number of people visiting Virginia wineries has grown by 39 percent, from 1.6 million visitors in 2010 to 2.25 million visitors in 2015. At the same time, wine-related tourism expenditures have grown dramatically from $131 million to $188 million, a significant 43-percent increase.

Many in the industry attribute the growth of tourism to these factors: the increase in the number of wineries and the steadily improving quality of the wines.  Virginia wine producers will humbly boast that it is the latter.

“Overall, I think our Meritage wines are receiving the most recognition on a national and international basis,” said Annette Boyd, Director of the Virginia Wine Board marketing office. “I think a lot of that is the Bordeaux-style blend, which is a blend of up to five grape varieties. And, Virginia grows four of the five really well. Those wines are showing a lot of complexity, a lot of depth, finesse, and elegance because of our climate and soil.”

The five grapes that are used in the production of red Bordeaux blends are: Cabernet Franc, Petit Verdot, Merlot, Cabernet Sauvignon, and Malbec.  All of them thrive in Virginia’s climate, terrain, and soil.

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Wine can be fermented in oak wine barrels or stainless steel drums.                         Maggie Malick Wine Caves – photos by Howard Fletcher

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“Of course, there are also some amazing white wines being produced in the state,” added Boyd. “There are really elegant Chardonnays, Viogniers, and Petit Manseng has been coming on strong in Virginia.”

A Rising Tide Lifts A Boats

Tourism is not the only segment of the economy that is benefiting.  “Due to the increase in demand, winemakers are purchasing more and more land, which in turn is raising property values,” stated Scott Buzzelli of Middleburg Real Estate in an interview last year.

There has been a 24-percent increase of grape-bearing acreage since 2010, as well as a

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World-class Hanoverians at Otium Cellars | Goose Creek Fam

188-percent increase in tax revenue for state and local governments, according to state revenue statistics for 2016.

Virginia is traditionally considered to be horse country.  However, a grown number of equestrians have started using their land to expand and diversify their business interests toward wine and grape growing.  In Purcellville, the father-and-son team of Gerhardt and Max Bauer own and operate Otium Cellars, which opened its tasting room in 2012. The winery shares space with Goose Creek Farm where Gerhardt and his wife run a private equestrian facility to breed and sell world-class Hanoverians, German show- and competition-horses.

“Our original intent was just to sell the grapes,” Max Bauer told the Loudoun Times-Mirror in 2013. “But when we started looking for buyers, no one was interested in Blaufränkisch or Dornfelder because they’d never heard of it.”

Planted in 2007, the vineyard is home to several German varietals including Blaufränkisch, Dornfelder, and Grauburgunder. The soil, moderate elevation, excellent drainage and temperate climate of Loudoun County have enabled the Bauers to introduce varietals that are not commonly grown in many locations in the country.

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Breaux Vineyards, Purcellville, VA

Loudoun County has played a major role in this economic growth. Loudoun has more wineries than any county in the Commonwealth. It is home to 44 of Virginia’s 280 wineries, or 16 percent of the total. Loudoun County comprises just 1 percent of the land in Virginia, but its 738 acres of vines grow 19 percent of the state’s wine grapes.  The county’s annual grape harvest is valued at more than $2 million and wine production was responsible for over $36 million in sales in 2016.

The state’s overall wine sales and production are not concentrated within a few large wineries. On the contrary, most of the state consists of small wineries, each with production under 10,000 cases. The larger wineries sell a larger proportion of wine through distributors and retailers, while smaller producers tend to focus on selling their wine direct-to-consumer and direct-to-trade.

Across all winery sizes, there has been a significant increase in the expansion of related-product offerings and events, private parties, weddings, and festivals held on winery properties and, thus, the winery’s function has continued to evolve past simple production.

Some existing wineries have expanded their facilities to incorporate these additional revenue streams, resulting in increased winery employment and support services, and increased rural economic development.

Zephaniah Farm is a prime example of this type of expansion.  In 2015, they built a large timber frame barn next to the 1830 manor house, where wine tastings are served.

“When people kept asking us schedule wedding receptions, photo shoots, birthdays, and other events at the winery, it was just too much business to turn away,” said Archer.  “During the warmer months, we are booked solid.”

The Virginia Department of Commerce estimates there was over $53 million in revenue generated from these wine-related events in 2016.

Over the last several years, government and townships have recognized the importance of the wine industry to the Virginia economy. At the state level, they have worked to set up tax credits for winery and vineyard start-ups and expansion. Furthermore, funding for the Virginia Wine Promotion Fund’s research, education, and marketing programs has nearly tripled.

If this positive growth trend continues, the grape-laden hills of Virginia are on their way to becoming the nation’s Napa Valley East.

 

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