SFSU Public Affairs Press Release Published by the Public Affairs Office at San Francisco State University, Diag Center.

#136
Contact: William Morris
phone: (415) 415/405-3606,
e-mail: wmsalcie@sfsu.edu

SAN FRANCISCO, CA, June 27, 2000--Preliminary results from a new survey by three San Francisco State University business professors show that a majority of the wineries that have tested the international market do not consider their export programs a success.

The survey, funded by a grant from the U.S. Department of Education, was conducted in cooperation with WineVision, an industry-wide initiative that seeks to secure the position of American wine in the domestic and international marketplace.

The survey found that:

• 44 percent of the wineries are involved in exporting.
• 73 percent of exporting wineries say their export program is not profitable.
• 60 percent do not consider their program a success.
• 61 percent say their program has not met their expectations.

"The wine industry is facing several challenges," says Rick Castaldi, who conducted the study along with professors Murray Silverman and Sanjit Sengupta. "The domestic market is maturing with fewer new wine drinkers coming on board, several years of robust harvests and increased world-wide vineyard plantings have led to a glut of grapes, and domestic wineries are encountering stiffer competition both locally and abroad from emerging wine-producing nations such as Chile and Argentina."

"What makes this data unique is that it represents close to one-fourth of the industry," says Silverman. The survey was sent to 978 wineries in California and the Pacific Northwest-240 replied. "To be able to work with such a large sample means that our findings powerfully reflect the attitudes and practices of the industry-a 25 percent response rate is just amazing for a market survey," he adds.

The three professors said they chose to study the wine industry because of its importance to the northern California economy. The USED grant requires that they and their students study a local industry and use their findings to help small- and medium-sized businesses develop export programs.

Additional results of the survey show that interest in increasing exports is high:

• 70 percent of the exporting wineries disagreed with the following statement: "Top management is just not interested in exporting."
• 29 percent of non-exporting wineries say they are likely to establish an export program in the next three years.

Many wineries, however, have not yet committed significant resources to entering the international market:

• 55 percent of the exporting wineries indicated that exporting is not a high priority.
• 66 percent agreed with the statement that they were "not as serious about their exports as their competitors."
• 55 percent of exporting wineries do not have an employee formally assigned to exporting.
• Only 24 percent of exporting wineries have a line item budget for exporting.

Despite the high number of wineries that do not consider their export programs a success, Castaldi and Silverman say they are optimistic about the domestic wine industry's ability to compete in a global marketplace. They point to the fact that one-third of the smaller exporting wineries (those that produce less than 25,000 cases a year) and close to one-half of the larger exporting wineries (25,000 cases and up) consider their programs to be very successful-suggesting that it's not only the large vintn ers who can benefit from the international market.

This fall, professors Castaldi, Sengupta and Silverman will present the full results of their analysis at the Wine Financial Symposium, scheduled for September 13-14 in Napa County. They hope to use the event to generate interest in the next phase of their work with WineVision-three workshops to be held this coming fall and spring.

In each workshop, the three professors along with industry experts will help 15 to 20 small- and medium-sized wineries either expand or introduce export programs. "The survey helped generate a nucleus of material for this coming year's workshops," says Castaldi. "We also are developing a library of eight to ten case studies of wineries that we can use with our training. Most are the result of degree projects from our MBA students and include Internet companies like wine.com. If we can help fifty win eries through these workshops, that would meet a significant need in the wine industry."

The College of Business at San Francisco State enrolls more than 5,000 students and has more than 120 faculty members. Business administration is the most popular undergraduate major at SFSU, chosen by nearly one in four undergraduates.

San Francisco State University is a highly diverse, comprehensive, public and urban university with an enrollment of 27,000 students. It is one of the largest campuses in the nationally-recognized 23-campus California State University system.

NOTE: Professor Rick Castaldi can be reached at 415/338-2829, or castaldi@sfsu.edu. Professor Murray Silverman can be reached at 415/338-7489, or msilver@sfsu.edu. .

NOTE: Full survey results can be found at the Wine Industry Survey website: http://userwww.sfsu.edu/~sfsuwine/.

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Last modified June 14, 2000, by Office of Public Affairs