Colorado's wine industry, based primarily on the Western Slope, contributed more than $40 million to the state's economy during the 2005 growing season, according to a new study conducted by Colorado State University.

More than $21 million was generated from the production and sale of wine when considering all the economic activity associated with winemaking in an area, according to the report, which was funded by the Colorado Wine Industry Development Board and the Grand Junction Visitor and Convention Bureau.

Sales of wine produced in Colorado directly accounted for $11.8 million, and $1.3 million came from the sale of grapes grown in Colorado; employee wages, material and equipment purchases and tax revenue accounted for about $8 million. Add the economic impact of wine-related tourism and recreational enterprises such as tasting room visits, wine festivals, wine trains and educational programs, and the total economic contribution of the Colorado wine industry is $41.7 million.

Colorado's wine production ranked 22nd in the nation and accounted for 3 percent of all sales nationwide, according to the study. Colorado produced 689,000 liters of wine -- about 76,550 cases -- during the 2005 growing season, a five-fold increase from 10 years ago. The average 750 milliliter bottle of Colorado wine sells for $12.86, according to the report.

"Wine has a tremendous positive effect on Colorado's economy," said Dawn Thilmany, a Colorado State University professor of Agriculture and Resource Economics who led the study with George Kress, an emeritus professor from Colorado State University's College of Business.

New Engine for Tourism

"In addition to the direct economic impact of the sale of wine and grapes, the wine industry also boosts local economies through the dollars of visiting tourists who might otherwise not have visited or stayed as long in the region. Hotels are able to fill their rooms and restaurants fill their tables during historically slower seasons. It's a ripple effect."

"Wineries are generally in production in the spring and fall, known as the shoulder seasons for Colorado tourism," Thilmany said. "Since wineries are attractive destinations during these seasons, this industry may help different areas to more fully utilize their existing tourism infrastructure.  Even in high seasons, the wine industry can be used to justify a visitor to extend their visit a day or two."

Consumption of wine in the United States is growing as the baby-boomer generation grows older and Colorado is outpacing the nation on wine consumption, Thilmany said. In 2004, Coloradans consumed an average of 3.66 gallons of wine per capita, almost 20 percent more than the national average of 3.06 gallons per capita. As of March 2005, there were 66 wineries operating in Colorado, the majority in Mesa County.

Since Colorado's wine industry is a new engine for tourism, the state has the ability to increase the economic impact of wine production through developing tourism campaigns highlighting Colorado wines and its wine producing regions, Thilmany said. Many wine producing regions in the nation have also been able to cultivate a complementary, thriving art scene accompanied by boutique food-oriented businesses making and serving artisan foods such as micro-cheeseries, gourmet chocolatiers and small-batch sauces, preserves and mustards.

Overall, there is much optimism about the sustained growth in the number and quality of Colorado wines, and increasing evidence that it can be a catalyst for other economic development (tourism, food-based businesses) as the size of the industry grows.

Category: Research at the University
Submitted: Tuesday, June 13, 2006
Subject: Ag and Resource Economics
Contact: Nikolaus Alrik Olsen
E-mail: Nik.Olsen@colostate.edu
Phone: (970) 491-6432