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September 2012 Winery & Vineyard Economics Issue

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Inquiring Winemaker TIM P A T TERSON udging by the audience reaction (a standing ovation that lasted a good while), the high point of the June meetings of the American Society for Enology and Vi- ticulture in Portland was UC Davis professor Roger Boulton's Merit Award lecture, devoted not to co-pig- mentation or one of his other research specialties but to the generally sorry state of research into wine and grapes in the United States as a whole. On the other hand, the address was hardly news, since Boulton has been making the point in various forms to anyone who will listen—and some who wish they didn't have to—for some time. Many people in the industry could recreate his arguments from memory, whether they agree with them or not. J U.S. Research Trails the World at Cornell, Sara Spayd (currently president of the ASEV) at North Carolina State and Bruce Zoecklein at Virginia Tech; Glenn Mc- Gourty, viticulture advisor for California's Mendocino and Lake counties; Russ Robbins of the AEB Group and Gordon Specht of Lallemand; Rae Blair at the Australian Wine Research Institute; veteran winemakers Jerry Sepps of Storybook Mountain, Harry Peterson-Nedry of Chehalem and Jerry Lohr of J. Lohr; and Hal Huffsmith of Trinchero Family Estates, a former 3-year chairman of the board at the American Vineyard Foundation. Another list just as long includes all the people I couldn't catch up with. Many started our conversations by saying they had no clue, but between them they had quite a few. Rather than directly quoting what everybody said—and there are more than a few strong per- sonalities in this group—what follows (with a few non-controver- sial exceptions) is where I landed after consulting with all of them. Highlights • The level of funding for wine research in the United States badly trails other wine-producing countries and other U.S. ag sectors—but why? • Lack of government support, industry complacence and the insularity of researchers all contribute to the problem. • Other countries with healthier research programs developed them to meet crises, and it may take another one to change the pattern in the U.S. The main thrust of Boulton's lecture wasn't news to me, either, but I had never heard it in such detail or with such mind-boggling numerical comparisons. Noting that the U.S. spends less than other countries on wine research is one thing; pointing out that it spends orders of magnitude less is something else altogether. There are, to be sure, critics of his numbers (more on that below), but the anomalous spending patterns still require some kind of explana- tion. How did this happen? Is it something peculiar about the wine culture of the U.S.? Something about the structure of the industry? Some reason other countries need research, but we don't? Could elevated alcohol levels have made us collectively dumber? As usual, I called and emailed around to as many wise men and women as I could. The list included Boulton and David Mills at UC Davis; researchers Thomas Henick-Kling at Washington State University, Jim Kennedy at Cal State Fresno, Alan Lakso 66 WINES & VINES SEPTEMBER 2012 Research by the numbers Roger Boulton's presentation has been posted on the ASEV web- site, so I'll skip the details. Two broad points merit summarizing: Boulton's view of how research builds intellectual capital, and the magnitude of the gaps shown by his statistics and graphs. Like the good chemical engineer he is, Boulton came with a slideful of equations showing the connection between research expenditures and intellectual capital formation—and this, rather than the dollars, was the heart of his talk. The initial investment, the left-hand term in the equation, moves through a series of stag- es in which it can either be multiplied or squandered away: The research may or may not develop useful, lasting infrastructure; the results may or may not be communicated well; and importantly, the research may or may not train large numbers of people in advanced ways of thinking about problems. The flow is largely one-way: Research money can lead to training, but training by itself does not necessarily lead to research unless there is research money. If nothing comes in to enlarge the left-hand term, nothing comes out the other end of the equation. By Boulton's numbers, the inputs into wine research in the U.S. are perilously close to nothing. His focus was on funds available through some form of competitive grant program, and by that measure, expenditures in the U.S. as a percentage of value (i.e., wine sales) are massively lower than any other wine-producing country. While some nations approach 1% of value ploughed back into research, the U.S. clocks in at a hair under 0.005%. (Yes, those zeroes to the right of the decimal point belong there.) The contrast is nearly as stark when the U.S. wine industry is com- pared to other domestic ag sectors. As David Mills noted in an email, the cost of running his DNA-analysis lab at Davis is more than the American Vineyard Foundation, the principal industry-

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