Arizona Wine Tourism Industry Study 2017

Alliance Bank Business Outreach Center

The Arizona Wine Tourism Industry – 2017 Prepared for the Arizona Office of Tourism July 2017

COMPARISON

RATIOS/PROBABILITIES

Alliance Bank Business Outreach Center Northern Arizona University

Ryan Fitch, Ph.D., Research Associate Thomas Combrink, M.S., Senior Research Specialist Tom Pitts, Chair of the Arizona Association for Economic Development’s Rural Task Force

i Acknowledgments

The Alliance Bank Business Outreach Center would like to thank the members of the Arizona Office of Tourism and the 11 co-sponsors who made this project possible. Without your support, this study would not have been possible. Special thanks to Colleen Floyd, Director of Research and Kari Roberg, Research Manager at the Arizona Office of Tourism and the 11 co-sponsors: Arizona Wine Growers Association, City of Sedona, Cottonwood Chamber of Commerce, Cottonwood Economic Development Council, Sedona Chamber of Commerce, Sonoita/Elgin Chamber of Commerce, Verde Valley Regional Economic Organization, Verde Valley Wine Consortium, Willcox Chamber of Commerce and Agriculture, Jerome Chamber of Commerce, and Town of Camp Verde. We would like to thank and acknowledge Tom Pitts, Chair of the Arizona Association for Economic Development’s Rural Task Force, for putting together this group of co-sponsors to help fund the project.

We received a tremendous amount of help and support with introductions, logistics, and survey dissemination. Again, Tom Pitts was instrumental in showing us around the Verde Valley and introducing us to winemakers throughout the region. Next, we would like to thank Alan Baker, Executive Director for the Willcox Chamber of Commerce and Agriculture, for taking us around the Willcox area and introducing us to the winemakers of the Willcox region. A big thanks to Kent Callaghan, Founder of Callaghan Vineyards, for taking the time to show us around the Sonoita/Elgin area and facilitating introductions to the winemakers of the Sonoita/Elgin region. Finally, we would like to thank all the participating tasting rooms, vineyards, and wineries for taking part in this study. Without your involvement, we would not have been able to collect the necessary data for this project.

We understand administering surveys to wine tourists is not the typical duty of staff at the participating sites. We are grateful for your professionalism and dedication in distributing the survey instrument. Lastly, we thank all the individuals who took the time to take our survey. We hope this report will better serve you, the wine consumer.

For the Alliance Bank Business Outreach Center: Ryan Fitch, Ph.D., Research Associate Thomas Combrink, M.S., Senior Research Specialist Heather Cornea, Research Assistant Wade Rousse, Ph.D., Interim Director

Northern Arizona University Alliance Bank Business Outreach Center | July 2017

1 The Arizona Wine Tourism Industry – 2017

Executive Summary

This survey and analysis is a 761 were deemed usable based of a wine purchase at the tasting follow-up to “The Arizona on completion of several key room, vineyard, or winery. We Wine Tourism Industry” 2011 questions in the survey. did not find this variable to be study conducted by Northern significant in predicting the Arizona University’s (NAU’s) Our surveys captured wine probability of purchasing a bottle Arizona Hospitality Research visitors from 41 states, the of wine. However, wine tourists and Resource Center (AHRRC), District of Columbia, and three most commonly traveled as a unit of the Alliance Bank foreign countries (Canada, couples or in groups of men and Business Outreach Center. On Scotland, and Mexico). women together. Approximately behalf of the Arizona Office Arizona wine tourism is largely 67% of wine visitors traveled of Tourism and 11 other co- driven by in-state visitors in groups of men and women. sponsors, this study looks into with approximately 58% of all Groups of women only was the the growth of Arizona wine Arizona wine tourists traveling next most common party type tourism over the past six years. from a place within the state. with around 19% of wine visitors The survey was designed to Wine visitors from the greater comprising a women only party. collect information regarding Phoenix and Tucson Metro general demographics, on-site areas comprise over 77% of wine Roughly 70% of survey expenditures, visitation length, tourists originating from Arizona. respondents purchased a bottle and the overall wine tasting Combined, Prescott and Flagstaff of wine while visiting the tasting experience of visitors. Surveys represent just over 3% of wine room, vineyard, or winery. We were administered to visitors visitors originating from Arizona. found age and income to be (one per party) at tasting rooms, Out-of-state places of origin that variables that can help determine vineyards, and wineries within comprise greater than 1% of total the probability of a bottle of wine the three dominant wine growing wine visitors include: being purchased. As age increases, regions of Arizona. These regions Illinois (approximately 6%), each additional year increases are Cochise County, Willcox; California (approximately 5%), the odds ratio of purchasing a Santa Cruz County, Sonoita/ Wisconsin (approximately 4%), bottle of wine by 1.015. Survey Elgin; and Yavapai County, New York (approximately 3%), respondents with an income Verde Valley. Five locations were Washington (approximately greater than $150,000 are more surveyed in the Willcox area, 3%), Canada (approximately likely to purchase a bottle of wine nine locations were surveyed 2%), Colorado (approximately compared to survey respondents in the Sonoita/Elgin area, and 2%), Texas (approximately 2%), with an income less than 16 locations were surveyed Indiana (approximately 1%), $50,000 (odds ratio of 1.403). in the Verde Valley. Over the Florida (approximately 1%), and Surprisingly, survey respondents four month survey period from Ohio (approximately 1%). with an income between $50,000 February – May 2017, 1,026 and $99,999 were slightly less We analyzed the impact party surveys were collected. From likely to purchase a bottle of wine composition (men, women, and the 1,026 surveys collected, compared to survey respondents children) had on the probability

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with an income of less than wineries with an experience expected” with an additional 15% $50,000 (odds ratio of 0.964). that, on the whole, exceeds of survey respondents rating their expectations. Over 63% of survey experience as “A little better than Wine tourists depart Arizona respondents rated their overall I expected.” tasting rooms, vineyards, and experience as “Much better than I Key Findings and Summary Statistics from the Survey Data

• The Arizona wine tourism visitors spending the night in 5% of visitors), Wisconsin industry creates an estimated the region. (approximately 4% of visitors), $56,178,643 in total New York (approximately 3% • Visitors with incomes economic output. of visitors), and Washington ranging between $100,000 (approximately 3% of visitors). • The Arizona wine tourism and $149,999 are estimated industry creates an estimated to have almost twice the • About 50% of wine visitors 640.6 full-time equivalent jobs. odds of spending the night from Arizona come from the in the region compared to greater Phoenix Metro area. • Approximately $3.6 million visitors with incomes less than Approximately 27% of wine in local and state taxes are $50,000 (odds ratio of 1.997). visitors from Arizona come generated from Arizona wine from the greater Tucson Metro tourism expenditures, indirect • Visitors with incomes greater area. Roughly 3% of wine effects, and induced effects. than $150,000 are estimated visitors from Arizona come to have 1.8 the odds of from Flagstaff and Prescott • Percentage of surveys received spending the night in the combined. from each area closely match region compared to visitors the percentage of survey sites with incomes less than $50,000 • Approximately 67% of wine from each area: Approximately (odds ratio of 1.8). tourists travel as couples or in 17% of the sites were located groups of men and women. in Willcox, roughly 12% (93) • Approximately 70% of visitors of surveys analyzed came from purchased a bottle of wine at • Over 78% of survey Willcox; approximately 30% the tasting room, winery, or respondents rated their tasting of the sites were located in vineyard they visited. room, vineyard, or winery Sonoita/Elgin, roughly 35% • Given at least one bottle experience as exceeding (263) of surveys analyzed came of wine was purchased by a expectations. from Sonoita/Elgin; and 53% visitor at the tasting room, • An additional year of age of the sites were located in the winery, or vineyard, the average for the visitor increases Verde Valley, approximately expenditure on wine was the estimated odds ratio of 53% (405) of surveys analyzed roughly $78. making a wine purchase at came from the Verde Valley. • Given at least one bottle of the tasting room, winery, or • Approximately 38% of visitors wine was purchased by a visitor vineyard by 1.015. to tasting rooms, wineries, and at the tasting room, winery, • Visitors making $150,000 or vineyards had previously visited or vineyard, the average total more have an estimated odds the site (repeat visitors). expenditure was roughly $101. ratio for purchasing a bottle of • Approximately 57% of visitors • The top five out-of-state wine at a tasting room, winery, to tasting rooms, wineries, and places of origin are Illinois or vineyard of 1.403 compared vineyards were day visitors (approximately 6% of visitors), to visitors making less than with the remaining 43% of California (approximately $50,000.

The Arizona Wine Tourism Industry – 2017

5 Table of Contents

Introduction...... 7

Methods...... 10

Summary Statistics...... 11

1. Overall...... 11

2. Regional...... 18

2011 – 2017 Comparison...... 24

Odds Ratios and Purchasing Probabilities...... 29

Economic Impacts...... 30

Northern Arizona University Alliance Bank Business Outreach Center | July 2017 6

The Arizona Wine Tourism Industry – 2017 7 Introduction

The wine industry in Arizona Priest, Fray Marcos de Niza, was New Mexico, Texas, Oklahoma, has a long, colorful, and truly appointed to head an expedition and Kansas before returning unique history. In a very real to find the seven cities and to Mexico in 1542, broke, sense, Arizona was both the first Esteban was sent along to guide discouraged, and disappointed, and the last state in the union him. Esteban went ahead of the having found no golden city. All to capitalize on its terroir to group, leaving markers to guide of this was within 50 years of the make fine wine. Following the them, and ultimately disappeared Columbus voyage, far before most Columbus voyage of discovery or, as reported, was killed by the of the rest of North America had in 1492, the Spanish search for Zunis. The expedition returned been touched. In 1583, Spanish gold became the driving force for to Mexico and Marcos de Niza explorer Antonio de Espejo new world exploration. Southern said that he had seen Zuni, was sent from Mexico City and Mexico and, subsequently, South supposedly one of the seven cities, became the first European to America became the focus on a high hill from a distance but explore the Verde Valley. He was because of the fabulous wealth he said he feared that his force followed in 1598 by Farfan de los that was quickly discovered. was too small and if he tried to Godos and a second expedition North America could wait. That enter the city, they would all meet that year by Juan de Oñate, who is, until tales of the Seven Cities the same fate as Esteban. revisited in 1604. The Padres of Cibola surfaced. quickly began planting so-called In 1540 Francisco Vázquez de “Mission Grapes” to make their Coronado y Luján, the Governor In 1528, the remnants of the sacramental wine and other of Nueva Galicia (New Galicia), ill-fated 600 member Narváez favorite wine varieties soon a province located northwest of 1527 expedition to Florida was followed. washed ashore on Galveston Mexico City and comprising the Island on the Texas coast, driven contemporary Mexican states There are reports of European there by hurricanes. Ultimately, of Jalisco, Sinaloa and Nayarit, grapevines being established there were only four survivors, determined to mount his own in Southern Arizona as early led by Álvar Núñez Cabeza de expedition, using Marcos de as the mid-16th century, as the Vaca. He and a Moroccan slave Niza as a guide. He put together Spanish explorers recognized named Esteban along with two a far larger group, consisting similarities to their home soils in others, spent eight years working of 400 Spanish soldiers, 2,000 Spain, which would make these their way on foot across Texas Mexican (Indian) soldiers, several the first wine grapes planted in and New Mexico into Arizona Native and African slaves, four the United States. Nine missions and then south into Mexico Franciscan monks (including were established between 1629 where they were finally reunited Marcos de Niza), and numerous and 1691, with each establishing with their Spanish countrymen, family members and servants their own vineyards. Special reaching Mexico City in 1536 who also joined in. He entered success was attained in Southern and returning to Spain in 1537. Arizona south of Willcox in the Arizona north of Nogales in They provided extensive reports Sulfur Springs Valley of what what is now Santa Cruz County. on flora, fauna, native customs is now Cochise County and Missions and vineyards were of the people they’d met on their explored at length all the way to also established in New Mexico journey, and stories and rumors Kansas. Elements of his force during this period. The grapes of fabulous wealth they had been were the first to see the Colorado flourished and, as permanent told about in the seven cities of River, the Grand Canyon, and settlements independent of Cibola. In 1539 a Franciscan many other locations in Arizona, the missions were established,

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such as Tubac in 1752, classical up in California wine country, and for the wine industry to Spanish grape varietals such as loaded with lug boxes full of completely disappear in Arizona. Tempranillo were established. wine grapes for shipment to When federal prohibition took The first wine grapes were not home winemakers all over the effect in 1920, most people planted in California until 1779 country, keeping at least some of forgot about the Arizona law at the Mission San Diego Alcalá. those vineyards in business. No completely. When the federal law By that time, Arizona had a 200 such thing occurred in Arizona. was reversed in 1933, and future year head start and the number All production, sale, ownership, control of alcoholic beverages of wine grapes grown in Arizona possession, and consumption was given to the states, no one and New Mexico far exceeded the was outlawed – even medicinal, even thought about restoring production in California well into scientific, and sacramental uses production here. Arizona the 20th Century, a lead they had were forbidden. When it looked adopted the so-called three tier dramatically increased as mining like the Catholic Church was system of distribution utilized became a driving economic going to take a case all the way by many states. The state licenses force in Arizona, attracting to the Supreme Court, the state a distributor to obtain alcoholic many European wine drinking met with the Bishop in Phoenix beverages from a producer or miners. And then political history and a deal was struck whereby if importer, bring in the state, and, intervened and literally changed a priest used a small amount of in turn, sell the beverages to state the rules. wine during mass, he wouldn’t licensed retailers such as liquor be arrested, but the law wouldn’t stores, bars, and restaurants. End Arizona became the 48th and be changed. There was little consumers comprise the third tier final of the contiguous states public discussion of the bill and where the alcoholic beverages are in 1912. In 1914 a small group apparently none of the growers purchased and consumed. of prohibitionists in Phoenix in the state, all of whom were ushered a bill through the No discussion of growing grapes located in higher elevations at state legislature bringing wine and making wine occurred some distance from the capital, production and consumption for almost 40 years. In 1970, even knew about the new rules to a halt. Absolute prohibition Professor Gordon Dutt came to until they were being enforced. came to Arizona on January 1, the College of Agriculture at the Henry Schuerman, a large grower 1915, five years before federal University of Arizona from his and winemaker with vineyards prohibition came about. prior position at the University located along Oak Creek, near When federal prohibition was of California, Davis, known as Red Rock Crossing outside established, it happened with a California’s top wine school. of Sedona, had built a very constitutional amendment and He wasn’t a winemaker. He lucrative business selling to the was widely debated and well was a soil scientist, specializing international miners in the nearby discussed all over the country. in hydrology, who had done “Billion Dollar Mining Camp,” Under federal prohibition, numerous soil studies for of Jerome. He didn’t hear about many vineyards, especially in vineyards in California. When the law until the Yavapai County California, stayed in business he began working in Arizona, he Sherriff arrived to tell him he because it allowed winemaking quickly concluded that Arizona’s was out of business. Schuerman for medicinal and sacramental soils could be well suited for said, “What? You can’t grow purposes and for personal growing wine grapes. Knowing food?” He was promptly arrested consumption. In fact, you could nothing of the wine industry and hauled off to jail in Prescott, make up to 60 gallons a year history here, he set out to see if the County Seat. It didn’t take for your family. At harvest time, he was right, placing a number long for the word to get around railroad box cars were lined of wine grape test plots around

The Arizona Wine Tourism Industry – 2017 9 the state for study. Based on the in Vail, near Tucson. He quickly industry in Arizona to experience apparent success of those sample determined that it was too hot dynamic growth, thus making plots, he approached Governor on the desert floor and began the it one of the last states, if not Raúl Castro, explaining that first major vineyard in Arizona the last state to become a major he felt the state was missing in the foothills of the Chiricauha player on the U.S. wine stage. an opportunity to establish a Mountains near Willcox in Arizona is taking advantage of new cash crop in the state. The Cochise County. The second the opportunity in a big way. Governor was encouraging license went to Bill Staltarni, a As this is being written, but thought stronger data was small producer in Yavapai County, the number of licensed and needed. He helped develop a and Gordon Dutt established bonded wineries in Arizona is $95,000 grant in 1976 to conduct Sonoita Vineyards with license approaching 100, reflecting a a full statewide study and tied #3 in an attempt to demonstrate large investment in Arizona’s in New Mexico, Colorado, and that high quality wine could be future. Planting a vineyard Utah, making it a ‘four corners’ produced in Arizona. His 1986 typically costs between $25,000 study with shared data. In 1979 Reserve Cabernet Sauvignon to $35,000 per acre, not counting as the grape vines began to was the first Arizona wine served land acquisition and land produce fruit, Dr. Dutt contacted at the White House and was preparation cost. New vineyards an enologist (winemaker) friend served for the Bush inauguration are now being planted constantly at UC Davis to come to Tucson in 1989. However, the legal in Arizona, while many older to make some test batches of restrictions were so severe that holdings are being honed and wine from the young grapes. only a total of nine licenses had expanded. It takes three to five The batches were deemed to be been issued by 2000. Battles years for new grapevines to quite good, with the favorite raged in the legislature and generate the first usable crop and coming from a plot near the courts each year to loosen five to seven years to reach full Sonoita, in the hills southeast or tighten restrictions. Similar production. The good news is of Tucson. With test results in activity was also taking place that these vineyards then stay in hand, it was time to go back elsewhere around the country production for 45 years or more. to the Governor, who agreed – at least until 2005, when one In addition to the vineyards, to proceed. Opposition came of the cases made it all the way a full scale winery can easily from the liquor distributors who to the U.S. Supreme Court. In cost over $1 million to build wanted to restrict product sales to the case of Granholm vs. Heald and equip. With aging of wine those wineries with distribution 544 U.S. 460 (2005), the Court before release, it is not unusual agreements – something no found the rules unconstitutional, for a new winery to take seven winery could possibly have, with particular attention drawn years or more to generate its first as yet. After a serious battle, a to the Commerce Clause, and dollar of income. A huge plus is bill was finally passed allowing wiped away the restrictive that people like to see where the winemaking to return to Arizona shipping and other business grapes are grown and where their – but with major restrictions on regulations. On June 23, 2006, wine is made and this longevity how the product could be sold Governor Napolitano signed of production in a proven location or shipped, seriously limiting SB1276, finally making it legal helps to explain the development the potential of the fledgling for the wine industry in Arizona of long-term interest and loyalty industry. The first license was to operate as it does today. The on the part of consumers to visit issued in 1982 to R.W. Webb, laws tend to be fine-tuned every and continually return to their who had seen the study at the U year, but the new legal operating favorite wineries. Most of the of A. He started his operations structure has allowed the wine wineries now have membership

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clubs to encourage commitment Methods County, Verde Valley. Eight sites and reward their customers’ were asked to participate in the loyalty. The wine industry in Northern Arizona University’s Willcox area, five sites returned Arizona has had an enormous (NAU’s) Arizona Hospitality surveys; 10 sites were asked advantage in establishing their Research and Resource Center to participate in the Sonoita/ on-site customer base in that the (AHRRC), within the Alliance Elgin area, nine sites returned state has been long established Bank Business Outreach Center surveys; and 18 sites were asked as a major tourist destination. (ABBOC), (Henceforth, “The to participate in the Verde Valley, Adding the attraction of the Center”) designed a survey, 16 sites returned surveys. Twenty- wineries has provided another distributed the survey, and five (25) surveys were delivered good reason to visit. Hospitality analyzed survey results to identify to tasting rooms, vineyards, and and culinary opportunities wine visitor demographics and wineries each month of the quickly follow. estimate the economic impacts survey period from February – wine tourism has on Arizona’s May 2017. Employees were asked National recognition has economy. For comparisons sake, to distribute surveys to guests followed, as well. A steady the 2017 survey was designed, of their establishment. One array of Gold Medals and and distributed based on “The survey was to be given per party. other awards continues to Arizona Wine Tourism Industry” Completed surveys were returned bring attention to Arizona 2011 study. to us via a self-addressed, postage wine. With regard to our three paid return envelope. established principle growing Survey Design regions, the Federal Government In addition to paper surveys, has awarded American The Center created a visitor electronic surveys were created Viticultural Area (AVA) status survey compatible with Teleform in Qualtrics as a substitute to as distinguished wine grape scanning software to allow for data the paper format. A unique URL growing regions to Sonoita and collection. The survey asks a series was created for each site and Willcox, with the Verde Valley of questions pertaining to visitor flyers were distributed to sites approval expected shortly. demographics, wine spending advertising the on-line survey. patterns, and general wine interest. Final analysis was conducted on This report examines several Questions range in type including total paper and electronic surveys aspects of wine visitors within numerical entries, five-point completed and returned. Arizona. Namely, we address Likert Scale responses, yes/no demographic information, responses, and written responses. Survey Analysis spending habits, and expectations and reactions of the Arizona wine Survey Distribution Returned paper surveys were visitors. From this information, scanned with Teleform software we derive probability estimates The Center distributed paper and combined with the on-line of wine visitors making surveys to tasting rooms, survey results. Returned surveys purchases at tasting rooms, vineyards, and wineries willing were used in the analysis if vineyards, or wineries and to participate in the study and age, income, and type of stay we model the economic located within the sample area. questions were completed. Of impacts Arizona wine tourists The three major wine producing the 1,026 surveys returned to The bring to the state in terms of areas of Arizona were defined as Center, 761 surveys were deemed employment, expenditures, and the study area: Cochise County, usable through the completion of multiplier effects. Willcox; Santa Cruz County, the above questions. Acceptable Sonoita/Elgin; and Yavapai survey results were compiled for

The Arizona Wine Tourism Industry – 2017 11 economic and statistical analysis Wisconsin were the top three metro areas. Over 50% of in-state in IMPLAN 3.0, SAS 9.4, and out-of-state places of origin with wine tourists traveled from the SPSS 24 software packages. approximately 6%, 5%, and 4% of greater Phoenix metro area with total wine visitations respectively. approximately 27% coming from Summary Statistics Table 1 lists the top places of the greater Tucson metro area. (Overall) origin for Arizona wine visitors Table 2 shows cities in Arizona with at least 2% of total visitation. with approximately 3% or more Places of Origin The full table is provided in of wine visitors. The full table is Out of state wine visitors Appendix 1. provided in Appendix 1. comprised approximately 42% In-state visitors dominate A vast majority of Arizona of our sample. Visitors traveled Arizona’s wine tourists. wine tourists have previously from 41 states across the US; Approximately 58% of our experienced an Arizona winery. The District of Columbia; sample identified as an Arizona Roughly 76% of Arizona wine and three foreign countries resident. These Arizona wine visitors have visited an Arizona including Canada, Scotland, and tourists mostly originate from tasting room, vineyard, or Mexico. Illinois, California, and the greater Phoenix and Tucson winery in the past 12 months

Table 1: Places of origin with approximately 2% or more wine tourists.

Top Places of Origin for Arizona Wine Tourism Count Total Visitor Percentage Arizona 426 58% Illinois 43 6% California 35 5% Wisconsin 31 4% New York 20 3% Washington 20 3% Canada 18 2% Colorado 17 2% Texas 14 2%

Table 2: Cities in Arizona with approximately 3% or more of wine tourists.

Top Cities of Origin in Arizona for Wine Tourism Count Percentage of In-state Visitors Phoenix 60 15% Tucson 57 14% Scottsdale 34 8% Mesa 23 6% Chandler 14 3% Rincon 13 3% Peoria 13 3% Corona de Tucson - Vail 13 3% Tempe 11 3%

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(Table 3). Given that a person and wineries have wine clubs responses. “Friends Only” made had visited an Arizona tasting to complement on site sales. up roughly 23% of the survey room, vineyard, or winery in Approximately 12% of our survey replies. Our surveys captured the past 12 months, the average respondents stated they were a very few visitors traveling as part number of visits to one of these member of the wine club where of an organized tour. Less than establishments in Arizona was they took the survey. 1% of Arizona wine tourists approximately six. Getting more stated they were traveling as the site specific, around 38% of survey Party Type, Age, and Composition “Organized Tour Group” party. respondents had visited the Arizona wine tourists most Table 5 summarizes party type tasting room, vineyard, or winery commonly visit tasting rooms, composition. where they took the survey in vineyards, and wineries with Our survey further broke down the past (Table 4). Given that family members. Approximately party member composition by the respondent has visited the 45% of survey respondents are at the number of adult women, site in the past, the average the establishment with “Family adult men and children present number of visits to the site was Only”. “Family and Friends” was in the party. Given a party type approximately seven. Some of the the next most common party of “Family & Friends”, the Arizona tasting rooms, vineyards, type with about 28% of survey party composition averaged

Table 3: Binomial distribution derived from the question, “Approximately how many Arizona wineries have you visited in the last 12 months?” If respondent entered one or more, they were classified “repeat visitor”.

Repeat Visitors to an Arizona Winery Count Percentage Repeat Visitor 580 76% First Time Visitor 181 24% Total 761 100%

Table 4: Binomial distribution derived from the question, “How many times have you visited this site before today’s visit?” If respondent entered one or more, they were classified “repeat visitor”.

Repeat Visitors to the Site Count Percentage Repeat Visitor 287 38% First Time Visitor 4 74 62% Total 761 100%

Table 5: Count Data from the question, “Who is in your travel party today?”

Arizona Wine Tourist Party Type Count Percentage Family & Friends 202 28% Family Only 331 45% Friends Only 168 23% Traveling Alone 25 3% Organized Tour Group 4 1% Business Associates 1 0% Total 731 100%

The Arizona Wine Tourism Industry – 2017 13 approximately 2.2 women, 1.5 men, Another analysis with respect to The final analysis of Arizona and 0.2 children. For the party type party type was carried out with the wine visitor composition is in of “Family Only”, approximately age of the survey respondent. The terms of adult gender and the 1.3 women, 1.1 men, and 0.1 overall average age of an Arizona presence or absence of children children was the average. “Friends wine tourist was approximately in the party. The most common Only” party composition averaged 48.2 years. The party type party composition consisted of approximately 2.1 women, 1.3 “Friends & Family” closely groups of men and women visiting men, and no children. Men tended matched the overall average age the tasting room, vineyard, or to visit Arizona tasting rooms, at approximately 48.4 years. The winery together. Over 67% of vineyards, or wineries slightly average ages of the party groups surveyed wine visitors traveled more often than women for the “Organized Tour Group” and in groups of “Men and Women”. party group “Traveling Alone”. “Business Associates” was 66.8 and “Women Only” groups were 28 years respectively. We attribute the next most popular party The approximate probability for a this larger divergence from the type with approximately 19% of man or woman “Traveling Alone” overall mean to the smaller survey respondents falling into was 60% for a man and 40% for sample sizes of “Organized Tour this category. The “Men Only” a woman. Women dominated the Group” and “Business Associates”. and “Men, Women, and Kids” party composition of “Organized The party types of “Family Only”, groups rounded out the most Tour Group” at an average of “Friends Only”, and “Traveling significant party compositions roughly 3.5 with men at 1.3. Alone” were similar to the overall at approximately 7% and 6% The one party that identified as average with approximate average respectively. Full count data of the “Business Associates” was ages of 49.7, 45.9, and 45.4 years party compositions is represented two women. respectively. in Figure 1.

Figure 1: Categorical Data derived from the question, “How many people, including yourself, are in your travel party? Number of: Adult Women___, Adult Men___, and Children___.” If respondents entered one or more for women, men, or kids, that person type was included.

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Income and Expenditure $74,999, $75,000 – $99,999, anything at this venue today Patterns and $100,000 – $124,999 at please complete the questions approximately 16% for each below:” Any value equal to or If wine is categorized as a luxury group. Visitors with incomes less greater than one was considered good, the consumer’s higher than $25,000 were the smallest a wine purchase. Surprisingly, income could be correlated with group at approximately 3% of our Arizona wine tourists in the increased consumption patterns. sample size. “less than $25,000” household We designed a survey question to income category had the highest We further examined expenditure determine Arizona wine tourists probability of purchasing wine at patterns at the tasting room, income within a range of $25,000 over 76%. Apart from the high vineyard, or winery based on the increments. Figure 2 shows the purchase probability of lower eight income categories Arizona count data of how our survey income households, probabilities wine tourists were grouped into. respondents were distributed of purchasing wine at the venue Overall, approximately 70% of across the eight income categories. tended to decrease as household survey respondents entered a Visitors with incomes greater than income decreased. Survey value greater than zero for the $175,000 comprised the largest respondents with household question, “How many bottles of group at approximately 20% of our incomes of greater than $175,000 wine did you purchase?” under sample. The next most common had a wine purchase probability the heading, “If you bought income brackets were $50,000 – of approximately 74% with

Figure 2: Count Data of visitors’ responses to the question, “Which of the following categories best describes your annual household income?”

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decreasing probabilities as “How much did you spend on respondents in the $175,000 household incomes decreased. merchandise?” We analyzed or greater household income Table 6 summarizes the expenditures on wine alone and category had the greatest average percentages of wine purchases per the aggregate of all expenditures wine and total expenditure at household income group. (total expenditure) for each $104.64 and $126.50 respectively. household income category. The Household incomes of $50,000 Our survey asked Arizona wine following statistics are based – $74,999 had the lowest average visitors to state how much on at least one bottle of wine expenditure on wine at $55.24. they spent on wine, food, and being purchased. The average Household incomes of < $25,000 merchandise at the venue they expenditure on wine was $77.69; had the lowest average total took the survey. The following the average total expenditure expenditure at $68.31. Tables 7 questions were asked under was $100.57. In terms of average summarize the average wine and the heading, “If you bought wine and total expenditures by total expenditure by household anything at this venue today household income categories, income groups given a wine please complete the questions as household incomes increase, purchase was made at the tasting below:” “How much did you in general, so does average wine room, vineyard, or winery. spend on wine?”, “How much and total expenditure given a did you spend on food?”, and wine purchase was made. Survey

Table 6: Row percentages for the probability of household income groups making a wine purchase.

Percentage Within Income Categories That Purchased Wine Did Not Purchase Wine Did Purchase Wine ≥ $175 K 25.66% 74.34% $150 K - $174.99 K 26.15% 73.85% $125 K - $149.99 K 26.19% 73.81% $100 K - $124.99 K 30.00% 70.00% $75 K - $99.99 K 35.54% 64.46% $50 K - $74.99 K 31.97% 68.03% $25 K - $49.99 K 38.16% 61.84% < $25 K 23.81% 76.19%

Table 7: Average wine and total expenditure at tasting rooms, vineyards, and wineries by household income groups given a wine purchase was made.

Average Wine and Total Expenditure Given a Purchase Was Made Average Wine Expenditure Average Total Expenditure ≥ $175 K $104.64 $126.50 $150 K - $174.99 K $77.81 $99.42 $125 K - $149.99 K $84.11 $125.02 $100 K - $124.99 K $84.86 $109.15 $75 K - $99.99 K $67.23 $79.04 $50 K - $74.99 K $55.24 $69.45 $25 K - $49.99 K $55.89 $93.51 < $25 K $55.88 $68.31

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Length of Stay Wine Tasting Preferences Arizona wine visitors rate their experience as “Much better than If Arizona wine tourists spend Many Arizona wine tourists I expected” or “A little better than the night in the region of the stated that incorporating wine I expected”. Figure 4 shows the tasting room, vineyard, or winery, tasting or touring into their trip count data to the question, “How there is a greater economic was at least “Very Important”. was your overall experience at this benefit to the area stemming Approximately 71% of survey particular winery/vineyard/tasting from the initial wine visit. This respondents answered the room or festival?” analysis is performed in more question, “How important is wine detail within the “Economic tasting/touring to your trip?” with Tasting rooms, vineyards, and Impacts” section of this report. “Very Important” or “Extremely wineries can advertise their establishment in a number of However, some of the summary Important”. Figure 3 shows the ways. Our survey asked the statistics on overnight and day count data to the above question. question, “How did you hear visitors are presented here. Survey respondents were asked about this winery/vineyard/ Approximately 57% of our to identify any Arizona tasting tasting room? (Check all that survey respondents were day room, vineyard, or winery they apply)” to better understand how visitors with the remaining 43% had visited in the past. In the Arizona wine tourists are finding being overnight visitors. Table Sonoita/Elgin region, Kief about the different establishments 8 summarizes this count data. Joshua Vineyards had the largest to visit. “Brochures” and “Other Day visitors spent on average number of previous visitations Way” were the most common 4.3 hours touring the region. at over 28% of the sample. In methods survey respondents On average, overnight visitors the Willcox region, Flying cited as knowing about the spent 4.3 days in the wine region. Leap Vineyards had the largest tasting room, vineyard, or winery. Approximately 43% of overnight proportion of previous visitations For the “Other Way” response, visitors reported staying in hotels at over 16%. Finally, in the Verde visitors could write in how they or motels with an additional 15% Valley, Page Springs Cellars had heard about the establishment. staying in a bed and breakfast. the largest number of previous “Groupon” and “Google” were the Vacation Rentals and staying visitations at over 35% of visitors most commonly stated “Other with friends or family were other reporting they had previously Way” responses. Table 9 lists the common lodging types with been to that establishment. most common ways respondents approximately 11% and 10% of Arizona wine tourists appear heard about the establishment. the survey sample staying in these to be satisfied with their wine A full table can be found in accommodations respectively. tasting experience. Over 78% of Appendix 1.

Table 8: Count and percentage data for the question, “How much time, in total, will you spend in this area? Hours (Day Visitors Only):___, Nights (Overnight Visitors Only):___”

Proportions of Day and Overnight Visitors Count Percentage Day Visitors 437 57.42% Overnight Visitors 324 42.58% Total 761 100%

The Arizona Wine Tourism Industry – 2017 17

Figure 3: Count Data of visitors’ responses to the question, “How important is wine tasting/touring to your trip?”

Figure 4: Count Data of visitors’ responses to the question, “How was your overall experience at this particular winery/ vineyard/tasting room or festival?”

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Summary Statistics Age the average expenditure on wine (Regional) and the average total expenditure. The average age of wine Total expenditure includes food Visitor profiles vary considerably visitors across all regions was or merchandise purchased in between the three major wine approximately 48 years. Wine addition to wine. This analysis producing areas of Arizona. Of visitors in the Willcox region is shown by region but does not the demographic information were approximately six years older take into account the average collected from survey respondents, than the overall average with price of wine by region or site we analyze the differences in age, an average age of approximately specific. The Verde Valley had the expenditures, overnight visitations, 54 years. The average age of a highest average wine and total and incomes between the three wine visitor in the Sonoita/Elgin expenditure of the three regions. regions and the overall averages. region was closest to the overall Over two thirds of wine visitors Our models for the probability average age. Their average age in the Verde Valley made a wine and odds ratios of making a wine was approximately a year and a purchase with an average wine purchase or being an overnight half older than overall average. purchase of approximately $84 visitor are based on the aggregate The average age of a Verde Valley and an average total expenditure of all region. However, this wine visitor was 46 years, less of approximately $113. The information is provided to show than that of the overall average Willcox region had over 75% regional differences in wine by more than two years. Figure 5 of visitors reporting a wine tourists. The overall statistics are shows the differences in average purchase. The average wine largely influenced by the Verde ages of wine visitors. expenditure in the Willcox region Valley. 405 of the 761 analyzed was approximately $75 with Expenditure Patterns were from Verde Valley sites an average total expenditure of with the Sonoita/Elgin area Given a wine tourist bought a approximately $96. The Sonoita/ contributing 263 surveys and the bottle of wine at a tasting room, Elgin region had the lowest Willcox area with 93. vineyard, or winery, we calculated average and total expenditures.

Table 9: Count Data of visitors’ responses to the question, “How did you hear about this winery/vineyard/tasting room?” Visitors could select more than one option. Percentages represent proportions of survey respondents that used the information source. The table was amended to show ways that received at least a 5% rate. Full table can be found in Appendix 1.

How Visitors Heard About the Tasting Room, Vineyard, or Winery Count Percentage Brochures 284 37% Other Way 209 27% Chamber of Commerce Web Site / Visitor Center 101 13% Magazine Article 72 9% Review Website (e.g. Yelp or TripAdvisor) 71 9% Arizona Office of Tourism Materials 70 9% Tasting Room 66 9% Concierge 51 7% Facebook 50 7% Travel Agent 49 6% Newspaper Article 46 6% Word of Mouth 39 5%

The Arizona Wine Tourism Industry – 2017 19

Over 68% of wine visitors in expenditure of approximately $68 at around $84. Figures 6 and 7 this region purchased a bottle and an average total expenditure summarize this data. of wine with an average wine

Figure 5: Average age of wine visitors by region.

Figure 6: Average expenditure on wine for each wine producing region given a bottle of wine was purchased at the tasting room, vineyard, or winery.

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Overnight Visitations differences in the infrastructure Willcox was approximately to accommodate overnight 2% below the overnight visitor In addition to a wine visitor’s visitors. We acknowledge these average at approximately 41% expenditures at a tasting differences but our study does of wine visitors to the region room, vineyard, or winery, not address the number of rooms spending the night. The Verde economic benefits stemming or accommodations within each Valley had over 51% of their wine from the wine industry to area. We examined the overall visitors reporting that they were the area and state are realized percentage of overnight visitors spending the night in the region. through overnight lodging, for the total economic impact Again, this does not account for transportation, food, and other analysis. Here, we present the infrastructure within the area or expenditures. Our survey focused differences in overnight visitation proximity to larger population specifically on the lodging by region. centers. Figure 8 shows the aspect of these expenditures. differences in overnight wine Sonoita/Elgin had the lowest We asked respondents if their visitation between the three wine percentage of overnight wine visit was for the day or an producing regions. overnight visit. Within the visitors at approximately 30%. three dominant wine producing This is nearly 13% lower than regions of Arizona, there are the average of the three regions.

Figure 7: Average total expenditure for each wine producing region given a bottle of wine was purchased at the tasting room, vineyard, or winery.

The Arizona Wine Tourism Industry – 2017 21

Figure 8: Percentage of overnight wine visitors for each wine producing area.

Figure 9: Percentage of wine visitors with an income of $150,000 or above.

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Income category comprised the largest comprised approximately 24% segment of wine visitors at and 15% of wine visitors to the Our logistical regression models approximately 39% of visitors Sonoita/Elgin region. in the probabilities and odds to the region. The next most The Verde Valley attracted more ratios section use income as a common income group to the affluent wine visitors with the predictor variable in determining Willcox region were visitors “$150,000 or above” income wine purchases and overnight in the “$100,000 – $149,999” group being the largest at visitation. Here, we give a income group which accounted approximately 34% of their wine breakdown of income categories for 31% of the wine visitors. visitors. The “$50,000 – $99,999” amongst the three regions. Our The “$150,000 or above” and and “$100,000 – $149,999” survey had income divided into “less than $50,000” completed income groups comprised eight categories respondents the wine visitors to Willcox at approximately 29% and 25% of could classify between. The approximately 16% and 14% wine visitors to the area. The “less categories were in $25,000 respectively. increments ranging from “less than $50,000” income group was than $25,000” to “$175,000 or In the Sonoita/Elgin wine region, again the smallest contingency at above”. For this analysis, we the largest income group also approximately 11% of the Verde combined income groups into fell into the category of “$50,000 Valley’s wine visitors. Figures 9 – four $50,000 increments ranging – $99,999” at approximately 12 show the percentage of each from “less than $50,000” to 34%. The “$100,000 – $149,999” income as a portion of total wine “$150,000 or above”. followed up at approximately visitors to each region. 28% of wine visitors to the For the Willcox region, the region. Finally, the “$150,000 or “$50,000 – $99,999” income above” and “less than $50,000”

Figure 10: Percentage of wine visitors with an income range of $100,000 - $149,999.

The Arizona Wine Tourism Industry – 2017 23

Figure 11: Percentage of wine visitors with an income range of $50,000 - $99,999.

Figure 12: Percentage of wine visitors with an income of $50,000 or less.

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2011 – 2017 visitor spending outside of the 58% and 59% respectively. Wine Comparison winery was removed in favor of visitors from Canada represented secondary data in the 2017 study. approximately 2% of total wine The following section compares visitors to Arizona in 2017. This the 2011 study of wine tourism Places of Origin for Arizona group was not considered in the with the 2017 study. We examine Wine Tourists overall proportions in the 2011 summary statistics between the study. Apart from Canada, the Arizona visitors are the two studies that were obtained top places of origin for out-of- bellwether for wine tourism from survey respondents. There state Arizona wine visitors has in the state. The proportion are two major differences between changed in order but the states of Arizona wine visitors has 2011 and 2017 studies. First, themselves haven’t changed remained about the same specific wine visitors’ motivation drastically in proportions. Indiana between 2017 and 2011 with questions were removed from the was a top ten state of origin in the overall percentages being 2017 study. Second, individual 2017 but was much lower in

Table 10: Comparison of state of origin of wine tourism visitors for 2017 and 2011. Numbers in parenthesis represent the rank in 2011.

Top Places of Origin for Arizona Wine Tourism Comparison 2017 2011 Arizona 58% 59% (1) Illinois 6% 4% (5) California 5% 8% (2) Wisconsin 4% 7% (3) New York 3% 2% (8) Washington 3% 4% (4) Canada 2% - Colorado 2% 1% (10) Texas 2% 2% (7) Indiana 1% 0% (20)

Table 11: Comparison of cities of origin within Arizona for wine tourism visitors between 2017 and 2011. Numbers in parenthesis represent the rank in 2011.

Top Cities of Origin in Arizona for Wine Tourism Comparison 2017 2011 Phoenix 15% 21% (1) Tucson 14% 9% (3) Scottsdale 8% 9% (2) Mesa 6% 4% (6) Chandler 3% 5% (5) Rincon 3% 2% (20) Peoria 3% 1% (37) Corona de Tucson – Vail 3% 3% (8) Tempe 3% 3% (11) Glendale 2% 2% (16)

The Arizona Wine Tourism Industry – 2017 25 rank in 2011. However, only 1% Table 11 compares the top 10 Party Type, Age, and of total visitors originated from cities of origin within Arizona in Composition there in 2017 with less than 1% 2017 with the same cities from Wine visitors traveling with a originating from there in 2011 the 2011 study. “Family Only” party increased (less than a 1% change). Table 10 by approximately 8% from 2011 summarizes the top 10 places of Repeat Wine Visitors to 2017. The party types of origin in 2017 and the proportion In the 2017 study, approximately “Family & Friends”, “Friends of visitors that originate from that 76% of survey respondents stated Only”, and “Business Associates” place compared with 2011. they had visited an Arizona decreased by approximately 3% tasting room, vineyard, or winery Within the state of Arizona, each between the two studies. The within the last 12 months. This Phoenix continues to be the in- other two party types remained proportion is up from the 2011 state place of origin where most relatively unchanged. Table 12 study. Approximately 71% of wine visitors originate. Given summarizes these comparisons. survey respondents in 2011 stated its population density, this is they had visited an Arizona The average age of an Arizona not surprising. Here, we look at tasting room, vineyard, or winery wine visitor in 2017 was individual cities of origin rather within the last 12 months. In approximately 48 years old. This than aggregating to “greater addition to a higher proportion is up from the 2011 study where metro areas” as we did in the of wine visitors having previously the average age of a wine visitor summary statistics. Phoenix experienced an Arizona tasting was approximately 46 years old. (15% in 2017) has decreased by room, vineyard, or winery in 2017 When comparing gender between approximately a third in terms than 2011, a higher proportion the two studies, we were unable of proportion of wine visitors of wine visitors had previously to examine the “children” category within Arizona. Scottsdale visited the site where they took as there was no distinction and Tucson have remained as the survey in 2017 than in between male and female top cities of origin with Tucson 2011. Approximately 38% of kids for survey respondents. increasing by about 5% and 2017 wine visitors said they had Under this distinction, wine Scottsdale decreasing by about 1%. visited the establishment in the visitors to Arizona in 2017 Comparing the proportion of in- past compared to about 31% in were more balanced in terms of state wine visitors in 2017, 60% 2011. Given the passage of time men and women in the party were from those two cities while and high proportion of in-state compared with the 2011 study. in 2011, 59% came from those visitors, it follows that more Approximately 58% of parties in 2017 were women compared two cities. repeat visitors could be expected at Arizona wine establishments. to a 68% composition in 2011;

Table 12: Comparison of the approximate proportions of party types between 2017 and 2011

Arizona Wine Tourist Party Type Comparison 2017 2011 Family & Friends 28% 31% Family Only 45% 37% Friends Only 23% 26% Traveling Alone 3% 3% Organized Tour Group 1% 1% Business Associates 0% 3%

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this leaves a party composition of approximately 3.1 in the 2011 years old” and “children”. approximately 42% men for 2017 study. Overall, average number of Survey respondents could have and 32% men for 2011. men, women, and children in the indicated they were traveling parties was down compared to with “children” but the children Party size between the the 2011 study. While the average could have been over the age of two studies didn’t change number of children in the party 18 in the 2017 study. Given this dramatically; however, party was down in the 2017 study, the distinction, approximately 6% composition did show some proportion of parties traveling of parties traveled with children interesting changes. Average with children was up. However, in the 2017 study compared party size, including men, women, several distinctions should be with 3% in the 2011 study. and children, was approximately made. The 2017 didn’t distinguish Table 13 summarizes the party 3 in the 2017 study compared between “children under 18 composition comparisons. to an average party size of

Table 13: Comparison of the approximate proportions of party types between 2017 and 2011.

Party Composition Comparison 2017 2011 Average Number in Party 3 3.1 Average Number of Men 1. 2 1. 6 Average Number of Women 1. 7 1. 9 Average Number of Children Under 18 Years Old - 1. 9 Average Number of Children 0.1 - Percent of Parties with Children 6% 3%

Figure 13: Percentage of wine visitors in amended income categories for the 2017 study.

The Arizona Wine Tourism Industry – 2017 27

Income and Expenditure to approximately 48% in the number of bottles purchased per Patterns 2011 study. In the lower income party and in the average dollar categories, approximately 3% of value spent on wine per party. Direct comparisons between survey respondents reported a The average number of bottles household incomes are difficult household income of “Less than of wine purchased per party to compare between the 2017 $25,000” in 2017 compared with in 2017 was approximately 2 and 2011 studies. The 2017 study approximately 1% of wine visitors compared with approximately utilized eight income categories reporting a household income 3.3 per party in 2011. Average in $25,000 increments. Seven of “Less than $20,000” in 2011. expenditure on wine per party income categories in $20,000 Figures 13 and 14 can be used at the establishments was also increments were used in the 2011 to draw comparisons between down between the 2017 and study. For comparison, the four income groups in the 2017 and 2011 studies. Average per upper income categories in the 2011 studies at the reader’s party expenditure on wine was 2017 study are combined. In the discretion. approximately $55 in the 2017 2011 study, the two upper income study and approximately $70 Proportions of wine visitors categories are combined to make from 2011. Because of differences making purchases at tasting the top end income category in the phrasing of questions rooms, vineyards, and wineries “$100,000 or above”. Within on food and merchandise remains unchanged at this modification, approximately expenditure between the two approximately 70% between the 56% of survey respondents in the studies, total expenditure is not 2017 and 2011 studies. However, 2017 study reported an income compared. of $100,000 or more compared there were declines in the average

Figure 14: Percentage of wine visitors in amended income categories for the 2011 study.

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Overnight Visitation overnight trips increased from for Arizona wine tourism. The 2.9 nights to 4.3 nights. Table 15 proportion of wine visitors In 2011, almost two-thirds shows this comparison. who heard about Arizona wine (approximately 61%) of wine establishments through brochures tourism visitors were on a Advertising for Arizona grew in 2017 to approximately day trip, while the remainder Wineries 37% from approximately 32% in (approximately 39%) stayed 2011. Combining social media Information sources change overnight. In 2017, there was an sources of information on the constantly and those focused increase in the proportion of wine 2017 survey yields approximately on travel information are no visitors spending the night in 27% (not including “Other Way” exception. A majority of the the wine region. Approximately on-line sources) of respondents Arizona wine information sources 43% of Arizona wine visitors gaining information on Arizona were comparable between the reported spending the night, wine establishments through 2017 and 2011 studies; however, with the remaining 57% being social media. Approximately social media and other internet day trippers. Table 14 gives the 8% of information sources were sources have grown in popularity percentage of day and overnight cited as “Social Media” in the and were not considered in the visitors for the two studies. 2011 study. While not a direct 2011 study. Survey respondents comparison, Arizona Wines In 2011, the average length stay could select multiple sources of and Vines was an important for a day trip visitor was 4.7 information on the survey so the information source in 2011 hours, while the average length percentages represent proportions accounting for approximately of overnight trips was 2.9 nights. of Arizona wine visitors who used 20% of information sources, the In 2017, the average length of a given information source. stay for a day trip wine visitor magazine is no longer published declined slightly to 4.3 hours. Brochures remain the most and was compared to Arizona However, the average length of common source of advertising Wine Lifestyle which does

Table 14: Comparison of the approximate proportions of day and overnight visitors between 2017 and 2011.

Proportions of Day and Night Visitors Compared 2017 2011 Day Trip 57% 61% Overnight Trip 43% 39%

Table 15: Comparison of the average length of stay for day and overnight visitors between 2017 and 2011.

Average Length of Stay Comparison 2017 2011 Average Day Trip Length of Stay 4.3 hours 4.7 hours Average Overnight Length of Stay 4.3 days 2.9 days

The Arizona Wine Tourism Industry – 2017 29 not appear to be widely used. Odds Ratios Age was treated as a continuous Table 16 summarizes the top 10 and Purchasing variable while income was information sources from the Probabilities analyzed as a categorical variable. 2017 study with the 2011 study. In our survey, income had eight Purchase Probabilities categories the respondent could Experience select from. The categories were Our analysis implemented in $25,000 increments that Arizona wine visitors continue to the demographic information ranged from “Less than $25,000” highly rate their wine experience. obtained from survey respondents to “$175,000 or above”. For However, in 2017, approximately to predict changes in probabilities our logistical regression model, 64% of wine visitors rated their of purchasing wine and spending income categories from the experience as “Much better the night in the wine region. survey were grouped together to than I expected”, down from The three predictor variables create four income categories in approximately 67% in 2011. The we examined for correlations $50,000 increments ranging from proportion of survey respondents with wine expenditures and “Less than $50,000” to $150,000 who rated their experience as overnight visitation were age, or above”. “A little better than I expected” income, and the composition was also down in the 2017 study of the party (e.g. men, women, With respect to predicting the at approximately 15% from children, and the various possible probability of a survey respondent approximately 16% in 2011. combinations). We did not purchasing a bottle of wine at In 2011, approximately 2% of find party composition to be the tasting room, vineyard, or respondents had a negative significant in predicting the winery, the model including experience at an Arizona wine probability of a wine purchase age and income was significant establishment. This percentage or the visitor spending the night at the 95% confidence interval. also fell in the 2017 study to in the wine region at the 95% However, age is a more precise below 0.5% of respondents confidence interval. However, age estimator than income and is having “A little worse than I and some categories of income significant at the 95% confidence expected” or “Much worse than I were significant predictors. interval. All else equal, a one year expected” experience.

Table 16: Comparison of the top 10 information sources about Arizona wine establishments between 2017 and 2011. Numbers in parenthesis represent the rank in the 2011 study.

How Visitors Heard About the Establishment Comparison 2017 2011 Brochures 37% 32% (1) Other Way 27% 1% (12) Chamber of Commerce Web Site / Visitor Center 13% - Magazine Article 9% 8% (8) Review Website (e.g. Yelp or TripAdvisor) 9% 24% (2) Arizona Office of Tourism Materials 9% 2% (11) Tasting Room 9% - Concierge 7% 14% (4) Facebook 7% - Travel Agent 6% -

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increase in age would bring about income was significant at the odds ratios, a wine visitor in the an approximate 1.45% increase in 95% confidence interval. For income categories of “$100,000 the probability of a bottle of wine predicting the probability and – $149,999” and “$150,000 or being purchased. The “$150,000 odds ratios of an overnight above” has 1.997 and 1.8 times or above” income category was visit, income is a more precise the odds of a spending the night the most precise estimator of the estimator than age. Overall, in the area compared to a wine income categories being signif- income is significant at the 95% visitor in the income category icant at a confidence interval of confidence interval while age is of “less than $50,000”. Both approximately 80% (approximately significant at an approximate 92% estimates are significant at the 1.27 standard deviations). If a confidence interval. The income 95% confidence interval. For a wine visitor is in this income category of “$100,000 – one year increase in age, the odds category, they were approximately $149,999” had the largest ratio is 1.009. The full regression 34% more likely to purchase a probability of an overnight visit. model and odds ratio estimates bottle of wine, all else equal. If a survey respondent was in for spending the night in the area this category, all else equal, their can be found in Appendix 2. Odds ratio estimates for the probability of an overnight stay predictor variables of age and increased by approximately 69%. Economic Impacts income were also analyzed. If a wine visitor is in the income Age was significant at the 95% Several studies have addressed category of “$150,000 or above”, confidence interval. A one year various aspects and regions of their probability of an overnight increase in age had an estimated the Arizona wine industry (e.g. visit increased by approximately odds ratio of 1.015, all else equal. The Economic Contributions of 59%, all else equal. Both income Again, the “$150,000 or above” Verde Valley Winemaking (2011) category estimates are significant income category had the largest and The Arizona Wine Tourism at the 95% confidence interval. impact on increasing the odds Industry (2011)). The economic Increasing age also brings about a ratio but was not significant at Impact analysis presented here positive impact on the probability the 95% confidence interval. focuses specifically on wine of a wine visitor having an All else equal, the odds ratio of tourism expenditures and the overnight stay in the area. For a wine visitor in the “$150,000 corresponding economic impact a one year increase in age, our or above” category compared to on the state of Arizona. Several model estimates an approximate a wine visitor in the “less than assumptions were needed to carry 0.9% increase in the probability $50,000” category was 1.403 for out this analysis. of an overnight visit, all else purchasing a bottle of wine. The equal. However, this estimator is First, a population estimate full regression model and odds significant at a 92% confidence for the number of Arizona ratio estimates for purchasing a interval rather than the 95% wine tourists was needed. We bottle of wine can be found in confidence interval. randomly sampled three wine Appendix 2. establishments in each of three The odds ratio between the major wine growing regions to Overnight Stay Probabilities income categories “$100,000 – ask about visitation numbers. $149,999” and “less than $50,000” We further estimated the From this data, we calculated is 1.997. The income category probability and odds ratios of an average annual visitation rate of “$150,000 or above” has an survey respondent spending the of 12,000 per year, per site. We odds ratio of 1.8 compared with night in the area of the tasting estimated there to be roughly the “less than $50,000” income room, vineyard, or winery. 50 sites related to Arizona category. Interpreting these The model including age and wineries and vineyards. This

The Arizona Wine Tourism Industry – 2017 31 yields a total Arizona wine visitor at Arizona wine establishments In total, we entered eight unique population of 600,000 visitors. were derived from our survey. activities into IMPLAN v3 to Our survey was conducted on a Lastly, we combined Longwoods’ calculate the economic impact per party basis with party size (2015) expenditure data with of Arizona wine visitors on the averaging three persons per party. our population estimates and greater Arizona economy. Table 17 Applying this to our population survey results to obtain Arizona summarizes the activity types and dollar amounts that were entered estimate, we calculate 200,000 wine visitor expenditures. From into IMPLAN to calculate the parties visiting Arizona wine our survey data, 43% of wine total economic impacts. establishments per year. visitors were spending the night in the wine region. Of the 86,000 From the IMPLAN inputs listed Next, an estimate for several overnight parties, 32% of these in Table 17, direct, indirect, expenditure types needed to parties are estimated to spend the induced, and total effects derived be derived. For these estimates night with friends and family or from wine visitor expenditures Longwoods International, have their own accommodations are presented in Table 18. These Arizona, 2015 Visitor Report (Longwoods 2015). This yields outputs are based on Minnesota (Longwoods 2015) was used. 58,480 parties that need some IMPLAN Group’s 2015 data set. $232 per party was used as the type of paid accommodation. In addition to the direct, indirect estimate for lodging and $171 86,000 overnight parties were and induced effects from wine per party was the estimate for used to calculate overnight food visitor expenditures, tax dollars food expenditures. Expenditures and beverage expenditures. are also collected as a result of

Table 17: List of direct wine visitor expenditure inputs into IMPLAN model. Categorized by IMPLAN sector number, IMPLAN sector description, and IMPLAN expenditure inputs by sector.

IMPLAN Inputs Sector Description Event Expenditure 109 Wineries $14,280,000 400 Retail – Food and beverage stores $3,151,291 402 Retail – Gasoline stores $12,000,000 499 Hotels and motels $7,268,212 500 Other accommodations $7,268,212 501 Full-service restaurants $3,151,291 502 Limited-service restaurants $6,302,581 503 All other food and drinking places $3,151,291

Table 18: Effects and multipliers from Arizona wine visitor expenditures. Dollar value effects are in 2017 dollars.

IMPLAN Effects and Multipliers from Arizona Wine Tourists Direct Effect Indirect Effect Induced Effect SAM Multiplier Total Effect Output $41,923,930 $6,757,943 $7,496,770 1.34 $56,178,643 Employment 511.2 64.5 64.9 1.25 640.6 Labor Income $13,313,308 $1,831,511 $2,126,269 1. 3 $17,271,087

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these economic activities. Table 19 distinguishes the various sectors and amounts of state and local tax collections resulting from wine visitor expenditures and the carry on effects of that economic activity.

Our IMPLAN analysis for the 2017 Arizona wine tourism industry estimates a total economic contribution of $56,178,643 and 640.6 full-time equivalent jobs created. From this direct, indirect, and induced economic activity, approximately $3.6 million in local and state taxes are collected. In comparison to the 2011 study, the total economic impacts from tourism aspects of the wine industry have increased from approximately $37.6 million to approximately $56.2 million. This represents about a 49.3% increase in total economic activity over a six-year period. Our IMPLAN analysis also estimates 236 additional jobs created through Arizona wine tourism since 2011. This is a substantial economic driver of markets located outside of major population centers.

Table 19: Breakdown of total state and local taxes by sector from IMPLAN analysis. Taxes are reported in 2017 dollars.

State and Local Tax Implications of Arizona Wine Visitor Expenditures Employee Tax on Production Households Corporations Total Compensation and Imports Total State and Local Tax $64,318 $3,190,929 $285,372 $38,964 $3,579,583

The Arizona Wine Tourism Industry – 2017 33 Appendix 1

Place of Origin Count Percentage (%) Arizona 426 56.6% Illinois 43 5.7% California 35 4.6% Wisconsin 31 4.1% New York 20 2.7% Washington 20 2.7% Canada 18 2.4% Colorado 17 2.3% Texas 14 1.9% Indiana 9 1.2% Florida 8 1.1% Ohio 8 1.1% Nevada 7 0.9% North Carolina 7 0.9% Utah 7 0.9% Iowa 6 0.8% Massachusetts 6 0.8% Michigan 6 0.8% New Mexico 6 0.8% New Jersey 5 0.7% Pennsylvania 5 0.7% Idaho 4 0.5% Maryland 4 0.5% Montana 4 0.5% Nebraska 4 0.5% Virginia 4 0.5% Kansas 3 0.4% Louisiana 3 0.4% Tennessee 3 0.4% Oregon 2 0.3% Scotland 2 0.3% South Dakota 2 0.3% Washington DC 2 0.3% Alabama 1 0.1% Alaska 1 0.1% Arkansas 1 0.1% Connecticut 1 0.1% Delaware 1 0.1% Georgia 1 0.1% Kentucky 1 0.1% New Hampshire 1 0.1% Mexico 1 0.1% North Dakota 1 0.1% South Carolina 1 0.1% West Virginia 1 0.1%

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City of Origin for Arizona Wine Visitors Count Percentage Phoenix 60 14.6% Tucson 57 13.9% Scottsdale 34 8.3% Mesa 23 5.6% Chandler 14 3.4% Rincon 13 3.2% Peoria 13 3.2% Corona de Tucson – Vail 13 3.2% Tempe 11 2.7% Glendale 10 2.4% Sun City 9 2.2% Fry 9 2.2% Green Valley 8 2% Fort Lowell 7 1.7% Flagstaff 7 1.7% Queen Creek 6 1.5% Prescott 6 1.5% Kino 6 1.5% Saddlebrooke 5 1.2% Gilbert 5 1.2% Cottonwood 5 1.2% Anthem – Desert Hills 5 1.2% Sahuarita 4 1% Oro Valley 4 1% Marana 4 1% Hereford 4 1% Goodyear 4 1% Cave Creek 4 1% Bisbee 4 1% Sedona 3 0.7% Paul Spur 3 0.7% Nogales 3 0.7% Groom Creek 3 0.7% Buckeye 3 0.7% Benson 3 0.7% Avondale 3 0.7% Wickenburg 2 0.5% Turkey Creek 2 0.5% Payson 2 0.5% Guadalupe 2 0.5% Cortaro 2 0.5% Waddell 1 0.2%

The Arizona Wine Tourism Industry – 2017 35

Tubac 1 0.2% Tolleson 1 0.2% Surprise 1 0.2% Sonoita 1 0.2% Sierra Vista 1 0.2% Safford 1 0.2% Pine 1 0.2% Pearce 1 0.2% Paradise Valley 1 0.2% New River 1 0.2% Litchfield Park 1 0.2% Laveen 1 0.2% Lake Montezuma 1 0.2% Jerome 1 0.2% Fort Huachuca 1 0.2% Dewey 1 0.2% Coronado 1 0.2% Casa Grande 1 0.2%

Northern Arizona University Alliance Bank Business Outreach Center | July 2017 36

AppendixAppendix 2 2

Probability of a visitor purchasing a bottle of wine:

Pr �Purchase� � 0�011 � 0�0145 � �ge � 0�� 1 �If income greater than $150,000� � 0��15 � 1 �If income $100,000 ‐ $149,999� � 0�0�� 1 �If income $50,000 ‐ $99,999� Testing Global Null Hypothesis: BETA=0 Test Chi-Square DF Pr > ChiSq Likelihood Ratio 11.5980 4 0.0206 Score 11.6225 4 0.0204 Wald 11.4769 4 0.0217

Analysis of Maximum Likelihood Estimates Parameter DF Estimate Standard Wald Pr > ChiSq Error Chi-Square Intercept 1 0.0110 0.3150 0.0012 0.9720 Age 1 0.0145 0.00559 6.6854 0.0097 Income4 1 1 0.3388 0.2674 1.6054 0.2051 Income4 2 1 0.2150 0.2670 0.6484 0.4207 Income4 3 1 -0.0367 0.2563 0.0205 0.8861

Odds Ratio Estimates Effect Point Estimate 95% Wald Confidence Limits Age 1.015 1.004 1.026 Income4 1 vs 4 1.403 0.831 2.370 Income4 2 vs 4 1.240 0.735 2.092 Income4 3 vs 4 0.964 0.583 1.593

The Arizona Wine Tourism Industry – 2017 37

Probability of an overnight visitation:

�r �Overnight Stay� � ‐1�1�� 0�00�� Age � 0�5��1 � 1 �If income greater than $150,000� � 0��914 � 1 �If income $100,000 ‐ $149,999� � 0��19� � 1 �If income $50,000 ‐ $99,999� Testing Global Null Hypothesis: BETA=0 Test Chi-Square DF Pr > ChiSq Likelihood Ratio 13.4251 4 0.0094 Score 13.1991 4 0.0103 Wald 12.9720 4 0.0114

Analysis of Maximum Likelihood Estimates Parameter DF Estimate Standard Wald Pr > ChiSq Error Chi-Square Intercept 1 -1.1827 0.3147 14.1231 0.0002 Age 1 0.00886 0.00521 2.8953 0.0888 Income4 1 1 0.5881 0.2610 5.0778 0.0242 Income4 2 1 0.6914 0.2627 6.9276 0.0085 Income4 3 1 0.3196 0.2586 1.5273 0.2165

Odds Ratio Estimates Effect Point Estimate 95% Wald Confidence Limits Age 1.009 0.999 1.019 Income4 1 vs 4 1.800 1.080 3.003 Income4 2 vs 4 1.997 1.193 3.341 Income4 3 vs 4 1.377 0.829 2.285

Northern Arizona University Alliance Bank Business Outreach Center | July 2017