Wine Cluster Study andImplications for Planning

EMSI ConferenceSeptember 11, 2012

Steven VanAusdle, PresidentWalla Walla Community College

Welcome to

Walla Walla

Balancing Security,Prosperity, and the Environment

The Challenges of our Time

Safety andSecurity

EconomicCompetitiveness

EnvironmentalSustainability

*Improving Productivity will require more innovative uses of existing resources.

A Strategy for Economic Competitiveness

Talent Investment Infrastructure

Jobs, Wages, andStandard of Living

Productivity*

Innovation and Entrepreneurship

Infrastructure•Information Technology•Energy Technology•Water Technology•Waste Management Technology•Transportation Technology

Regional StrategyFor Economic Development

Talent•STEM programs•High-demand programs•Establish high school skills center•Use instructional technology for

access and efficiency•Economic studies

Investment & Entrepreneurship•Increase access to expertise and capital•Strengthen capabilities of manufacturing•Provide small business incentives•Ensure regulations are not barriers•Promote entrepreneurship

WWCC Center for Enology & Viticulture

2006 Governor’s Workforce and Economic Development Best Practice Award

Our Vision: Wine / Food / Art

WWCC Enology StudentsLearning While Creating College Cellars Wine

Wine Country Culinary InstituteWith a Focus on Pairing Food and Wine

Port of Walla WallaWine Incubators

Vinea: Sustainable Wine Farming

The Cluster-Based Approach to Economic Development

WWCC was awarded an $82,000 grant, plus a $25,000 match, to:• Define and describe the nature of the region’s

functional economy;• Describe the nature of the wine industry cluster;• Develop a shared vision;• Determine the influence of the wine industry cluster;• Develop a strategic plan for the wine industry cluster;• Maintain a wine industry cluster web site.

Walla Walla AreaFunctional Economy

WALLA WALLA AREA FUNCTIONAL ECONOMY

Westernmost edge of Walla Walla County (includes Columbia County, most of Walla Walla County, and part of Umatilla County)

Umatilla County, Oregon

WALLA WALLA COUNTY

COLUMBIA COUNTY

WASHINGTON

OREGON

UMATILLA COUNTY

Net Migration, Walla Walla County

2000

1500

1000

500

0

-500

-1000

-1500

1995-2000

2000-2005

Sources: U.S. Census 2000 (Residence 5 years ago), U.S. Census Annual County Population Estimates

25000

30000

35000

40000

45000

1977

1982

1987

1992

1997

2002

2007

2012

2017

Tota

l Reg

iona

l Jobs

Without Wine ClusterWith Wine Cluster

The Economic Impact ofWalla Walla Valley Wine

Total current jobs in wine production and tourism 1,094

Growth rate of jobs related directly to wine, 1997 – 2007 1,052%

Total earnings generated by wine-related jobs $96 million

Additional jobs created by economic multiplier effects 937

Total regional earnings due to wine-related industries and multiplier effects $59.3 million

Total jobs projected to be dependent on wine-related industries in 2017 3,975

Proposed Initiatives

• Marketing (6)• Education and Workforce (8)• Infrastructure (8)• Amenities (3)• Policy (8)

VisionFoster a Healthy Economy

and a Healthy Environment

Mission

Collaborators

Initiatives

Values

K-12

University Center

WWCC

County

City

Port

Chambers of Commerce

TourismWalla Walla Wine

AllianceArt

Alliance

Sustainable Living Center

Wallowa Resources

Utilities

Dept. of Ecology

Salmon Recovery

Board

ConfederatedTribes

Water Center

Walla Walla WatershedPartnership

Enology & Viticulture

Center

DowntownFoundation

Career Pathways

Infrastructure

Business Development

Wine & Hospitality Cluster

Renewable Energy

Energy Efficiency

Water Efficiency

WaterQuality

WatershedRestoration

Skills Center

Workforce Development

Rural Center forEntrepreneurship

Collaboration

Excellence

Integrity

Entrepreneurship

Partnerships

Sustainability

Innovation Diversity

Learning

Creating the Walla Walla Innovation Partnership Zone (IPZ) Ecosystem

Economic, Environmental, and Cultural Sustainability

Industry Cluster:

Groups of similar or related industries that are geographically concentrated and may achieve collective efficiencies and increasing returns to scale through transactions, shared labor pools, infrastructure, knowledge and technology spillovers, and other complementarities.

Questions How has this regional economy changed over the

past five years? How has the wine cluster changed over the last five

years? What are the effects of the economic downturn on

the region and the wine cluster? How do indicators of economic progress compare in

2011 with the 2006 benchmarks? What are the priority initiatives for growing the

regional economy and what central role can the IPZ continue to play?

What are other potential clusters the IPZ can promote?

Walla Walla Valley Wine Cluster StudyWashington State Legislature,

Wine Commission, Wine Institute, andWalla Walla Valley Wine Alliance

Growers/Vineyards

Wineries/ProcessingFacilities

Grape Stock

Grape HarvestingEquipment Vendors

Irrigation TechnologyManufacturers

Compostea

Worm Farming

Fertilizer, Pesticide,& Herbicide Vendors

Barrel Accessories

WinemakingEquipment

Bottle Etching

Caps and CorksSuppliers

Public Relations& Advertising

WashingtonAgricultural Cluster

Art Cluster

Culinary Cluster

Tourism Cluster

INFRASTRUCTUREEducational, Research, and Trade Organizations

(e.g., WWCC Enology & Viticulture Center& Culinary Arts Program, WSU)

Based on Michael Porter’s formatfor describing industry-based clusters

Projected IPZ EmploymentWith and Without the Wine Cluster

19771980

19831986

19891992

19951998

20012004

20072010

20132016

201925000

30000

35000

40000

45000

With Without

The Walla Walla IPZ Wine Cluster

Percentage Growth in Overall Employment 2006 to 2011

United States - 1.5%Washington State 1.1%

IPZ 11.3%

Walla Walla Regional Wine Economy, 2011

Direct jobs in wine production and wine tourism 2,061Direct wine cluster employment growth, since 2001 76%Total earnings generated by the wine cluster $96 millionWine cluster jobs, including multiplier effects 6,003Total regional earnings $230 millionTotal jobs projected to be dependent on the winecluster in 2017 8,913Percent of all jobs dependent on wine cluster 14.4%Projected percent of all jobs dependent on wine cluster in 2020

19.8%Regional economic growth since 2007 9%Regional economic growth since 2007, absent the wine cluster

2%

Wine Cluster Research Summary

• Growth in the wine industry occurs in tandem with wine tourism.

• The wine cluster’s share of the regional economy is increasing: a multiplier effect of 3 and location quotient of 50.7.

• Wine cluster diversifies the region’s industrial mix and contributes to its resilience, dampening the effects of economic recession.

Cluster Research InformsPlanning Decisions

• Align Workforce Education programs with regional economy

• Adjust the scale and scope of existing programs• Create new programs• Identify industry needs• Identify and target potential high wage/high

growth sectors• Identify public policy needs

NationalJournalHow Wine Growing in Walla Walla Supports the EconomyBy Catherine HollanderJune 1, 2012

“America’s economy today feels as sleepy as Walla Walla’s two decades ago. Middle-class workers were slammed by the financial crisis, their jobs disappearing, wages stagnating, and future uncertain. To put them back to work, the nation would do well to consider Walla Walla, which seems to have cracked the code on how to get mid-skill workers back into the labor force while revitalizing an economy.

If the country needs a model, this could be it.”

WALLA WALLA

Union~BulletinWednesday, May 30, 2012

College Cellars wineswin regional acclaimEight wines from the local teaching winerytook home honors from recent judgingsWALLA WALLA – Student-made wine brought home nearly a case full of hardware at the recent Seattle Wine Awards and Northwest Wine Summit. In the Seattle Wine Awards, College Cellars won three double gold medals for its 2011 Ice Wine, 2009 Syrah and 2008 Malbec. Silver medals were awarded for the 2011 Sauvignon Blanc and 2010 President’s Blend, along with a bronze medal for the 2010 Scholarship Red. The college’s 2011 Chardonnay won gold and its 2011 Semillon won bronze in the Northwest Wine Summit awards, which covers Alaska, Alberta, British Columbia, Idaho, Montana, Oregon, and Washington.

The 7th Annual Seattle Wine Awards is Washington State’s largest and most comprehensive independent wine recognition program. On April 21 & 22, local and national wine professionals gathered to taste and evaluate 982 Washington wines in a single-blind format (meaning grape variety or style is known, but not price or producer) and awarded the top wines by consensus with Double Gold, Gold, Silver and Bronze Grand Awards of Excellence.

Water & Environmental Center

2010 Governor’s Workforce and Economic Development Best Practice Award

• 90 construction jobs• 27 additional jobs created associated with

Center Expansion• At least 250 direct and indirect jobs created,

according to Earth Economics• 129 graduates in 9 years with $414,336

increased lifetime earnings for each graduate

Water & Environmental CenterJobs Created and Enhanced

Employment, Earnings, and Sales

Vineyard Operations Winery Operations

TimePeriod

NewAcres

NewFull-TimeJobs

TotalCombinedEarnings

GrossSales

NewFull-TimeJobs

TotalCombinedEarnings

GrossSales

Year 3 200

Year 6 500

Year 9 1,000 120 $4,392,000 $8,750,000 200 $6,000,000 $60,000,000

Indirect 48 $2,898,720 $2,800,000 80 $3,960,000 $19,200,000

Total 168 $7,290,720 $11,550,000 280 $9,960,000 $79,200,000

Economic Impact of Establishing 1,000 AcresOf Vineyard Production in the Walla Walla Valley

Can We Create An Energy Cluster in Southeastern Washington?

Wine is Prosperity in a Bottle