Download Wine Tourism Economic Impact Study May 2013 Main Report

 Okanagan Wine Tourism Industry Economic Impact Report May 2013 Prepared for The Okanagan Wine Festivals Society The British Columbia Wine Institute Prepared by Dr. Blair Baldwin J.D./M.B.A. Stephen Mellows B.B.A. Okanagan School of Business Okanagan College Copyright 2013 Okanagan School of Business Table of Contents Glossary ....................................................................................................................................................... 4 Output .................................................................................................................................................. 4 Employment ......................................................................................................................................... 4 Value Added and Gross Domestic Product .......................................................................................... 4 Indirect Impacts and Net Government Revenue ................................................................................. 4 Grapes .................................................................................................................................................. 4 Wine Sales ............................................................................................................................................ 4 CIC Wine ............................................................................................................................................... 4 VQA Wine ............................................................................................................................................. 4 Okanagan Wine Tourism Industry ....................................................................................................... 4 British Columbia Wine Institute Economic Impact Report (BCWI Impact Report) .............................. 5 List of Tables ................................................................................................................................................ 6 List of Charts ................................................................................................................................................ 6 Acknowledgements ..................................................................................................................................... 7 Executive Summary ..................................................................................................................................... 8 Introduction ................................................................................................................................................. 9 Methodology ............................................................................................................................................... 9 Research Objective 1 (Output) ............................................................................................................. 9 Research Objective 2 (Employment) .................................................................................................. 10 Research Objective 3 (Net Government Revenue) ............................................................................ 10 Research Objective 4 (Value Added to GDP) ..................................................................................... 10 Research Objective 5 (Primary Data) ................................................................................................. 10 Assumptions and Caveats .......................................................................................................................... 11 Measuring Economic Impact ..................................................................................................................... 12 Table 1: Business Output of Okanagan VQA Wine Industry .................................................... 12 Table 2: Employment Attributed to the Okanagan VQA Wine Industry ............................... 12 Table 3: Net Government Revenue Attributed to the Okanagan VQA Wine Industry ....... 12 Table 4: Value Added and Gross Domestic Product Attributed to the Okanagan VQA Wine Industry ..................................................................................................................................... 13 1 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Survey Results ............................................................................................................................................ 14 Distribution of Spending at Wineries ..................................................................................................... 14 Chart 1: Spending Allocation of Winery Visitors (Pie Chart) .............................................................. 14 Demographics ........................................................................................................................................ 16 Party Size ............................................................................................................................................ 16 Chart 3: Party Size of Customers (Pie Chart) ...................................................................................... 16 Chart 4: Party Size of Customers (Column Chart) ............................................................................... 17 Age ..................................................................................................................................................... 18 Chart 5: Average Age of Customers ................................................................................................... 18 Education ........................................................................................................................................... 19 Chart 6: Level of Education Obtained ................................................................................................. 19 Okanagan Residency .......................................................................................................................... 20 Chart 7: Okanagan Residency ............................................................................................................ 20 Number of Nights Stayed in the Okanagan ........................................................................................ 21 Chart 8: Number of Nights Stayed in the Okanagan .......................................................................... 21 Type of Accommodation .................................................................................................................... 22 Chart 9: Type of Accommodation ...................................................................................................... 22 Areas of Accommodation .................................................................................................................. 23 Chart 10: Areas of Accommodation ................................................................................................... 23 Number of Different Okanagan Wineries Visited .............................................................................. 24 Chart 11: Number of Okanagan Wineries Visited .............................................................................. 24 Household Income ............................................................................................................................. 25 Chart 12: Household Income .............................................................................................................. 25 Winery Marketing Data ......................................................................................................................... 26 Chart 13: Main Purpose of Winery Visit/ Most Influential Factors for Winery Attendance ............... 26 Wine Festivals Marketing Data .............................................................................................................. 27 Wine Festival Attendance .................................................................................................................. 27 Chart 14: Winery Customers That Have Previously Attended an Okanagan Wine Festival ............... 27 Chart 15: Number of Attendances of an Okanagan Wine Festival .................................................... 28 Future Okanagan Wine Festival Attendance Plans ............................................................................ 29 Chart 16: Customer Plans to Attend a Future Okanagan Wine Festival ............................................ 29 Influence of Various Marketing Mediums, Okanagan Wine Festivals ............................................... 29 2 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Chart 17: Averaged Rank of Marketing Mediums by Influence, Okanagan Wine Festivals ............... 30 Conclusion ................................................................................................................................................. 31 Bibliography ............................................................................................................................................... 34 3 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Glossary Output “Output is the simple sum of all expenditures in the BC economy that result from the project under study. However, this figure to some extent exaggerates the impacts because the purchase of finished products often involves components of those products at some earlier stage in the overall production process.” (British Columbia Wine Institute, 2005) Employment “Employment levels, expressed in full-­‐time-­‐equivalent (FTE) jobs, are calculated using 2080 hours as the annual FTE.” (Cartier, British Columbia Wine Industry Economic Impact, 2011) Value Added and Gross Domestic Product Value added impacts are identified as either direct or indirect in this report. “Direct impacts measure the actual costs incurred by firms operating within the industry, the operating profits earned by these firms, and government revenues, in the form of taxes, generated by the industry. Indirect impacts measure the economic activity generated by other industries supplying goods and services to the industry.” (Cartier, British Columbia Wine Industry Economic Impact, 2011) Indirect Impacts and Net Government Revenue Net government revenue is meant to include “…personal income taxes, corporate income taxes, and indirect taxes (including PST) less subsidies.” (Cartier, British Columbia Wine Industry Economic Impact, 2011). Grapes Data which revealed the percentage of BC wine grapes which are grown in the Okanagan was extracted from the 2011 BC Wine Grape Report. Wine Sales BC VQA Wine retail sales were provided in 6 separate channels. These are; Liquor Distribution Branch (LDB), Winery Customers, VQA Stores, Licensee Retail Stores (LRS), Agencies, and Sales at Licensed Establishments (Licensees). (See Electronic Appendix) CIC Wine Cellared in Canada (CIC) wine in is made at least partially (if not entirely) with foreign grown grapes. VQA Wine Vintners Quality Alliance (VQA) wine is certified to be grown with 100% Canadian grown grapes. Okanagan Wine Tourism Industry For the purposes of this report, the Okanagan wine tourism industry includes VQA wine purchases whereby the producing winery receives at least the wholesale price of wine sold. 4 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 British Columbia Wine Institute Economic Impact Report (BCWI Impact Report) The BCWI Economic Impact Report was written in 2011 by Professor Lee Cartier of the Okanagan School of Business and includes much data regarding the BC wine industry. Electronic Appendices The Electronic Appendices are meant to accompany this report. They include all survey data, graphs and calculations. Standard Deviation Standard deviation is a term which indicates the amount of variation that exists from the average in a given amount of data. A high standard deviation indicates a high amount of variation. For example, some people claimed to spend hundreds on a typical winery visit, while many claimed to spend much less or nothing. This high level of variation results in a standard deviation higher than its own mean. 5 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 List of Tables Table 1: Business Output of the Okanagan VQA Wine Industry Table 2: Employment Table 3: Net Government Revenue Attributed to the Okanagan VQA Wine Industry Table 4: Value Added and Gross Domestic Product Attributed to the Okanagan VQA Wine Industry List of Charts Chart 1: Spending Allocation of Winery Visitors (Pie Chart) Chart 2: Spending Allocation of Winery Visitors (Column Chart) Chart 3: Party Size of Customers (Pie Chart) Chart 4: Party Size of Customers (Column Chart) Chart 5: Average Age of Customers Chart 6: Level of Education Obtained Chart 7: Okanagan Residency Chart 8: Number of Nights Stayed in the Okanagan Chart 9: Type of Accommodation Chart 10: Areas of Accommodation Chart 11: Number of Okanagan Wineries Visited Chart 12: Household Income Chart 13: Main Purpose of Winery Visit/ Most Influential Factors for Winery Attendance Chart 14: Winery Customers That Have Previously Attended an Okanagan Wine Festival Chart 15: Number of Attendances of an Okanagan Wine Festival Chart 16: Customer Plans to Attend a Future Okanagan Wine Festival Chart 17: Averaged Rank of Marketing Mediums by Influence, Okanagan Wine Festivals 6 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Acknowledgements Primary data was collected from the following member wineries of the Okanagan Wine Festivals Society. Wineries Quails Gate Estate Winery Volcanic Hills Estate Winery Calona Vineyards Mission Hills Estate Winery Gray Monk Estate Winery Red Rooster Estate Winery Nk’Mip Cellars Tinhorn Creek Vineyards Blasted Church Vineyards Wild Goose Winery Sumac Ridge Estate Winery Dirty Laundry Vineyard Summerhill Pyramid Winery Stag's Hollow Winery Primary data was also collected at three different Okanagan Wine Festivals and associated signature events listed below. Wine Festivals Fall Wine Festival 2011 The Westjet Wine Tastings All You Need Is Cheese & Wine Party Winter Wine Festival 2012 Sun Peaks Bartenders Mixology Sun Peaks Progressive Tasting Spring Wine Festival, 2012 The Westjet Wine Tastings All You Need Is Cheese and Wine Party Individuals Special thanks to Lee Cartier of the Okanagan School of Business and Thad Elder of BC Liquor Stores who contributed much useful data which aided in calculations used to formulate data in this report. 7 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Executive Summary This report examines the contribution of the domestic (VQA) Okanagan wine tourism industry to the economy of BC. The economic contribution was measured in four separate ways. These are: Output (2010), Employment (2009), Government Revenue (2009) and Value Added (2009) impacts. These economic contributions were estimated using secondary research, mostly by adapting data found in the BCWI Economic Impact report (with the exception of output). For example, in 2009 the number of acres of wine grapes planted in BC was 9866, 81.7% of which is planted in the Okanagan region. (Press Release, 2011) This percentage was applied to Employment, Government Revenue and Value Added figures found in the BCWI Economic Impact report to discover relevant corresponding Okanagan estimations. Direct output was estimated using inputs of total Okanagan VQA wine retail sales by channel, which was adjusted to eliminate taxes, third party discounts and markups. Indirect output was estimated as the difference between total Okanagan VQA wine retail sales less direct output and taxes. Revenue of the Okanagan Wine Festivals Society was also included in the direct output calculation. A survey (2011/2012) was used to collect primary data on wine customers relating to subjects such as demographics, visitor spending, and preferred marketing methods in the hope that some statistically significant patterns could be found. 967 individual wine consumers participated in the survey while at the various venues listed under the acknowledgments section. The direct output of the Okanagan VQA wine tourism industry in 2010 was estimated to be $87,250,819 while the indirect output was estimated at $51,824,977. Employment attributed to the Okanagan VQA wine tourism industry in 2009 was estimated to be 1145 direct FTE jobs and 462 indirect FTE jobs. Government Revenue attributed to the Okanagan VQA wine tourism industry in 2009 less subsidies was estimated to be $4,075,807. The Value Added or GDP impact attributed to the Okanagan wine tourism industry in 2009 was estimated to be $69,512,874. Primary research revealed much information about patterns of Okanagan winery tourism. For instance: • On a typical day of winery visits, non-­‐Okanagan residents tend to spend more per day at wineries than do Okanagan residents. However, a high standard deviation in visitor spending indicates extreme variation in spending between individual customers • Okanagan wine tourists are often highly educated and earn relatively high incomes. • Approximately half of Okanagan wine customers tend to belong to the baby boomer generation. However all adult age groups were represented at all venues. • Wine customers often travel in small parties, such as a couple on a date. • Many differences were discovered between customers surveyed at Okanagan Wine Festivals versus those surveyed at wineries (explained in report). • Non-­‐Okanagan residents who were surveyed at wineries claimed to be just as likely to use a Bed and Breakfast as a hotel for their accommodation (explained in report). 8 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Introduction The Okanagan School of Business has completed an analysis into the economic effects of the Okanagan VQA wine tourism industry. The economic effects were measured in four ways, meant to represent the effect on output, employment, government revenue and value added (GDP) impacts. Following the secondary research in this report, information that was discovered through the use of a survey is also revealed. Methodology Primary data was collected through the use of a survey (see Electronic Appendices) which was designed by Stephen Mellows and Dr. Blair Baldwin. Secondary research was mainly collected from the BCWI Economic Impact Report, in addition to some other sources. Five research objectives are examined in this report. The secondary research was used to collect data for Research Objectives 1 – 4, while the primary research was used to collect data for Research Objective 5. The main secondary information sources used to develop the economic estimations were provided by: •
•
•
•
•
The BCWI Economic Impact Report BC Liquor Stores Retail Sales The Okanagan Wine Festivals Society The BC Wine Institute 2011 BC Wine Grape Report The research objectives to be answered in this report are listed below. The methods used to estimate answers will be discussed per objective. •
•
•
•
•
Research Objective 1. What spending (output) did the Okanagan VQA wine tourism industry generate? Research Objective 2. What employment did the Okanagan VQA wine tourism industry generate in the Okanagan? Research Objective 3. How much did the Okanagan VQA wine tourism industry contribute to net government revenues? Research Objective 4. How much did the Okanagan VQA wine tourism industry contribute to the Canadian GDP? Research Objective 5. What information was discovered about the customers of the Okanagan wine tourism industry with the collection of primary data via the survey method? Research Objective 1 (Output) 2010 BC VQA wine retail sales were used as inputs to calculate the output of the Okanagan VQA wine industry. The Okanagan contribution to 2010 BC wine retail sales was estimated using the percentage of BC wine grapes which are grown in the Okanagan (81.7%). From the Okanagan VQA retail sales estimation, sales taxes, discounts, markups and excise taxes were removed to isolate an estimation of gross VQA 9 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Okanagan winery sales. Estimated gross Okanagan VQA winery sales were then added to an estimation of the revenue of the Okanagan Wine Festival Society during 2010 to discover an estimation of the direct output of the Okanagan VQA wineries. The corresponding indirect output was estimated by subtracting the Okanagan VQA retail sales estimation from the estimation of the gross VQA winery sales. BC CIC wine retail sales were excluded from the calculation of gross VQA winery sales, leaving only BC VQA wine retail sales by channel as the main inputs. CIC wines were excluded because CIC wine production contributes a relatively inferior amount of value added to the BC economy compared to VQA wine production. (Cartier, British Columbia Wine Industry Economic Impact, 2011). Research Objective 2 (Employment) Data was extracted from the BCWI Economic Impact Report to estimate the Full Time Equivalent (FTE) employee positions that were created by the Okanagan VQA wine industry. The amount of FTE jobs created by the BC VQA wine industry as stated in the BCWI Economic Impact Report was multiplied by the percentage of BC wine grapes which were grown in the Okanagan (81.7%) to discover an estimation of the corresponding Okanagan FTE jobs. Research Objective 3 (Net Government Revenue) Data was extracted from the BCWI Economic Impact Report to estimate the amount of net government revenue generated as a result of Okanagan VQA wine sales. The amount of net government revenue (personal income taxes, corporate income taxes and indirect taxes, less subsidies) created by the BC VQA wine industry as stated in the BCWI Economic Impact report was multiplied by the percentage of BC wine grapes which were grown in the Okanagan (81.7%) to discover an estimation of the corresponding Okanagan net government revenue. Research Objective 4 (Value Added to GDP) Data was extracted from BCWI Economic Impact Report to estimate the value added to GDP as a result of Okanagan VQA wine sales. The amount of value added created by the BC VQA wine industry as stated in the BCWI Economic Impact Report was multiplied by the percentage of BC wine grapes which were grown in the Okanagan (81.7%) to discover an estimation of the corresponding Okanagan figures. Research Objective 5 (Primary Data) Primary data collected from the survey (see Electronic Appendices) was used to formulate charts and other conclusions drawn regarding the spending distribution, demographics and other patterns associated with the Okanagan wine tourism industry.Survey data collected included responses from 967 individual winery customers. Surveys were completed both on paper as well as on an identical iPad version with Poll Daddy software. Responses were collected over a nine month period (September 2011 – May 2012) at member wineries of the Okanagan Wine Festivals Society and Okanagan Wine Festival Signature Events which are listed under the acknowledgements section. The variation in location of survey implementation was an intentional attempt to balance the objectives of obtaining a high response rate as well as collect data from an appropriate distribution of the varieties of customers that visit Okanagan wineries and the Okanagan Wine Festivals. 10 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Assumptions and Caveats Since data measuring the aggregate wholesale revenue of the VQA wine tourism industry in the Okanagan was not readily available, some assumptions had to be made in regards to the calculation used to estimate this figure. Assumptions related to the calculation of the 2010 Okanagan VQA winery output are as follows: •
•
•
•
•
•
•
•
That multiplying the percentage of wine grapes grown in the Okanagan (81.7%) (Press Release, 2011) relative to the rest of BC with reliable figures indicating BC VQA retail sales by distribution channel will yield acceptably reliable corresponding figures for Okanagan VQA retail sales by distribution channel; That by multiplying the same Okanagan/BC percentage of planted wine grape acres to VQA liters sold in BC, the corresponding figure for Okanagan VQA liters sold are reliably estimated; That by multiplying the same Okanagan/BC percentage of planted wine grape acres to BC data published in the BCWI Economic Impact report (such as BC employment attributed to VQA wine), reliable corresponding Okanagan estimations are discovered; That the number of Okanagan VQA liters sold to the BC LDB is reliably estimated when multiplying the percentage of BC domestic wine sold to the LDB (47.1%) (Cartier, British Columbia Wine Industry Economic Impact, 2011), relative to other marketing channels, with the estimation of Okanagan VQA liters sold; The Additional Alcohol Sales Tax (AAST) was abolished July 1st 2010. It is assumed that the AAST tax revenue collected on Okanagan VQA wine sales can be reliably estimated by multiplying a calculation of what would have been the result of a full year’s implementation of the AAST with a fraction representing the number of days of the year before the change (181/365). Note that this change did not result in a material change for the price of wine because the BC LDB increased its retail markup on wine from 117% to 123% on the same day; (Liquor Distribution Branch, 2011) (Jiali Leng, 2006) (Cartier, Email Correspondence, 2012) That it is acceptable that RO1 (output of the Okanagan VQA wine industry) is answered with 2010 secondary data, whilst RO2, RO3, RO4 is estimated using 2009 secondary data, and RO5 using 2011/2012 primary data; That excluding CIC wine and instead using only VQA wine from the inputs used to estimate Okanagan winery revenue resulted in a more relevant figure in regards to an accurate depiction of the economic output of the Okanagan wine industry; and That adding an estimation of 2010 Gross Okanagan VQA winery revenue to an estimation of the revenue for the 2010 Okanagan Wine Festival Society revenue is an acceptable method in calculating the output of the 2010 VQA Okanagan wine tourism output. Limitations regarding the economic data shown in this report are discussed below. •
Some of the economic data calculations in the BCWI Economic Impact report originated from multipliers extracted from the BC Input-­‐Output model. Net government revenue, for instance, is likely to be significantly underestimated due to additional forms of direct and indirect taxes placed 11 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 on alcohol that are not fully represented by multipliers. It should therefore be noted that these estimations may not always reveal an accurate representation of the true economic impact, because of the scope of broad based categories for which multipliers are meant to represent. Measuring Economic Impact Below is a summary of the results of the secondary research calculations. Table 1: Business Output of Okanagan VQA Wine Industry Estimated Annual Okanagan Wine Festival Society Revenue (2010)
Estimated Annual Okanagan Winery VQA revenue (2010)
Total
Direct Impact
Indirect Impact
$ 8,104,444
$ 79,145,975
$ 87,250,419 $ 51,824,977 This table is the result of calculations which estimated the wholesale 2010 revenue attributed to Okanagan VQA wine and 2010 revenue attributed to the Okanagan Wine Festivals Society. Table 2: Employment Attributed to the Okanagan VQA Wine Industry Direct jobs
Indirect jobs
Grape Growers
539
297
Wineries
65
69
Winery Retail
541
96
Total
1145
462
This table shows the estimated FTE jobs created by the Okanagan VQA wine tourism industry. Table 3: Net Government Revenue Attributed to the Okanagan VQA Wine Industry Government Revenues
Grape Growers
Wineries
Winery Retail
Total
$ 187,231 $ 1,931,839 $ 1,956,737 $ 4,075,807 This table shows the estimated net government revenue, which includes “…personal income taxes, corporate taxes, and indirect taxes (including PST) les subsidies.” (Cartier, British Columbia Wine Industry Economic Impact, 2011) 12 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Table 4: Value Added and Gross Domestic Product Attributed to the Okanagan VQA Wine Industry Direct i mpact
Indirect i mpact
Subtotal
Government Revenues*
Total
Grape Growers
$ 4,508,840
$ 1,397,741
$ 5,906,581
$ 187,231
$ 6,093,812
Wineries
$ 16,818,742
$ 4,541,060
$ 21,359,802
$ 1,931,839
$ 23,291,641
Winery Retail
$ 31,808,904
$ 6,361,780
$ 38,170,684
$ 1,956,737
$ 40,127,422
Total
$ 53,136,486
$ 12,300,581
$ 65,437,067
$ 4,075,807
$ 69,512,874 This table shows the estimated value added impact of the Okanagan VQA wine tourism industry. 13 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Survey Results Below is a summary of the primary data collected. Distribution of Spending at Wineries Winery survey respondents were asked what they tended to spend in a day on average at wineries on the categories listed below. Chart 1: Spending Allocation of Winery Visitors (Pie Chart) Purpose This chart shows an averaged allocation of what survey respondents claimed to be the amount of dollars spent on the listed categories, separated by residency location. Conclusions Winery survey respondents who happened to reside outside the Okanagan spent much more on winery visits than did Okanagan resident respondents. Destination wine tourists spent an average of $473.68 per person per winery trip. Okanagan residents spent an average $119.79 per winery trip. In addition to spending more on their winery visits, non-­‐Okanagan residents created the additional economic impacts of spending on accommodation and other general expenses which would not had been made without their travel to the region. Okanagan resident respondents spent an average of $66.86 when visiting Okanagan wineries (excluding winery restaurants). Residents also spent an average of $52.93. These 14 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 destination tourist spending estimates are extremely high supporting the conclusion that wine tourism is a very significant tourism sector. Non-­‐Okanagan resident respondents spent a daily average of $97.44 when visiting Okanagan wineries (excluding winery restaurants. Non-­‐residents also spent an average of $74.43 when visiting winery restaurants. Non-­‐residents spent a nightly average of $142.21 on accommodation while in the Okanagan. Non-­‐
residents spent $159.61 on a combination of transportation, general shopping and food during their stay in the Okanagan. Chart 2: Spending Allocation of Winery Visitors (Column Chart) Purpose This chart shows an averaged allocation of what survey respondents claimed to be the amount of dollars spent on the listed categories, separated by residency location. This column chart was made from the same data as the previous pie chart (excluding extra spending made by non-­‐Okanagan residents), but done so in a different style to accentuate the absolute dollar amount, rather than percentage differences. Conclusion This chart shows that non-­‐Okanagan residents spend far more per winery visit than do Okanagan residents. However, this chart does not address the number of times individuals visit Okanagan wineries. It may be that locals visit wineries more often. What is evident is the importance of culinary tourism to the wineries. Those wineries that have invested in food service are generating a strong economic impact and are proving attractive to all visitors as a reason to stay longer, spend more and try more wines from the winery. 15 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Demographics Party Size Respondents were asked how many individuals were in their party. Chart 3: Party Size of Customers (Pie Chart) Purpose This chart shows the percentage breakdown of party size of survey respondents separated by venue. 16 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Chart 4: Party Size of Customers (Column Chart) Purpose This chart shows the difference in party sizes of survey respondents separated by venue. This column chart was made from the same data as the previous pie chart, but done so with a different style to accentuate the number of responses for each size category, rather than by percentage. Conclusions It was discovered that the most common party size for customers attending all venues was two, often couples on a date. This is important for the wineries and the Okanagan Wine Festivals to make informed choices on their messaging to attract customers and for the types of media selected s part of their integrated marketing communications mix. 17 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Party size at the Winter Wine Festival in particular deviated from the pattern of the other venues, mostly because of a relatively higher percentage of large parties and parties of three. This difference in party size reflects the unique group atmosphere for which the Winter Wine Festival at Sun Peaks is known. Age Respondents were asked to give an average age for the party they were with at the time. Chart 5: Average Age of Customers Purpose This chart shows the average age of the parties of survey respondents, separated by venue. Conclusions Although all adult age categories were represented by respondents in all venues, some age groups were more common than others and some variation did exist between winery and wine festival respondents. Baby boomers were the most common age group, with 48% of wine festival respondents between 46 – 60 years, and 42% of winery respondents of the same age. The greatest difference between the age distribution of wine festival and winery respondents was that wine festivals tended to have a greater representation of younger age groups (49% of festival respondents 19 – 45 years versus 39% for wineries), while wineries tended to have a greater proportion of senior customers (19% of winery respondents 61+ versus only 3% for festivals). This is important as it demonstrates the Okanagan Wine Festivals help to expose member wineries to a younger audience. 18 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Education Respondents were asked how much education they have thus far completed. Chart 6: Level of Education Obtained Purpose This chart shows the levels of education obtained by survey respondents, separated by venue. Conclusions Relatively high levels of education were claimed by survey respondents compared to the general public (The Conference Board of Canada, 2007). For example, more than half of respondents from both types of venue claimed to have successfully completed at least four years of post-­‐secondary education. The impact of this for the Okanagan Wine Festivals is that the events must largely create a level of innovation to keep these wine tourists loyal; a degree of interaction as typically desired by affluent well educated tourists and a need for authenticity of events as well educated tourists want to experience local culture as they want to learn by experience. No statistically significant differences between festival and winery responses were found. 19 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Okanagan Residency Respondents were asked whether or not they live in the Okanagan. Chart 7: Okanagan Residency Purpose This chart shows the percentage of survey respondents claiming to be residents of the Okanagan, separated by venue. A ‘No’ answer indicates non-­‐Okanagan residency. Conclusions Wine festival customers were slightly more likely to be Okanagan residents than winery customers. However, non-­‐Okanagan residents made up the majority of customers at both venues. This indicates the critical importance to the Okanagan Wine Festivals of ensuring it equally targets regional residents and destination wine tourists to ensure its events and overall Festivals are an economic success. Despite the fact that non-­‐Okanagan residents account for the majority of winery/festival customers, Okanagan residents remain a large percentage of visitors and a critical part of the industry. 20 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Number of Nights Stayed in the Okanagan Non-­‐Okanagan resident respondents were asked how many nights they planned to stay in the Okanagan Chart 8: Number of Nights Stayed in the Okanagan Purpose This chart shows the number of nights non-­‐Okanagan resident respondents planned to spend in the Okanagan, separated by venue. Conclusions Most respondents planned to stay in the Okanagan between one and four nights. 26% of winery customers planned to stay in the Okanagan for five nights or more, while only 6% of wine festival customers planned to do the same. The length of stay is important to the Okanagan Wine Festivals s it demonstrates that the Festivals do attract wine tourists for overnight stays and is a reason for accommodators to join the Okanagan Wine Festivals as members and market to these destination wine tourists. 21 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Type of Accommodation Non-­‐Okanagan respondents were asked what type of accommodation was used during their stay in the Okanagan. Chart 9: Type of Accommodation Purpose This chart shows the type of accommodation non-­‐Okanagan resident respondents claimed to use during their stay, separated by venue. Conclusions The majority of non-­‐Okanagan resident wine festival attendees claimed to use a hotel/motel for accommodation. Non-­‐Okanagan resident winery attendees were just as likely to use a Bed and Breakfast as a hotel/motel. Some examples of the ’Other’ accommodation category included camping, renting or timeshares. The importance of quality accommodation is underscored by these results as well as the importance of marketing accommodation in conjunction with wine festivals and visits to wineries. This chart highlights the significance of the Bed and Breakfast market to winery customers in particular. 22 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Areas of Accommodation Non-­‐Okanagan resident respondents were asked where they were staying during their trip to the Okanagan. Chart 10: Areas of Accommodation Purpose This chart shows the places non-­‐Okanagan residents claimed to stay at during their trip to the Okanagan, separated by venue. Conclusions West Kelowna, Kelowna and Penticton proved to be the main areas non-­‐Okanagan wine customers planned to stay overnight during their time in the Okanagan. Osoyoos also proved to be a popular accommodation area considering its relatively small population. 23 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Number of Different Okanagan Wineries Visited Respondents were asked how many different Okanagan wineries they visited during the last two months. Chart 11: Number of Okanagan Wineries Visited Purpose This chart shows the number of different Okanagan wineries customers claimed to have visited in the two months prior to answering the survey, separated by venue. Conclusions A significant proportion of customers at both venues claimed to have visited seven or more different Okanagan wineries in the past two months. The higher percentage of wine festival customers that visited more than seven wineries could be explained by the Wine Festivals Passport which encourages customers to visit more wineries with the use of draw prize incentives. Most winery customers visited between one and four different wineries. It also demonstrates the higher amount of travel and winery visitation that wine tourists are willing to undertake during an Okanagan Wine Festival. 24 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Household Income Respondents were asked how much income their household earned on an annual basis. Chart 12: Household Income Purpose This chart shows what customers claimed to be their annual household income, separated by venue. Conclusions Customers from both venues reported relatively high levels of income. 25 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Winery Marketing Data Winery respondents were asked two related questions regarding their selection of, and main purpose for visiting, the winery in which they were surveyed. Chart 13: Main Purpose of Winery Visit/ Most Influential Factors for Winery Attendance Purpose This chart shows what customers were hoping to achieve during their winery visit, as well as what drew their attention to the particular winery they had chosen. Conclusions Most winery customers were interested in wine tasting/purchasing, and often chose a specific winery based on winery location and reputation. Price was rarely the reason why customers decided to choose one winery over others. The other option was often elaborated by the customer as being a friend/family decision, a favorite wine or a special winery event. For the wineries, this shows the growing importance of maintaining a strong positive reputation, being authentic, and creating strong service skills. For the Okanagan Wine Festivals Society, it also highlights the growing importance of winery members needing to create innovative events at their wineries. 26 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Wine Festivals Marketing Data Wine Festival Attendance Winery customers were asked whether or not they had previously attended an Okanagan Wine Festival in the past. Chart 14: Winery Customers That Have Previously Attended an Okanagan Wine Festival Purpose The above chart shows how many winery customers claimed to have attended an Okanagan Wine Festival in the past, ‘Yes’ meaning they have, ‘No’ meaning they have not. The results revel that slightly less than 40% are loyal customers while just over 60% are new to the Okanagan Wine Festivals. Conclusions Approximately one third of winery customers claimed to have attended an Okanagan Wine Festival event in the past. This can be interpreted in a number of ways. There clearly is a strong degree of loyalty to the Okanagan Wine Festivals which is encouraging for customer database development and keeping loyal customers apprised of new developments. The large percentage of new customers indicates that the Okanagan Wine Festivals is reaching out and achieving its goal for market development of wine tourists and is attracting a new market of wine tourists. It also indicates that different segments exist that will require different messaging. 27 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Chart 15: Number of Attendances of an Okanagan Wine Festival Purpose This chart shows the number of times customers claimed to have attended an Okanagan Wine Festival event within the past year, separated by venue. It shows that wine tourists who attend an Okanagan Wine Festival are more likely to attend other Okanagan Wine Festivals than those wine tourists who only visit wineries. Conclusions Most people who have attended an Okanagan Wine Festival event in the past year have only done so one or two times, suggesting that the average Okanagan Wine Festival customer has not visited every season of wine festivals. This is positive news for “wine festivals” as it demonstrates that there is a segment of wine tourists that are more focussed on events and festivals than wine touring per se , thus underscoring the importance of “Festivals” as a vital tourism product sector. 28 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Future Okanagan Wine Festival Attendance Plans Customers were asked whether or not they planned to attend an Okanagan Wine Festival in the future. Chart 16: Customer Plans to Attend a Future Okanagan Wine Festival Purpose This chart shows whether customers planned to attend a future Okanagan Wine Festival, separated by venue. The result indicate the Wine Festivals customers are unanimously looking forward to returning to another Okanagan Wine Festival. The wine tourist who is visiting a winery only does have a positive response – over 50% -­‐ that they would like to attend an Okanagan Wine Festival in the future. Conclusions Those already in attendance of an Okanagan Wine Festival unanimously claimed that they intended to attend another wine festival, while those who were asked the same question at wineries were more divided. This shows the importance of festival execution and the existence of a strong probability of repeat visitation. With the Okanagan Wine Festivals Society offering two Valley wide Wine Festivals; a winter Festival in partnership with Sun Peaks Resort Municipality; and other Signature Events, it demonstrates the importance of cross promotion to educate and attract wine tourists to attend different Wine Festivals and Signature Events. Influence of Various Marketing Mediums, Okanagan Wine Festivals Respondents were asked to rank various marketing mediums regarding their potential to influence a positive decision to attend an Okanagan Wine Festival. 29 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Chart 17: Averaged Rank of Marketing Mediums by Influence, Okanagan Wine Festivals Purpose This chart shows the averaged ranking of what respondents claimed to be the most influential marketing mediums regarding attendance to an Okanagan wine festival. Friends & family rank #1 followed by the reputation/brand image of the Festival; and the website and earned media through stories and articles. Conclusions A good reputation conveyed through trusted family and friends is the best way to market Okanagan Wine Festivals to individuals. This means that the execution of the Okanagan Wine Festivals events is critical to success and that an appropriate amount of resources must be devoted to not only event planning but to execution. It also demonstrates the importance of the website to creating awareness and sales. Finally the ranking of stories on the Festivals underlines the importance of “earned” media and the efforts made to plan wine media fam trips need to be maintained. Social media was given the lowest ranking by survey respondents, suggesting that advertising Okanagan Wine Festivals through sites such as Twitter or Facebook are likely in the development stage. 30 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Conclusions 1. Economic Impact Conclusions i.
The annual direct economic impact of wine tourism during the 2010 Winter, Spring and Fall Okanagan Wine Festivals is measured at $87 million comprising $8 million in Wine Festivals events revenues and $79 in annual wine sales as measured by wine tourists visiting wineries. The indirect economic impact is estimated to be $52 million. ii.
There are over 1000 full time direct jobs created in the wine tourism industry on an annualized basis. iii.
The net government revenue amounts to just over $ 4 million in annualized revenues for the provincial treasury from Wine Tourism. iv.
Destination wine tourists spent significantly more on winery visits than did Okanagan resident respondents. Destination wine tourists spent an average of $473.68 per person per winery trip. Okanagan residents spent an average $119.79 per winery trip. This clearly demonstrates that wine tourism is a very significant tourism sector. The direct spend also demonstrates the importance of promoting of the Okanagan Wine Festivals embracing an approach to promote visits winery retail shops, events at wineries, accommodation packages and promotion of member restaurants. 2. Marketing Conclusions i.
Wine tourists are highly educated, earn high incomes, and come from Generation X or the Baby Boomers. The Okanagan Wine Festivals were found to draw in a significantly younger crowd and attract a higher proportion of Okanagan residents than do wineries. ii.
The importance of food combined with wine is growing as demonstrated by the statistics showing the spend on wine sales and food purchases as well the importance of accommodation for destination wine tourists. iii.
Destination wine tourists spend far more per winery visit than do Okanagan residents. Data collected also discloses that those wineries that have invested in food service are generating a strong economic impact and are proving attractive to all visitors as a reason to stay longer, spend more and try more wines from the winery. iv.
The most common party size for customers attending all venues was two, often couples on a date. This is important for the wineries and the Okanagan Wine Festivals to make informed choices on their messaging to attract customers and for the types of media selected s part of their integrated marketing communications mix. v.
Although all adult age categories were represented by wine tourists, baby boomers were the most common age group, with 48% of wine festival respondents between 46 – 60 years, and 31 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 42% of winery respondents of the same age. The greatest difference between the age distribution of wine festival and winery respondents was that wine festivals tended to have a greater representation of younger age groups (49% of festival respondents 19 – 45 years versus 39% for wineries), while wineries tended to have a greater proportion of senior customers (19% of winery respondents 61+ versus only 3% for festivals). This is important as it demonstrates the Okanagan Wine Festivals help to expose member wineries to a younger audience. vi.
vii.
Relatively high levels of education define wine tourists. More than half of respondents from both types of venue claimed to have successfully completed at least four years of post-­‐
secondary education. The impact of this for the Okanagan Wine Festivals is that the events must largely create a level of innovation to keep these wine tourists loyal; a degree of interaction as typically desired by affluent well educated tourists and a need for authenticity of events as well educated tourists want to experience local culture as they want to learn by experience. Wine festival customers are equally balanced between destination wine tourists and regional residents. This indicates the critical importance to the Okanagan Wine Festivals of ensuring it equally targets regional residents and destination wine tourists to ensure its events and overall Festivals are an economic success. viii.
Most respondents planned to stay in the Okanagan between one and four nights. 26% of winery customers planned to stay in the Okanagan for five nights or more, while only 6% of wine festival customers planned to do the same. The length of stay is important to the Okanagan Wine Festivals s it demonstrates that the Festivals do attract wine tourists for overnight stays and is a reason for accommodators to join the Okanagan Wine Festivals as members and market to these destination wine tourists. ix.
Kelowna and Penticton proved to be the main areas non-­‐Okanagan wine customers planned to stay overnight during their time in the Okanagan. Osoyoos also proved to be a popular accommodation area considering its relatively small population. x.
Most winery customers were interested in wine tasting/purchasing, and often chose a specific winery based on winery location and reputation. Price was rarely the reason why customers decided to choose one winery over others. The other option was often elaborated by the customer as being a friend/family decision, a favorite wine or a special winery event. For the wineries, this shows the growing importance of maintaining a strong positive reputation, being authentic, and creating strong service skills. For the Okanagan Wine Festivals Society, it also highlights the growing importance of winery members needing to create innovative events at their wineries. xi.
There is a strong degree of loyalty to the Okanagan Wine Festivals which is encouraging for customer database development and keeping loyal customers apprised of new developments. The large percentage of new customers indicates that the Okanagan Wine Festivals is reaching out and achieving its goal for market development of wine tourists and is attracting a new 32 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 market of wine tourists. It also indicates that different segments exist that will require different messaging. Most people choose a particular winery over others because of reputation, convenience or appearance, but rarely because of price. xii.
Customers indicated that they’re trust lies not with social media advertising campaigns, but rather in the words of their friends and family; the reputation of the Okanagan Wine Festivals and the quality of their events. xiii.
Those who had attended an Okanagan Wine Festival unanimously claimed that they planned to attend another in the future. Data suggests that those who visit Okanagan Wine Festivals also visit more wineries outside the festivals, proving the use of Okanagan Wine Festivals as a useful marketing tool for wineries. xiv.
Most people who have attended an Okanagan Wine Festival event in the past year have only done so one or two times, suggesting that the average Okanagan Wine Festival customer has not visited every season of wine festivals. This is positive news for “wine festivals” as it demonstrates that there is a segment of wine tourists that are more focussed on events and festivals than wine touring per se, underscoring the importance of “Festivals” as a tourism product sector. xv.
Those already in attendance of an Okanagan Wine Festival unanimously claimed that they intended to attend another wine festival, while those who were asked the same question at wineries were more divided. This shows the importance of festival execution and the existence of a strong probability of repeat visitation. With the Okanagan Wine Festivals Society offering two Valley wide Wine Festivals; a winter Festival in partnership with Sun Peaks Resort Municipality; and other Signature Events, it demonstrates the importance of cross promotion to educate and attract wine tourists to attend different Wine Festivals and Signature Events. xvi.
A good reputation conveyed through trusted family and friends is the best way to market Okanagan Wine Festivals to individuals. This means that the execution of the Okanagan Wine Festivals events is critical to success and that an appropriate amount of resources must be devoted to not only event planning but to execution. It also demonstrates the importance of the website to creating awareness and sales. 33 Okanagan Wine Tourism Industry Economic Impact Report /May 2013 Bibliography Baldwin, B. (2012, July). President of the Okanagan Wine Festival Society. (S. Mellows, Interviewer) British Columbia Wine Institute. (2005). BC Input-­‐Output Model Report. Victoria: BC Statistics. Cartier, L. (2011). British Columbia Wine Industry Economic Impact. Kelowna: Okanagan School Of Business. Cartier, L. (2012, July 26). Email Correspondence. (S. Mellows, Interviewer) Elder, T. (2012, July 3). District Manager of BC Liquor Stores Retail Sales. (B. Baldwin, Interviewer) Hicken, M. (2010, May 18). BC Increases Wine Markup From 117% to 123%. Retrieved July 26, 2012, from Wine Law: http://www.winelaw.ca/cms/index.php?option=com_content&view=article&id=90:bc-­‐
increases-­‐wine-­‐markup-­‐from-­‐117-­‐to-­‐123&catid=1&Itemid=19 Horne, G. (2008). Provincial Economic Multipliers And How To Use Them. BC Stats. Jiali Leng, J. S. (2006, February). Alcohol Pricing and Public Health in Canada. Retrieved July 22, 2012, from Center for Additions Research of BC: http://www.carbc.ca/Portals/0/PropertyAgent/558/Files/8/AlcPricing.pdf Liquor Distribution Branch. (2011). Quarterly Market Review December 2011. Retrieved July 26, 2012, from BC Liquor Stores: http://www.bcliquorstores.com/quarterly-­‐market-­‐review Press Release. (2011, August 22). 2011 BC Wine Grape Report: Acreage Expanding Across the Province. Retrieved July 20, 2012, from Eat Magazine: http://www.eatmagazine.ca/2011-­‐bc-­‐wine-­‐grape-­‐
report-­‐acreage-­‐expanding-­‐across-­‐the-­‐province/ Prodan, M. (2012, June 30). Executive Director of BC Wine Institute. (B. Baldwin, Interviewer) The Conference Board of Canada. (2007). University Completion. Retrieved August 20, 2012, from The Conference Board of Canada: http://www.conferenceboard.ca/hcp/details/education/university-­‐completion.aspx Wine Marketing and Law Canada. (2008, April 16). BC Liquor Stores Wine Markup Calculation. Retrieved July 16, 2012, from Wine Marketing and Law Canada: http://winemarketing.ca/blog/?page_id=14 34 Okanagan Wine Tourism Industry Economic Impact Report /May 2013