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Sioux Falls Business Journal: Wineries find growing taste

 

For the past three summers, guests at the Baumberger Vineyard Winery in rural Dell Rapids got the “farm-kitchen-table” experience.

The family made wine as a hobby for 15 years and slowly started a commercial winery in 2010, getting wine on some store shelves and invited visitors for sampling at the family home.

Sales are strong, owner Julie Baumberger said, and the family now wants to give guests a full winery experience. A tasting room will open later this month, and the winery will ramp up its marketing.

“You want this nice room people could sit in, ” Baumberger said. “There has been such good positive growth. It’s an important step for us to take.”

Baumberger, who serves as secretary and treasurer of the South Dakota Winegrowers Association, said her family’s story is a familiar one. Local industry followers said they expect more wineries to start in the state.

Commercial wine production in South Dakota is a relatively new form of agribusiness, made possible by the Farm Winery Act of 1996. The state has 26 licensed wineries, which produced 102,000 gallons of wine in 2012.

National wine industry analyst Doug Kelly from IBIS World said South Dakota is keeping up with the industry’s national growth. U.S. wine production is a $17.2 billion industry, growing 3.6 annually since 2008.

Increased wine consumption is fueling the industry, Kelly said. The country’s per capita wine consumption was 2.45 gallons a year five years ago. That has grown to 2.73 gallons, and Kelly said there’s more interest in drinking domestically produced wine.

“You’d think with the numbers of wines on the supermarket shelves we’d be reaching saturation, but it’s really fueled more growth,” he said. “There are a number of opportunities for wineries to enter and find their niche in the marketplace.”

Heather Taylor Boysen, owner and manager at Good Spirits Fine Wine & Liquor, has worked with South Dakota wineries since her business opened 15 years ago and said she has seen incredible growth.

She carries about 30 types of local wine made at five wineries and said they’re all selling – everything from sweet blueberry varieties to dry reds. Some customers will ask for the wines by name, having tried them at winery events.

“As a whole, they’re doing a better job of marketing the product to people in South Dakota,” Taylor Boysen said. “There’s a lot of new players I need to find space for on my shelf.”

The wine store owner said some local and regional wineries have their own sales staff and handle their own distribution, while others use distributors. She said she’s impressed by the sophistication in area winery facilities.

“It’s no longer a hobby that is being done in someone’s garage,” Taylor Boysen said. “It’s a market that’s really coming into their own.”

Ag-related tourism grows

In South Dakota, wineries also play a role in ag-related tourism, said Wanda Goodman, deputy secretary of tourism for the state.

“Our wineries have done the best job of carving out that niche with their tasting rooms and many hosted events,” she said. “It’s really a long tradition in South Dakota, and it’s fun to see the industry really get off the ground.”

A 2012 survey of tourists showed that 10 percent had come to South Dakota to visit wineries.

Prairie Berry Winery, based out of Hill City, traces its history back five generations to Czechoslovakian pioneers who brought their family tradition with them, co-owner Matt Keck said. Prairie Berry was the second to be licensed in the state and made its first wine in 30-gallon lots. Today, it produces 30,000 gallons at once.

Prairie Berry has shaped its business model to concentrate on retail sales and tourism. While the winery is located in the Black Hills, it hosts a wine club event in Sioux Falls four times a year. The winery is looking for more visibility in the city and will start weekly tasting events at retailers in the coming months, Keck said.

“We really look at the whole state in our plans,” he said. “A lot of people go to the Hills, but we want to make sure that they know they have the ability to buy the wines they like on a regular basis.”

Special events niche

The events business is a growing niche for many wineries.

Don South, owner of Strawbale Winery near Renner, wasn’t planning on making entertainment part of his business, but his model has evolved. Six years ago, an artist friend suggested the winery hold an event during the week for artists to sell their works.

(Full article)