Modern Day Growth of the Virginia Wine Industry

• Posted on 26 April 2023
• Posted in Cabernet Franc, merlot, Petit Verdot, Virginia
• 0

As many of you have known, the modern-day Virginia wine industry started in the late 1970s, with Gabriel Rausse as the modern-day Father of Virginia Wine. By the year 1980, Virginia had a rocking 10 wineries, which slowly grew to about 50 wineries by 1990. Under the Farm Winery Act of 1980, wineries were farms, so limited restrictions were needed, given normal agricultural activity. Wineries were free to have gatherings on their properties, and to construct or make additions to facilities in the use of wine production.

Wineries that were business-minded conducted tastings, served meals, and held musical performances to promote their product, while balancing compliance with local ordinances. These events and other revenue streams helped to offset the enormous costs to start up. It takes at least 10 years on average before there is positive cash flow for most wineries. During that 10 years, the owners will study the site, buy it, plant it, build processing buildings, build tasting rooms, first harvest, fermenting, aging, bottling, more aging, and finally, start selling.  Also, under this 1980 Act, wineries were allowed to bypass the Federal three-tiered distribution system and distribute their products directly to retailers and restaurants. These allowances were not necessarily a problem when the state was working with a small number of small wineries.

The second stage of the Virginia wine industry growth occurred between 1995 and 2005, when the total planted acres doubled. By 2007, Virginia had 119 wineries. With Virginia’s temperate Bordeaux-like climate, wineries were limiting the number of varietals to capture better quality merlot, cabernet franc, and viognier. And it was working. Virginia’s Barboursville rose to national notoriety and is mentioned in almost every wine textbook. The toddler Virginia wine industry was beginning to experience the power of agritourism.

During this time period, there developed a sort of tug war between the state, who wanted to protect the health, safety, and welfare of the farm wineries that were growing in number and conducting business. There began also to be opposing viewpoints of the Farm Winery Act of 1980, surrounding the usage of land zoned agriculture (A-1). The locality, like Albemarle County, wanted to limit the number of events that a winery could have in a given year. Any more than this would cause excess traffic, noise and harm the rural character. The localities also wanted to require special permitting for wineries to have activities other than agriculture on their properties. On the other side, the wineries have started to become tourist attractions that bring increased revenue for which the county could be the recipient of the increased tax revenue.

A starting point to a compromise came from Oregon’s wine industry, which is about 10 years head of Virginia’s, and had experienced the same landscape beauty concerns. Wineries’ property usage was considered on the basis of the size of the property, number of acres in production, and the vineyard location. As long as the music noises were self-contained on the property and the number of events were limited, some peace was restored between localities and wineries.

July 1, 2006, was a crippling day. Virginia Farm wineries lost their self-distribution loophole, when the Federal court in Richmond ruled that Virginia policy to allow only its wine to self-distribute was unconstitutional on the interstate commerce clause. The ruling had a significant financial impact. Many wineries were just too small to hire a wholesaling company for distribution; the costs were too high.

Enter David King. Who, to this point, had been in the Virginia wine industry for only a few short years. Coming from practicing law in Texas, he moved to Crozet, in Albemarle County, and bought land to play Polo in 1995. Discovering that he and his wife, Ellen, happened to buy land in the prized Monticello AVA, they opened up a winery three years later. Being a community minded person, David got involved in Virginia wine politics and served as the chairman of the Virginia Wine Board from 2007 to 2009 and again, later from 2013 to 2018. Using his law background, David was pivotal in moving the wine industry forward by fighting for legislation that supports wine growers and others in the industry. He championed being an advocate for the Virginia wine industry.

David King helped to pass the Virginia Farm Winery Act of 2007. House Bill 3120 was passed, addressing the taxing of wine sales, and states that no local may enact any ordinance that restricts any business-related conduct by farm wineries or business affiliates in the distribution or marketing of farm winery products. Basically, limiting local government efforts to curtail farm winery activities, thus creating a successful wine industry.

David King may have also had influence over the creation of the Virginia Wine Distribution Company (VWDC) in 2007. The General Assembly approved legislation allowing small farm wineries to distribute as many as 3,000 cases of their own wine each year to stores and restaurants through the state agriculture department. In effect, the VWDC became the middle tier in the federal three tier system. The goal was a less expensive option than traditional wholesale distributor channels. Today, there are more than 200 wineries in the Commonwealth that are signed on with VWDC.

Since 2007, growth in the Virginia wine industry can be the result of a few contributing factors. Virginia's moderate climate and diverse soil types provide excellent growing conditions for a variety of grapes. Additionally, Virginia's location on the East Coast makes it accessible to a large population center, including the Washington D.C. metropolitan area. Consumers are becoming more interested in the provenance of their food and drink, and are seeking out products that are grown and produced locally. This has led to a surge in demand for Virginia wines, which are seen as a high-quality, locally produced product. The Virginia wine industry has also been proactive in promoting itself and its products. The Virginia Wine Board Marketing Office—a state agency that promotes the Virginia wine industry—has launched numerous marketing campaigns to raise awareness of Virginia wines. Additionally, many Virginia wineries have formed alliances and associations to help promote their products and increase their visibility.

As of September 2021, Virginia was the sixth-largest wine-producing state in the United States, behind California, Washington, Oregon, New York, and Texas. However, the size of the Virginia wine industry in terms of total production and acreage is significantly smaller than these top wine-producing states. Just as a fun comparison, in 2020, Virginia produced approximately 566,000 cases of wine, which is significantly less than the more than 200 million cases produced by California, the largest wine-producing state. Virginia also had just over 3,500 acres of vineyards, which is a fraction of the over 637,000 acres in California.

Wine Enthusiast has written extensively about wines from California, Oregon, Washington, and New York as these are the largest producers in the Country. But added to this list is Virginia, for its diversity in styles and high-quality wines. It won’t be long now for Virginia’s wines to be internationally recognized, where the demand will take our wines to the world stage.