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North country wineries create ‘industrial cluster’ that’s ripe for growth

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There is a promising trend in economic development in Northern New York, and it tastes great. After years of trying to create industry clusters around papermaking or other manufacturing operations, our local winery industry appears to be developing as a classic industrial cluster. This is some of the best news we have had on several fronts in many years.

The idea of an industrial cluster as economic development strategy was first described by Michael Porter, a professor at Harvard University, and has been used to explain the success of clusters such as Silicon Valley in California or the film industry in Hollywood.

As more of the same (competing) businesses arrive in an area, economic conditions evolve to support them more effectively. Suppliers arrive seeking the concentration of business and can then lower their prices because shipping costs are low. Prospective employees with skills and interests in the cluster industry arrive, seeking jobs. As new businesses enter the cluster, they compete for those skilled employees, who then move from company to company, spreading ideas and skills. Government officials are more likely to develop supporting policies for a growing industry cluster than for a single business. The result is a group of similar companies that compete with one another but are also the beneficiaries of their neighbors.

The theory behind clusters is simple to follow and widely understood by economic developers everywhere. This leads to frequent attempts to create or grow a cluster from a single company or small group of companies. These efforts tend to be failures, however, as not even Mr. Porter seems to know how to make the magic happen. We just know what it looks like when it does happen, and it looks like it is happening here.

Silicon Valley formed originally around Stanford University and its creation of new technologies in computing and software. The north country’s nascent winery cluster began with the University of Minnesota and the development of a set of “cold hardy” grape varieties that can survive our winters. Those new grapes made it possible to produce wine this far north. Our region had everything else that was needed and the story began.

The first winery was the Thousand Islands Winery in Alexandria Bay, founded by Steve and Erica Conaway in 2003. Several years ago, I wrote a column about them and commented on the courage it took to do something that many people thought was impossible. The Thousand Islands Winery has grown rapidly since then and just won the Greater Watertown-North Country Chamber of Commerce’s annual business of the year award for a business with under 50 employees. At the rate they are growing, in a few years they are likely to win the award in the over 500 employee category.

But the Conaways started more than a single winery. They started a trend. We now have six wineries in Jefferson, Lewis and St. Lawrence counties, with more on the way. Otter Creek in Philadelphia is the newest in Jefferson County, opening in 2007, and River Myst of Ogdensburg brings St. Lawrence County into the cluster. More are expected next year.

Each new winery that enters the market strengthens the cluster effect and makes it easier for the next one. More wineries mean more attraction for tourists and more opportunities to develop a regional brand and reputation for the wines.

It also means more opportunities for local farmers to supply grapes and new job opportunities for young people with interests in wines, agriculture and marketing. It means connections with other businesses locally, like the partnership between bonbon maker Covered in Chocolate in Watertown and sweet wine from Coyote Moon Vineyards of Clayton. Man does not live by wine alone. He also needs chocolate, fresh breads, good cheeses, inspiring artwork, good books and rich winey pasta sauces. You can find all of those along our growing Thousand Islands wine trail, if you look.

Perhaps the most exciting part of an emerging wine cluster are people like Victoria Herrera, the marketing director at Thousand Islands Winery, or Valerie Hickman, wine club manager at Coyote Moon. Both are young talented professionals who grew up elsewhere but have found jobs and opportunity through the wine business. Ms. Herrera is from San Antonio, with a degree in marketing and experience in consumer goods. She came to the winery last October after Thousand Islands Winery attended a wine show in New York City, she has been excited about getting the wines into major urban markets and continuing to build the brand.

Mrs. Hickman is a young Fort Drum spouse who discovered an enthusiasm for wine and family businesses during one of her husband’s deployments. She is exactly the person you want greeting your customers — enthusiastic, charming and as bubbly as champagne. She explains the connections between the founding Randazzo family’s art and Sicilian roots to the current crop of wines, making it all fun and accessible.

Best of all, however, are the wines themselves. Those cold-hardy grapes are turning into drinkable wines with distinct regional characteristics. Like the Finger Lakes, north country grapes do not get enough sun to produce big California-style reds. Instead, the Pinot Noir from Coyote Moon is light bodied with notes of strawberries and some raspberry. Both Thousand Islands and Coyote Moon have a nice Marquette, a red cold hardy grape that makes a balanced and austere red. Coyote Moon’s 2010 Marquette won best in class gold at the San Francisco Chronicle Competition, one of the largest and most well-known judgings of American wines.

The signs of cluster effects are beginning to appear as the winery community grows and suppliers and support industries respond accordingly. Jefferson Community College recently was approved to offer a certificate in wine marketing and management and plans a new concentration on wines and wineries for its hospitality and tourism program. Local farmers and would-be farmers have begun to produce grapes for the wineries, and Thousand Islands Winery provides grape cuttings each year to encourage supplies. The New York Wine and Grape Foundation is providing marketing support as well.

What’s next? Local dairy farms looking to capitalize on the cluster opportunity can make some farmhouse cheeses to go with these farmhouse wines. Others can add grape acreage to their corn or soybean crops for extra revenue. Graduates of JCC’s training programs can start finding jobs and helping new wineries establish their wines in the market. Now we need one or more local banks to develop some expertise in the wine business so that they can finance these new wineries and help fuel the growth of the industry. Local restaurants need to add local wines to their wine lists and produce dishes that work well with them. Economic developers can try to recruit more winemakers. And the rest of us? We can support the growth by drinking the wines.

If you want to visit these wineries, check out the list at www.thousandislandsseawaywinetrail.com. I plan to write more about this industry in the next few months, partly because it is exciting business news, but mostly because it is a great excuse to try more wines. Join me?

Greg Gardner is an associate professor of business at SUNY Potsdam. His column on business issues in the north country is published monthly in Money Matters. Email him at ggardner@wdt.net.

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