Professor of Economics Bill Waller doesn’t believe the Finger Lakes wine industry has reached a saturation point; in fact, he anticipates growth in the next 10 to 15 years, according to an article in the Finger Lakes Times in which Waller was interviewed as director of the Colleges’ wine studies program.
“There’s nothing I see to inhibit that,” he says. “I think it’s our largest growth opportunity in the area, frankly.”
The article notes Waller’s study of the wine industry in the Finger Lakes has enabled him to see it grow both in size of the wineries and quality of the wines.
“We have wines we couldn’t even have imagined 25 years ago,” Waller says. “Cabernet lemberger blends and the quality of Riesling keeps improving.”
The article adds, “Even though he sees a healthy growth outlook, Waller also sees room for improvement to ensure that wineries thrive. He thinks the industry could benefit from more wine education opportunities for tourists, since wine can be intimidating for novices. The area could use more high-end restaurants for the wine trail tourists. Government support is needed, too, said Waller, noting at-risk grape growers don’t have access to crop insurance.”
Getting wine into grocery stores is also ‘really crucial,’ he said. ‘That’s just an element of making it a normal part of people’s experience in terms of having wine with meals.'”
Waller, who joined the faculty in 1982, holds a bachelor’s and master’s from Western Michigan University and his doctorate from the University of New Mexico.
The article is below.
Finger Lakes Times
Voluminous Vintners: Is there a saturation point?
Susan Clark Porter • July 22, 2011
Mike Linehan remembers the mid-1970s, a time when five “corporate-giant” wineries dominated the Finger Lakes landscape.
By 1990, after the 1976 passage of the New York Farm Winery Act cleared the way for grape growers to establish wineries and sell directly to the public, the number of area wineries increased more than tenfold, to about 60.
“People were saying at that time – when we went from five to 60 in 12 years – we’re at saturation,” recalled Linehan, president and CEO of the Yates County Chamber of Commerce.
However, in the ensuing 21 years, the number of wineries has more than doubled to about 130, “and we’re still not at saturation,” Linehan said.
The explosive growth in the number of Finger Lakes wineries begs this question: How many is too many, and is there is a strong enough consumer market to sustain all of them?
Linehan, for one, believes there is. “As long as we collectively work to increase the pie to increase the number of visitors coming here, I don’t know what saturation is,” he said.
Robert Barbato, a business professor at Rochester Institute of Technology’s E. Philip Saunders College of Business, interviewed 18 winery owners several years ago as part of a study looking at the social dynamics of economic clusters, in this case Finger Lakes wineries. Because more and more wineries have “clustered” in the Finger Lakes, they’ve been able to create a tourist destination.
“A very attractive tourist destination, by the way,” said Barbato, who was interested in seeing how the winery owners’ strategies evolved because of this cluster effect.
What he found is that winery owners are not necessarily making heaps of money selling wine to wholesalers. Instead, their destination status means they have been compelled to look at other revenue sources now that people are coming to tour their wineries – namely, retail wine sales and tastings, gift shops, restaurants and even events.
These other revenue sources are important, Barbato said.
“A lot of wineries are pretty marginal in terms of economic survival. Many of them are living very close to the edge,” he said. “Many are lifestyle entrepreneurs, not venture capitalists looking for the maximum rate of return on their investment.” Linehan said the creation of a tourist destination means wineries are not simply selling wine, they are creating an experience.
“That’s what this whole industry is becoming and it’s what the consumer wants, not just wine, but they want to go home with a story,” he said, noting how the region’s market base is expanding now that Finger Lakes wines are receiving national and international accolades.
Growth and diversification
Creating a particular niche can help an individual winery in a large cluster succeed. As Hobart and William Smith Colleges’ economics professor William Waller puts it, not all people visiting the Finger Lakes come for the same reason or like the same kind of wine.
When Vinny Aliperti and his wife, Kim, took over Billsboro Winery in Geneva in 2007, they understood it would be a challenging environment with the number of wineries around. They knew they had to brand themselves.
“Each of the wineries has its own vibe,” he said.
They chose to focus on being a small, family-run winery with all dry wines, classic European varieties and an educated staff.
“We just wanted people to feel relaxed and comfortable, but also create a place to inform customers and be an ambassador for local food,” Aliperti said. “You have to create a brand. You cast that net and some people gravitate to it and some people don’t.”
Aliperti – also the winemaker at Atwater Estate Vineyards in Burdett – agrees that providing the experience, and not just a few bottles of wine, is essential to a winery’s well-being.
He said he recently spoke to a friend on Long Island who was becoming annoyed because his neighbors “were turning wineries into nightclubs versus a tasting room.” Aliperti – who previously worked at Long Island vineyards and Hermann J. Wiemer Vineyard in Starkey – sees nothing wrong with a winery, including his own, using its space to provide different experiences.
Billsboro stages Pizza on the Patio events with wood-fired gourmet pizzas and is holding its fourth annual Plein Air Art Festival next month.
He admits owning a winery is a lot of work and involves juggling agriculture, manufacturing, retail sales and marketing, but said it’s worth it considering there is so much diversity in the Finger Lakes wine community and potential for growth as the number of tourists continues to climb (now at nearly 5 million annually).
“I don’t think we’re at a point of saturation,” he said.
Waller, also director of the Colleges’ wine studies program, has kept tabs on the local wine industry for the past 16 years. He dispels the notion of saturation and foresees growth in the next 10 to 15 years.
“There’s nothing I see to inhibit that,” he said. “I think it’s our largest growth opportunity in the area, frankly.”
He’s witnessed an evolution from wineries in garages to substantial establishments that build on the area’s natural beauty.
Growth in numbers has been accompanied by better wine quality.
“We have wines we couldn’t even have imagined 25 years ago,” Waller said. “Cabernet lemberger blends and the quality of Riesling keeps improving.”
Although he doesn’t believe the Finger Lakes wine region is oversaturated, Waller said the retail wine market is and there are lots of inexpensive, well-made wines produced worldwide. Plus, other wine regions are sprouting up domestically, in places like Ohio and Virginia.
Consequently, Finger Lakes wineries have to work hard to market and differentiate themselves – getting out the message, for example, that the Finger Lakes produces a superior riesling and not just a good bottle of wine.
Even though he sees a healthy growth outlook, Waller also sees room for improvement to ensure that wineries thrive. He thinks the industry could benefit from more wine education opportunities for tourists, since wine can be intimidating for novices. The area could use more high-end restaurants for the wine trail tourists. Government support is needed, too, said Waller, noting at-risk grape growers don’t have access to crop insurance.
Getting wine into grocery stores is also “really crucial,” he said. “That’s just an element of making it a normal part of people’s experience in terms of having wine with meals,” Waller said.
With growth comes development, but Linehan thinks a balance can be achieved between the two. He said it’s important that commercial development be mindful of environmental needs, so the region’s vistas, water and soil are not adversely affected.
“As long as you keep that balance, I don’t believe there’s saturation,” he said.