By: Ken Bernsohn

Ken Bernsohn — Wed, 14 Mar 2012 16:52:48 +0000

To help clarify what’s an “indirect” job as distinct from a direct one wine manufacturers pay for:
1) Lobbyists to convince the government to be nice to the industry: subsidies rather than restrictions, please. Every industry has them.
2) Machinery companies that develop specialized equipment and others that maintain and repair it.
3) Marketing people including:
a) Market research people. Who is the market and what trends are developing among consumers that might affect us.
b) People who figure out sales strategies. Mainly it’s the pitch – “Our wine will convince girls you’re debonair, impress your boss and actually cures dandruff” or more modest claims.
c) Merchandising folks who hire people to work on product design: odd shaped bottles, strange labels, 14 bottles or 10 to a case instead of 12. It’s also in-store displays, training sessions for retail staff and little gifts consumers find attached to bottles at the retail shop. They also design the wine tour visitors get and the tasting room. (Staff accountants figure out what visitors are served for free.)
d) Publicity people who try to get the message out without buying time or paying for space, preferably appearing o come from a more trustworthy source than an ad
e) Advertising agencies.
f) Ego boosters. All the junk organizations who say, “You’re more than important, you’re good.” Billy Crystal at the Academy Awards talked of millionaires handing other millionaires golden statues. Every industry and trade has organizations designed to boost the ego of egomaniacs. Mentioning this to any industry executive means you’re out of there.
4) Consulting agronomists, wine makers, and other experts.
5) Lawyers of three classes:
a) Those for commercial disputes – another company’s wine label and name imitates ours—or this wholesaler hasn’t paid up.
b) Criminal defense lawyers for when a binge drinking lout misuses he product and you end up being sued by the family of the person he killed in a car wreck and a lot of other problems that arise
C) Lawyers to limit your liability. They’re the ones who put warnings on labels that read, “Do not consume.”
6) Community relations consultants so people in town don’t resent you: the “We care about the community” thing. They usually also deal with the loud folk: some valid, some fruitcakes. Some will want you to ship wine in containers that don’t use any energy to produce or transport without specifying a reasonable alternative to what you’re now doing. Some want you to change how you make wine people want to buy to a method that costs more and produces rotgut. Some will have very valid concerns. Whoever you hire has to be very good. Some concerns are valid and should be addressed immediately. Others are hat “Y2K, all computers will crash” scare again.
There are a lot of others who will be on staff. One example: transportation specialists watch prices. At times rail is cheaper than truck over a given route in North America, but the price advantage flips to trucking at irregular intervals on some routes.
The list is far longer. Contact a major wine company where a friend works and your friend will send you a much more complete listing.
Important warning against two self-serving lies:
1)companies in any industry will tell you,”We’re different, we have unique problems.” They’ll also say, “We’re important. Look at all the jobs we’re creating.”
All the tasks listed above except criminal liability lawyers are also done by Harlequin romance novels, one of Canada’s great exports. Pharmaceutical companies have everything listed above done except in-store merchandising, but they have physician contact representatives and more government entanglement than wineries ever dreamed of.
2 )No company is out to create jobs. Since the industrial revolution began, eliminating jobs in one area—usually starting with manufacturing—has led to job creation in other areas. Employment for suppliers to a firm is just seen as unavoidable costs of doing business.
From the view of the ad agencies, the lawyers, the merchandising people and the others listed above, if grapevines were grubbed out and replaced with another industry, they’d just change clients. Remember that FMC Corporation started out as the Food Machinery Corporation. It made insecticide sprayers, then added fruit packing plants, then got a contact for the M113 Armored Personnel Vehicle. Today it’s mainly a chemical company.

By: Mike Veseth

Mike Veseth — Tue, 13 Mar 2012 18:40:42 +0000

Thanks, Paul. The tricky part comes when you attribute those indirect jobs to any specific producer because in most cases a shop that sells wine A also sells B, C, D etc. If wine A disappears all the indirect jobs associated with selling it won’t disappear, they will likely shift to selling B, C and D.

By: Paul Ahvenainen

Paul Ahvenainen — Tue, 13 Mar 2012 14:56:24 +0000

Hey Mike, great article.

Let’s see if I understand you correctly… If the value added by a company equals the total value of its sales at retail, then something like the equation below should work (roughly) to estimate job creation for a winery.

(#bottles sold X average retail Price) / average annual income

For the company I work for, highly simplified rounded numbers…

(30 million bottles x $10 per bottle) / $50,000 per year US average salary = 6000 jobs

Our actual direct employment is a little over 500, so this would be more than 10 indirect jobs for every direct job. Does this make sense to you?

Comments on: Economic Impact: Wine [Not Just] By the Numbers

By: Ken Bernsohn

By: Mike Veseth

By: Paul Ahvenainen