abstract sunbelt migration and increased per an economic location model for texas...
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An Economic Location Model for Texas Wineries
Mary Luanne Napton l
Recent Masters Graduate
Darrell E. Napton2
Professor
James D. Harrison l
Professor
'Department of Geography and Planning Southwest Texas State University San Marcos, Texas 78666-4616
2Department of Geography South Dakota State University Brookings, South Dakota 57007
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ABSTRACT
Sunbelt migration and increased per capita wine consumption have stimulated the opening of 27 new wineries in Texas since 1976. Choosing the location of a winery is one of the vintner's most important decisions. A survey of vintners provided a ranking of locational criteria that was used to develop an economic locational model of winery location. A preliminary model was tested and discarded in favor of a more narrowly defined model. Critical marketing locational criteria included proximity to tourist areas, access to grapes, distance from urban areas, access to an interstate highway, and severity of county alcohol laws.
KEY WORDS: winery, location model, Texas, site planning, land use planning.
INTRODUCTION
Since 1975, the number of Texas wineries has increased from one to twentyeight. With Texas per capita wine consumption and population both increasing, the number of Texas wineries can be expected to continue increasing as well. Choosing the locations for these new wineries may be one of the most important business decisions the vintners will make. This study seeks to determine the role of economic location in the success or failure of Texas wineries.
HISTORICAL DEVELOPMENT OF THE TEXAS WINE INDUSTRY
Wine making is one of the newest and one of the oldest industries in Texas (Fig. 1). "As early as 1659, the Franciscans developed extensive vineyards in the rich alluvial flood plains of the Rio Grande near present day EI Paso" (Overfelt, 1985, 3) . In 1682, they established a mission at Ysleta, near EI Paso, and began making sacramental wines from the grapes they grew. Throughout the next 200 years there were reports praising the many fine vineyards in the EI Paso Valley (Templer, 1986). Many of these vineyards were destroyed in 1897 by a devastating flood from which the industry in that area never recovered (Overfelt, 1985).
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New Mexico
PANHANDLE
mGH PLAINS
TRANSPECOS
Lubbock •
EDWARDS PLATEAU
Mexico
o 50 100 miles I, ' , ,', I'
o 50 100 150 kilometers
Oklahoma
Dallas Fort ••
CENTRAL TEXAS mLL
COUNTRY
Worth
Austin •
·San Antonio
Gulf of Mexico
FIGURE 1. Texas.
In northeast Texas, Thomas Volney Munson established experimental vineyards near Denison in 1876 (English, 1986). Here, he devoted himself to grape hybridizing and to developing a commercial wine industry (Giordano, 1984). Before this time, Vinifera grapes had not flourished in Texas. Most of the early wine was made from native grapes such as the Mustang (Jordan, 1975; Augustin, 1988) or from French-American hybrids (Templer, 1988). The area where Munson located his vineyards was infested with phylloxera (Munson, 1909) and therefore, an excellent place for testing vines against this insect parasite which
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attacks the roots of grapevines. He was aware that Vinifera grapes could be grown in phylloxera infested areas only if they were grafted to the resistant native rootstock (Munson, 1909). When phylloxera was accidentally introduced into Europe from the eastern United States in the midnineteenth century, it almost destroyed the European wine industry. Munson supplied boatloads of resistant native Texas rootstock to the French vineyard owners who grafted the fine European wine grapes to them. The industry in Europe was saved and the French government honored Munson for his crucial role (Overfelt, 1985).
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FIGURE 2. Val Verde Winery was founded in 1883.
In 1882, Frank Qual ia came to Del Rio, Texas, purchased 10 acres of land that included a vineyard, and founded the Val Verde Winery the following year (Fig . 2). It is still in business in the same location and is the oldest w inery in Texas (English, 1986).
At the beginning of this century, vintners recognized that viticulture was feasible in the High Plains and Trans-Pecos areas (Templer, 1988) and by that time, as many as 40 small wineries may have been in operation (Adams, 1973). But in 1919, as a consequence of the Prohibition Amendment, Texas was voted legally dry. Only one Texas winery, Val Verde Winery, survived by selling table grapes (Templer, 1988). When the Prohibition Amendment was repealled in 1933, Val Verde Winery reopened, and for the next 40 years it was apparently the only commercial winery in Texas.
In 1975, Schlaraffenland Winery, now Guadalupe Valley Winery, opened north
of San Antonio, in Gruene, Texas (Templer, 1988). Th is was the beginning of a phenomenal growth of the industry, which has yet to slow down. New Texas wineries have opened nearly every year since 1975 (English, 1986). and today there are 28 in business (Texas Department of Agriculture Marketing Division, undated).
The 1960s world -wide resurgence in wine sales prompted three major Texas universities to research the likelihood that wine grapes could be grown on a commercial scale in Texas. Two professors at Texas Tech in Lubbock began making wine at home as a hobby, then purchased land and planted an experimental vineyard, and finally opened a winery (Giordano, 1984)._ The Texas Agricultural Experiment Station at Texas A&M University conducted a statewide study to determine which areas of the state were most suitable for wine grapes (Templer, 1986). The University of Texas at Austin committed a small portion of its land in west Texas to an experimental vineyard. This beginning eventually led to the establishment of the state's largest winery (Giordano, 1984). All three universities have played, and continue to play, vital roles in the Texas wine industry. Most of the wineries that have opened since 1975 are still in business; 3 have failed .
OUTLOOK FOR THE FUTURE
There appears to be ample room for more wineries in Texas since per capita wine consumption has increased during the past decade. In 1978, Texans drank an average of only 1.2 gallons per person . By 1987, average wine consumption had increased to 1.7 gallons (Presnal, 1989). In 1988, Texas wineries produced approximately 800,000 gallons (Texas Department of Agriculture Marketing Division, undated). which only met about three percent of the demand. By 1989, Texas per capita wine consumption had decreased slightly to about 1.5 gallons (Presnal , 1989). or a total of 26 million gallons annually.
This trend follows the national pattern, although Texas wine consumption is only about 50 percent of the national
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f ·
• Winery o 50 100 mile. I,', " " , o 50 100 kilometen!
FIGURE 3. Wineries of Texas.
per capita wine consumption . In 1975, Americans drank about 2.7 gallons of wine per person . By 1985, per capita consumption had increased to about 3.5 gallons. In 1987, it had declined slightly to 3.4 gallons per person .
Even if U.S. wine consumption continues to fall, it is reasonable to project that consumption of wine in Texas will increase, because Texas wine consumption is far below the U.S. average. With Texas projected to continue receiving Sun Belt bound migrants (Briggs, 1987) it seems reasonable that Texas per capita wine consumption will tend to converge with that of the nation .
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Texas vineyards are producing more grapes than existing Texas wineries can process. Wine grape production is closely related to the wine making industry. Grape production has long been a part of Texas agriculture (Lipe, 1979 and 1980; English, 1984; Giordano 1984b; McEachern, 1982 and 1986) and in 1989 the acreage devoted to vineyards had increased to more than 5,700 acres (Wright, 1989). Since Texas wineries are operating near capacity (McEachern, 1988). and Texas vineyards are producing more grapes than these wineries can process, it seems reasonable to expect more wineries to open.
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TABLE 1 Proposed Location
Factors of Texas Wineries
a. Wet/ dry alcohol laws b. Close to vineyards c. Availability of land d. Price of land e. Aesthetic facility f. Within viticulture area g. Within tourist area h. Near a large population center i. Other
Source: G. R. McEachern, 1988, College of Agriculture, Texas A&M University
METHODOLOGY AND RESULTS
This research was designed to determine the extent to which economic location has played a role in the success or failure of Texas wineries. It required answering three classic questions of location analysis.
1. Where are the existing Texas wineries located?
2. Why are they located where they are?
3. Where are the wineries of the future likely to be?
The existing wineries of Texas (Fig . 3) are dispersed across the state from the Panhandle in the north, to the Rio Grande in the south, and from EI Paso to Orange (Texas Department of Agriculture, undated) . There are, however, clusters around two of the largest metropolitan areas : Dallas-Fort Worth and Austin-San Antonio, extending westward into the Central Texas Hill Country and Edwards Plateau. Both the northernmost portion
TABLE 2 Initial Model
1. Wet/ dry alcohol laws 2. Within tourist area 3. Within viticulture area 4. Near a large population center
of the Panhandle and south Texas are noticeably devoid of wineries.
To answer the second question: "Why are they located where they are?" a questionnaire was sent to each of the 20 wineries in business in 1988. Vintners were asked to rank the importance of a list of nine attributes in reference to their business (Table 1).
The 15 respondents indicated that four of the attributes were of major importance to them in selecting a winery site. The remaining attributes were ranked well below the first four, and were not considered further in the study. The factor ranked most important, on Table 2, was the absence of alcohol restriction laws. The sale of alcoholic beverages is at least partially restricted in most of Texas. The pattern of these laws, by county (Kingston, 1987). in relation to winery location (Fig . 4). shows that wineries across the state are generally located in partially dry Protestant Anglo counties though some are located in the even more restrictive Panhandle area (Meinig, 1969). Wineries are absent from the less restrictive Catholic, Hispanic south Texas region (Jordan, 1984). Within the predominately Anglo area of the state, most wineries are located in counties that are only partially restrictive of alcohol sales.
The factor ranked second in importance by the respondents was "within tourist area". Nineteen of the 20 wineries were located in the general vicinity of several tourist attractions (Texas Multipurpose Map, 1983), as indicated on Figure 5. One winery is not located within a tourist area . However, its proximity to Texas A&M University, which has played a major role in the establishment of the Texas wine industry, may account for its location . In addition, this particular winery has taken steps to promote itself as a tourist attraction. Hundreds of people visit the winery each year, many of whom volunteer to be harvest workers (Wright, 1989). This winery also sponsors a bed and breakfast weekend coupled with a winery tour. These efforts to make the winery itself a significant tourist attraction may have overcome the handicap of its distance from other traditional
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II Dry r»1 Partially Dry
D Wet
• Winery o 50 100 miles I,', " ' o 50 100 kilomete.1'8
FIGURE 4. Alcohol restriction laws.
tourist areas. There are many other tourist areas within the state, but the others did not contain wineries at the time of the survey.
Respondents ranked a location within a viticulture area (Figure 6) third in importance. Seventy percent of the 20 wineries were located within a viticulture area, as delineated by Templer (1986). Another 25 percent were within 100 miles of a viticulture area. Only one winery was located more than 100 miles from such an area. This winery, unlike the other 19, produces wines from native grapes and other kinds of fruit such as blackberries and peaches. For this reason it is not considered in this study.
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Wine grapes are a fragile commodity because they are perishable. Although the respondents did not indicate why they thought a location near a viticulture area was important, from the locations of the Texas wineries with respect to vineyards, it would appear that it is important to vintners to be close to the supply. However, the average maximum distance grapes were shipped is 235 miles with the most distant at 600 m iles. This apparent contradiction may be explained by the fact that not every grape variety is grown in every part of the state (Giordano, 1984). Vintners may be purchasing grapes from several vineyards in various parts of the state, since the
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iiiiiiiiiiii!i Tourist Areas
~ Winery o 50 100 miles I.' •• ' .' • o 50 100 kilometers
FIGURE 5. Proximity of wineries to tourist areas.
quality of the wine is influenced by such things as the soil and weather in the vineyard (Kohn, 1985). The importance of a location near a viticulture area may be a separate issue from the distance grapes are shipped. Perhaps the viticul ture areas attract tourists who then buy wines.
The respondents ranked "near a large population center" fourth in importance. Only one winery is located more than 100 miles from a population center of at least 90,000 (Fig . 7). It seems that proximity to a large population area is quite important, and respondents' answers to other questions corroborate this. They said that most of their wines are sold
either as "on-site retail" or through a wholesale distributor, to local markets or in non-local Texas cities.
Based on data gathered from the questionnaire, a model (Table 2) of a successful winery location was devised. A matrix of the four most important criteria and the wineries (Table 3) showed that each of the winery locations satisfies at least three of the criteria, and fifteen satisfy all four. We hypothesized that these four factors act synergistically to create a "critical mass" of favorable conditions in a successful Texas winery location.
To test this model, wineries that had failed since 1975 were examined to as-
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IIIIIIIIIIIIII Viticulture Area
• Winery o 50 100 miles , ,', " ' o 50 100 kilometers
FIGURE 6. Proximity of wineries to viticulture areas.
certain whether their locations met the above criteria . Unfortunately for the study, there were only three failed wineries, and the locations of two of them did indeed satisfy the four locational conditions. The third satisfied three of the four conditions. Either these wineries failed for reasons unrelated to location or the model needed adjustment. Further investigation showed that the wineries did close for reasons which, on the surface, were unrelated to location. One closed because of business difficul ties between partners (English, 1986), and the other two apparently had legal and financial problems (Giordano, 1984; McEachern, 1988).
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Since the survey was made. eight additional wineries have opened in Texas (Fig . 8) . Mapping their locations against the four locational criteria showed that seven of the eight locations satisfy all four conditions. The eighth winery satisfies three of the established criteria .
DEVELOPMENT OF REVISED MODEL
Since nearly all of the wineries met the criteria of the initial model. it was apparent that the criteria were too broad. Additional attributes were needed to establish more meaningful links. The locations of Texas wineries that had been in business for at least five years were
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H 2 •
, 3 7.
6 . • •• 13 14
15 •
17.
~18
1. El Paso 2. Amarillo 3. Lubbock 4. Wichita Falls 5. Shennan-Denison 6. Midland-Odessa 7. Abilene 8. Fort Worth
18. Bryan-College Station 19. Austin
9. Arlington 10. Dallas 11. Garland 12. Irving
20. San Antonio 21. Houston 22. Galveston-Texas City 23. Pasadena
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• Winery 13. Tyler 14. Longview 15. San Angelo
24. Beaumont 25. Laredo 26. Corpus Christi
o 60 100 miles I, ' , " " , o 50 100 kilometers
16. Temple 27. McAllen 17. Waco 28. Harlingen-Brownsville
FIGURE 7. Proximity of wineries to population centers.
analyzed. These wineries, with the exception of Val Verde Winery, proved to be within 50 miles of one of Texas' several interstate highways (Fig. 9) . Perhaps the highways are providing tourists with easy access to the wineries and equally providing the wineries easy access to markets. One of the failed wineries was more than 50 miles from an interestate highway.
Figure 10 reveals that all but four of these wineries are within a metropolitan statistical area (MSA). One of the failed wineries was within an MSA, but the other two were not. Of the newer wineries, that is, those that have been in business less than five years, five are 10-
cated within MSAs and the remaining ten are not.
Respondents to the questionnaire listed " on-site retail" as the most important method of sales. Therefore, it seemed that the major tourist areas would attract more people to the wine sales rooms. "Tourist area" was redefined to mean within a circle with a di ameter of 25 miles which contains at least five tourist attractions in addition to the winery.
The wineries were tabulated again, using this revised five-category model. By adding to the table the number of years each winery has been in business (Table 4), it became apparent that all of
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TABLE 3 Tabulation Using the Initial Model
Near Near Partly Wet Within Tourist Viti-cultural Population
Winery County Area Area Center Total
1 X X X X 4 2 X X X X 4 3 X X X X 4 4 X X X X 4 5 X X X X 4 6 X X X 3 7 X X X X 4 8 X X X X 4 9 X X X X 4
10 X X X X 4 11 X X X X 4 12 X X X X 4 13 X X X 3 14 X X X 3 15 X X X X 4 16 X X X X 4 17 X X X X 4 18 X X X X 4 19 X X X 3 20 X X X 3
X = Meets criterion, - = Does not meet criterion
FIGURE 8. Grape Creek Winery was founded in 1989.
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• Winery o 50 100 miles 1000 0000 0
o 50 100 kilometcnl
FIGURE 9. Proximity of w ineries to interstate highways.
the wineries that have been in business at least 10 years, again with the exception of Val Verde Winery, satisfy at least four of the five locational criteria . At this point, Val Verde was eliminated from further consideration because it was well established long before Texas had a tourist industry, metropolitan statistical areas or interstate highways. It is therefore fundamentally different from the other wineries, all of which have been established since 1975.
One winery failed to meet the metropolitan statistical area criterion, but it is in an area of the Texas Hill Country which is popular among wealthy retirees. In effect, a metropolitan statistical
area came to the winery. The other w inery that met only four of the five cri teria is located in a legally wholly-dry county. This winery, however, has a tasting and sales room in an adjoining county, so it, too, has overcome its failure to meet all five criteria by effectively relocating to a less restrictive county. By examining the specific wineries, it appeared that all four of them that are at least 10 years old, in some way satisfy all five criteria .
Looking at wineries that were from five to nine years old, we found that all nine of them met at least four of the five cri teria . Five of them met all five criteria. Of the four that met only four of the cri -
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Metropolitan Statistical Area
~ Winery o 50 100 miles I,', " " , o 50 100 kilometers
FIGURE 10. Proximity of wineries to metropolitan statistical areas.
teria, three have taken some action to overcome the disadvantage. The fourth does not seem to have made any special effort to do so and is, in fact, having problems. On the surface, these problems are unrelated to location, but in reality, they may not be at all.
The revised model (Table 5) includes five criteria. A successful winery location will meet at least four of these. The fifth will either be met by the location itself or by some deliberate action taken to overcome the disadvantage.
To test this, wineries less than five years old were examined . Four satisfy all five criteria, eight satisfy four of the criteria, and two satisfy only two of the
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criteria . If the revised hypothesis is correct, the four that satisfy all five of the criteria and those that satisfy four of the criteria and successfully overcome the disadvantage of the missing component, will not fail because of locational reasons. The two that satisfy only two of the criteria, however, will fail.
Of the three failed wineries with respect to the new hypothesis, one winery met all five criteria. This one failed because of business difficulties between partners. A second winery met four of the criteria, and the third met only two of them. These two wineries failed because of legal and financial problems, but it may be that the financial problems
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TABLE 4 Tabulation Using the Five Criteria
Partly Within Near Wet Tourist Viti Culture In Near
Winery County Area Area MSA Hwy TOT Yrs
1 X X X 3 106 2 X X X X X 5 14 3 X X X X 4 13 4 X X X X X 5 13 5 X X X X 4 10 6 X X X X X 5 9 7 X X X X 4 8 8 X X X X X 5 7 9 X X X X X 5 7
10 X X X X 4 7 11 X X X X 4 6 12 X X X X X 5 6 13 X X X X X 5 6 14 X X X X 4 5 15 X X X X 4 4 16 X X X X 4 3 17 X X X X 4 3 18 X X X X 4 3 19 X X X X 4 2 20 X X X X 4 2 21 X X X X 4 1 22 X X X X X 5 23 X X X X X 5 24 X X X X X 5 25 X X X X 4 < 1 26 X X 2 < 1 27 X X 2 < 1 28 X X X X 4 < 1
Failed Wineries:
29 X X 2 4 30 X X X X X 5 3 31 X X X X 4
X = Meets criterion, - = Does not meet criterion Note: The winery numbers on Table 4 are not meant to correspond to the winery numbers on Table 3.
were, in reality, symptoms of locational Some Texas vintners, whose busi-problems. nesses are in sites that have locational
CONCLUSION deficiencies, have been aggressively at-tempting to alter their locational situa-
A business location can be a blessing tion. Vintners in dry counties have es-or a curse. If a winery owner selected a tablished tasting rooms in wet areas. poor location, he must devote precious Vintners located far from tourist attrac-time and resources to overcome this tions have developed promotional activ-disadvantage. It is important then, to se- ities to make their wineries and adjacent lect a location that is advantageous. vineyards attractive to tourists. Not every
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TABLE 5 Revised Model
1. Within a wet or partially wet county 2. With in a tourist area (25 miles rad ius) 3. Within 100 miles of a viticulture area 4. Within a Metropolitan Statistical Area 5. Within fifty miles of an Interstate Highway
location can have all of the attributes that vintners need to succeed, but those who are aware of the importance of location have responded creatively to overcome geographical disadvantages.
Establishing the criteria which must be met by a successful Texas winery location will add to the knowledge that will reduce risk and increase the probability of business success. The model of a successful Texas winery location developed here will enable vintners to select advantageous sites, and to focus their efforts on overcoming recognized disadvantages. Since winema king is becoming an important new industry in Texas, this geographical knowledge could also benefit the economy of Texas.
Successful wineries buy grapes, and of course, the more wineries there are, the higher is the demand for grapes. Determining the locational criteria that will lessen the risk of opening a winery, will also have an influence on the grape growing industry. Grapes grow well in west Texas and land owners there will undoubtedly produce more grapes as more markets for grapes are established. Wine grapes are a high profit, low water-use crop ideally suited to the High Plains where the declining Ogallala aquifer makes high-water demand crops increasingly less profitable to grow. Wine grapes also make sense for land owners who would like to diversify without committing large amounts of land to the new crop. The determination of the criteria which must be met by a successful Texas winery will benefit both Texas vintners and Texas wine grape growers, and may indeed benefit vintners in other areas of the nation.
FUTURE RESEARCH The research task remaining is to test
the new hypothesis over the next five
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years. If the revised hypothesis is correct, it should be possible to accurately predict which of the wineries will fail.
As a suggestion for further research, the wine industries in other states should be examined to determine whether these same factors might be applicable. Another suggestion is to determine which areas of Texas meet the five criteria but do not yet contain wineries.
ACKNOWLEDGEMENT
The authors thank Professor Dennis E. Fitzsimons of the Department of Geography and Planning, Southwest Texas State University, for preparation of the maps illustrating this paper.
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