Strategic alliances along the Niagara Wine Route

Tourism Management 22 (2001) 21}30

Strategic alliances along the Niagara Wine Route David J. Telfer* Department of Recreation and Leisure Studies, Brock University, St Catharines, ON, Canada L2S 3A1 Received 17 August 1999; accepted 24 November 1999

Abstract The purpose of this paper is to investigate the strategic alliances forming along the Niagara Wine Route. Key informant interviews conducted at 25 local wineries document the importance of working collaboratively to successfully develop a region as a wine tourism destination. Formal and informal agreements between wineries, tour operators and the food industry highlight the signi"cance of horizontal and vertical linkages. Wineries that have recognised the potential of tourism and have taken an aggressive approach to tourism including marketing have bene"ted through additional on-site wine and related merchandise sales. The implications for tourism management in maintaining successful strategic alliances are discussed.  2000 Elsevier Science Ltd. All rights reserved. Keywords: Wine tourism; Strategic alliances; Niagara region

1. Introduction Changes in technology and growing techniques in the 1960s paved the way for the emergence of New World Wine Regions around the globe (Aspler, 1996). Known widely for the thundering Niagara Falls, the Niagara Region has now become home to an emerging wine route with increasing numbers of tourists travelling back roads exploring rural environments. The wine industry has begun to forge links with various sectors in the tourism industry promoting high-quality wines and a regional cuisine. With wine having an agricultural base, it has the potential to play an important role in rural tourism development providing strong horizontal and vertical linkages are established and maintained (Telfer & Wall, 1996). Wine tourism and its links with other tourism sectors have received little attention in the literature (Hall, Macionis & Johnson, 2000). The purpose of this paper is to investigate the strategic alliances forming along the Niagara Wine Route. The paper begins by examining the nature of strategic alliances and their role in wine tourism. The historical development of the Niagara Wine Route is explored highlighting important developments leading to the creation of boutique wineries that form the

* Tel.: 905-688-5550 Ext. 4100; fax: 905-688-0541. E-mail address: [email protected] (D.J. Telfer).

base of the wine route. The focus of the paper is on the results of 25 in-depth interviews conducted at Niagara wineries presented to identify the importance of working collaboratively to successfully develop a region as a wine tourism destination. The paper concludes by considering the implications for managers of wineries as they move into the tourism industry.

2. Strategic alliances and wine tourism At a variety of scales, from local to international levels, tourism planners and operators are moving away from adversarial models of operation, discovering the power of collaboration (Crotts, Aziz & Raschid, 1998; Palmer & Bejou, 1995; Selin, 1993). With the wine tourism product bridging a complex set of industries from grape growers to wineries to restaurants and tour operators, the potential exists for building even greater strategic alliances. Hall and Macionis (1998, p. 267) de"ne wine tourism as the `visitation to vineyards, wineries, wine festivals and wine shows for which grape wine tasting and/or experiencing the attributes of a grape wine region are the prime motivating factors for visitors.a Peters (1997) suggests that when viticulture is successful, it transforms the local landscape into a combination of agriculture, industry and tourism. Gulati (1998, p. 293) de"nes strategic alliances as `voluntary arrangements between "rms involving exchange,

0261-5177/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 1 - 5 1 7 7 ( 0 0 ) 0 0 0 3 3 - 9

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D.J. Telfer / Tourism Management 22 (2001) 21}30

sharing, or co-development of products, technologies or services. They can occur as a result of a wide range of motives and goals, take on a variety of forms, and occur across vertical and horizontal boundaries.a Strategic alliances have become increasingly popular over the last decade (Hill, 1998) taking on many forms. Lynch (1993) categorises strategic alliances based on patterns in markets, products and technologies. Strategic alliances have been referred to as co-operative strategies, strategic networking, joint venturing and strategic partnering, however, they all have some form of collaborative arrangement and the enterprises involved agree to share or split managerial control over an undertaking (Starke & Sexty, 1998). Strategically, alliances are designed to build on core competencies, strengthen research and technology capabilities, address asymmetries in skill endowment of "rms, accelerate new product development, reduce cost of entry into new markets and lead to higher capacity utilisation and economies of scale (Rao & Reddy, 1995). At a functional level, strategic alliances facilitate co-ordination across and within "rms, build trust, mutual dependence and reciprocity (Rao & Reddy, 1995). From a behavioural perspective, alliances can be understood by examining the sequence of events in alliances including the decision to enter the alliance, the choice of an appropriate partner, the choice of structure for the alliance, and the evolution of the alliance (Gulati, 1998). Starke and Sexty (1998) indicate that the relationships between "rms in strategic alliances is more subtle that the usual supplier}customer relations and less formal than the rights of ownership. Key dimensions of strategic alliances and the ability for them to last involve the commitment of resources and the complexity of the arrangement (Rhoades & Lush, 1997). The wineries in Niagara are at various stages in entering collaborative agreements with other business. Some wineries are highly connected while others have only begun to venture into the tourism industry. In selecting a potential partner it is important to systematically assess the macroenvironment, industry environment, and organisational environment of the potential partner (Harvey & Lusch, 1995). The bene"ts of joining an alliance have been documented by Su, Kensinger, Keown and Martin (1997), who found that in a study of 345 strategic alliances from 1983 to 1992, partnering "rms displayed better operating performance than their industry peers over a 5 year period surrounding the year in which the alliance began. Khanna, Gulati and Nohria (1998) make the distinction between private and common bene"ts obtained by entering an alliance. Private bene"ts are those that a "rm learns unilaterally from a partner and applies them in areas of their operation unrelated to the alliance activities. Common bene"ts alternatively accrue to each partner from the collective application of learning that results in each "rm by belonging to the alliance. The

newer wineries, for example, that join the Niagara Wine Route are able to quickly take advantage of the bene"ts of joint marketing and special events created by the more established wineries with more experience in the tourism industry. The tourism industry has been criticised for a lack of communication between organisations (Selin, 1993), however, high-pro"le strategic alliances in the airline industry as well as in the sectors of travel agents, lodging and information technology highlight the growing trend of collaboration (Go & Williams, 1993). A 1996 survey by Airline Business reported 389 alliances within the global airline industry, which was a 19 per cent increase from the preceding year (Rhoades & Lush, 1997). As Tribe (1997) points out, alliances in the tourism sector can help to market a product on much wider scale while helping to reduce competitive pressures as old rivals start to work together. As all businesses are increasingly a!ected by globalisation, mature markets, rapid technological change and intense competition (Athiyaman & Robertson, 1995) the importance of strategic planning and developing of strategic alliances has received increased attention in the tourism literature. Palmer and Bejou (1995), for example compared destination marketing alliances in the UK and the USA. Hall, Cambourne, Macionis and Johnson (2000) have explored potential linkages within the wine tourism industry. The authors developed a set of examples of wineries working together under the categories of dyadic linkages, organisation sets, action sets and networks. In the Niagara Region for example, the joint-marketing e!orts by the Ontario Wine Council represent horizontal linkages while `Elegant Traditionsa, a package assembled in the town of Niagara-on-the-Lake between a winery, Bed and Breakfast, historic fort, and local theatre illustrate developing vertical linkages. It has been argued that vertical alliances between producers and their suppliers or distributors are focused more on maintaining #exibility and adding value while horizontal alliances are focused on protecting core competencies (Magun, 1996). There are several speci"c formal associations that have brought the wineries in Niagara together. The Wine Council of Ontario is a non-pro"t trade association developed as part of $100 million Canada}Ontario programme. The funds were used to create the Ontario Wine Council and develop and implement the council's marketing and research programme (Hackett, 1996). The Council has taken a leadership role in setting standards, policy and future directions for the wine industry in Ontario. The group also acts as a liaison between Ontario wineries, grape growers and government organisations (WCO, 1999). The Wine Council of Ontario works closely with the Vitners Quality Alliance, the national organisation responsible for introducing and maintaining standards of "ne wines (WCO, 1999). At a much smaller scale the wineries in the town of

D.J. Telfer / Tourism Management 22 (2001) 21}30

Niagara-on-the-Lake (NOTL) have formed a Wine Marketing Committee which co-ordinates marketing and the various interest of the wineries in the town. The development of these alliances has improved the reputation over time of Niagara as a Wine Region. The following section highlights additional important historical events in the wine industry, which have led to the development of the Niagara Wine Route.

3. The development of the Niagara Wine Route 3.1. The early Ontario wine industry The Niagara Peninsula has recently become a premier wine-growing region with over 20 000 acres of vines devoted to the production of wine (WCO, 1999). In the past, however, the Niagara Wine Region was not known for high-quality wines. One of the causes of poor-quality wine up until the 1970s was the heavy reliance of the wine industry on domestically grown vitis labrusca and vitis riparia grapes which produced lower-quality wines. Prohibition reinforced the production of lower-quality wine as the Canadian grape growers supplied the dry US market with wine in mass quantities (Clarke, 1995). With many farmers switching to other higher value crops, consolidation occurred in the industry as the number of wineries decreased from 67 to 8 by the 1930s. (Bramble & Darling, 1992). It was not until 1927 that the Province of Ontario created the Liquor Control Board of Ontario (LCBO) whose purpose was to start to control the industry as well as regulate price, distribute and sell alcohol (including wine) through government run liquor stores. The Great Depression and Second World War followed Prohibition and the industry still continued to struggle with quality (Clarke, 1995). Things began to change with developments in the Napa Valley in the 1960s. The trend of producing highquality table wines using classic European wine grape (vitis vinifera) varieties reached Ontario in 1975 with the establishment of Inniskillin Winery, one of Canada's "rst cottage or boutique wineries. The operators at Inniskillin and later Cha( teau des Charmes Winery felt that the future of the Niagara wine industry was in the production of premium wine using vitis vinifera grape varieties. Now mandated by provincial law, Ontario table wines must be produced with French hybrids and viniferas. In a major change from the past, wine sold through the LCBO is no longer allowed to contain any of the native labrusca grapes (Bramble & Darling, 1992).

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alliance (VQA) in 1988. Recently passed into law, the VQA appellation system governs the quality of the wines in both Ontario and British Columbia. In putting the VQA symbol on a bottle of wine, the producers are indicating that, for example, 100 per cent of the grapes come from the Ontario and that only vitis vinifera * the classic European grape varieties are used in the wine (Ziraldo, 1995). Except for 1994}1995, the sales of VQA wines have risen by 40 per cent per year since 1989 reaching CDN $65 million in 1996}1997 or 20 per cent of wine sales in the province. Following in the path laid out by Inniskillin and Cha( teau des Charmes, the number of boutique wineries opening their doors to tourists in Niagara grew from 15 in 1989 to 50 in 1998 (Chidley, 1998). In the Province of Ontario, 36 million litres of wine were produced generating sales of CDN $257 million (Ontario Wine Council 1999). 3.3. The impact of changing trade practices and boutique wine tourism During the time of the development of the VQA, the introduction of new trade laws resulted in signi"cant restructuring in the Canadian wine indirectly stimulating wine tourism. A GATT ruling forced the Ontario Government to revise their Wine Content Act to allow Canadian house wines to be comprised of 70 per cent imported grapes, up from 30 per cent under previous regulations (Chapman, 1994). Concurrently, a price equalisation policy established within the Canada}US Free Trade Agreement created a framework for the elimination of the 66 per cent mark up on foreign wines. Faced with these rulings, the Federal and Provincial governments negotiated the Grape Acreage Reduction Program (GARP) where farmers were paid over a 5 year period to remove up to 3 300 ha (8200 acres) of grapes, or 40 per cent of the Niagara grape acreage (Chapman, 1994). The pullout had a huge impact on the structure of the wineries as the majority of grapes removed consisted of the inferior, vitis labrusca and vitis riparia varieties. The resulting wave of new small boutique wineries producing high-quality wine from European vines has been crucial in changing the reputation of Canadian wines. Since 1994, 3000 acres of premium varieties of grapes have been planted at a cost of $CDN 14,000 an acre and independent growers have "nanced 80 per cent of that (Bramble, 1998). The change in the structure of the wine industry and the orientation to high-quality boutique wineries has generated a new interest in Ontario wines and has resulted in an increase in wine tourism (Hackett, 1996).

3.2. The Vintner's quality alliance (VQA) 4. Wine tourism in Niagara One of the important developments in raising the quality of Ontario Wine as well as raising its international pro"le was the creation of the Vintner's quality

Estimates place the number of visitors at wineries in the Niagara Region at over 300,000 a year (Chidley,

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D.J. Telfer / Tourism Management 22 (2001) 21}30

1998) and the future potential has been projected at 450,000 visitors per year (WCO, 1999). The Wine Council of Ontario (1998) has estimated that tourists spend between $50}$500 on wine and many turn into loyal customers of Ontario wines. Wine tourism employment has tripled in the 3 years preceding 1998 (WCO 1999). The increase in visitor numbers has been dramatic. According to Lawrason & Wilson (1998, p. 7), 10 years ago, there was very little to do in the way of wine tourism in the Niagara Region. Now, `one of the best things to do in Niagara is tour the back roads, winding through orchards and vineyards from winery to winery, sipping Rieslings, GewuK rztraminers, Chardonnays, and Pinot Noirsa (Matthews, 1998, p. 7). The map for the Niagara Wine Route connects 27 wineries in the Region o!ering guided tours, tastings, restaurants, special events and shopping; however, since the production of the map, over 25 additional wineries have joined the circuit. The wineries collaborate on a number of di!erent fronts including advertising and special events. One of the premier events is the &Six Unforgettable Weeks of Summer' organised by the Wine Council of Ontario which runs from the end of June to the "rst week of August. The umbrella concept promotes dozens of weekend events at Niagara wineries (see Table 1). Many of the activities illustrate the growing link between food and wine. As the wine route has developed, e!orts have been made to make Niagara a culinary destination linking wine and food. Strewn Winery for example, hosts The Wine Country Cooking School, which presents various half-day cooking demonstrations on Saturdays and Sundays using local Niagara ingredients and wines. The relationships built around food and wine are investigated later in the paper. Other notable wine tourism events include the Annual Niagara Grape and Wine Festival that attracts over half a million visitors each year and events are also being held year round to extend the wine tourism season. The relationship between wineries and tour operators has become increasingly important in the development of wine tourism. Some wineries have developed formal links with tour operators to have their winery included on bus tour itineraries. Wine Country Tours o!ers customised tours for groups and companies which can include &speciality tastings, meals at top wineries and local restaurants, wine and food matching seminars, agricultural seminars, shopping excursions in Niagara-on-the-Lake, sporting activities (golf, cycling, hiking), and a large number of cultural events' (Lawrason & Wilson, 1998, p. 7). The local transit authorities operate wine tours on the weekends during the summer along side other tour companies specialising in biking and hiking tours. Finally, a local airport shuttle bus company has expanded its tours into the fall and winter months hoping to attract tourists in the low tourist season as winter brings fewer crowds.

Table 1 Selected wine tourism-related events * Six Unforgettable Weeks of Summer '99 Complimentary tasting Hot air balloon ride over the vineyard Vineyard barbeque Chef series * wine and food pairings Comedy weekend How to taste wine seminar Caribbean cande light evening Weekend of gardening and wine Stargazing Wine country golf package Icewine sampling Wine and International cheese night Antique and classic car show Artisit in the vineyard

Wine and jazz night Backyard and helicopter vineyard tour Hiking through the vineyard Horseback riding in the vineyard Shakespeare in the vineyard Cigars, wine and sunsets Mediterranean lunches Mexican "esta Music festival Fresh local fruit and wine Dinning amongst the vines

Wine Council of Ontario (1998).

5. Methodology In order to determine the level of co-operation that exists within the growing wine tourism industry in the Niagara Region, 25 in-depth interviews were conducted at local wineries between April and May of 1999. The goal was to interview approximately half of the number of wineries of varying size and locations in the Region. Either owners or a member of the marketing department were interviewed. Respondents were asked to discuss the nature of the links they have with other wineries and other tourism-related industries. Supplementary questions were posed and respondents were asked to further explain their answers. Comments and suggestions were also obtained on strategies used in attracting customers as well as on the future of wine tourism in the Niagara Region. As Veal (1997) indicated, qualitative in-depth interviews are less structured than questionnaire based interviews and every interview in a research study, although dealing with the same issues, will be di!erent. While there are trade-o!s of using this type of approach highlighted elsewhere by Walle (1997), the purpose of the research is to investigate the details of the various types of strategic alliances building within the wine tourism industry and highlight the potential implications for managers. The result section below details the nature of the linkages between wineries and their alliances with the food industry and tour operators. The section also examines the role of statistics as well as strategies in attracting tourists and future developments in wine tourism. The results of this investigation serve as the foundation for future research on strategic alliances.

D.J. Telfer / Tourism Management 22 (2001) 21}30

6. Results 6.1. Alliances between the wineries The wineries collaborate both formally and informally covering a range of agreements demonstrating vertical and horizontal linkages. The importance of working together with other sectors of the tourism industry was highlighted strongly by all of the wineries. The more established wineries have taken a much more aggressive approach in forming bonds with a number of companies across the tourism industry spectrum. The joint initiatives between the wineries uncovered during the interviews primarily relate to association memberships, advertising, festivals and operations. At a very formal level, all of the wineries belong to a series of formal associations governed by rules and regulations, which promote the wineries as a group. The introduction of the rules and regulations of the VQA has helped in the development of high-quality wine as well as making the wine route a highly marketable and identi"able entity. All of the wineries interviewed belong to the Ontario Wine Council, which has been establishing joint marketing initiatives, festivals and special events. The respondents view the Ontario Wine Council as a very important organisation in promoting the industry. The Wine Council of Ontario generates a large amount of promotional material including the Wine Trails Newspaper and the agency's Internet site (http://www. wineroute.com/). One of the larger brochures that the agency produces is the calendar of events for the `Six Unforgettable Weeks of Summera which runs from June 28 to August 8 in 1999. The 24 page brochure outlines all of the weekly events taking place at all of the wineries including tastings, tours, barbecues, concerts, theatrical performances, star gazing and bicycle tours (see Table 1). Strong support was voiced over the Council's e!orts at giving the industry a sense of direction through its policies and for its actions in developing partnerships between the wineries. The Council is seen as body that reduces con#icts between wineries and it represents an important collective voice in discussions with the government. The wineries would like the Council to continue to develop new initiatives including taking a more international focus in the future. The Wine Council of Ontario has started international links by partnering with the New York Wine and Grape Foundation creating the Northeast Wine Route (see Telfer, 2000a). Finally, a smaller formal association of wineries that meets monthly to develop marketing strategies and promotional materials is the Niagara-on-the-Lake Wine Marketing Committee. The wineries also link formally for a number of other festivals including the Annual Grape and Wine Festival and Ice Wine evenings held during the winter months. Sponsorship marketing has become increasingly impor-

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tant during the 1990s (Wilkinson, 1993) and individual wineries identi"ed special events they sponsored such as golf tournaments further illustrating the move to selecting target markets that identify with their products. Various businesses such as "nancial institutions have also helped in sponsoring wine festivals and other events. At the operational level, it was found that the larger wineries often bottle and store wine for some of the smaller wineries. One of the larger wineries even indicated that they share their experimental results with the other wineries. A further example of alliances in terms of research has been the recent development of the Brock University Cool Climate Oenology and Viticulture Institute (CCOVI) which o!ers a biotechnology degree in the study of the science of grape growing and wine making. Many local wineries contributed funds for the development of a new science building for the program. At the informal level, a number of wineries indicated that they promote other area wineries by word of mouth when customers drop in for tastings. The sharing of customers clearly indicates the level of commitment the wineries have to the wine region and the commitment they have towards working together with the other wineries. A quote from one of the respondents indicates the approach the wineries take: `we market collectively and promote together however we sell competitively between each other.a 6.2. Alliances between wine and food One of the growing trends in the wine tourism industry is the pairing of wine with high-end food products. The introduction of a number of seminars at wineries on food and the number of new wine and food magazines re#ect this growing trend. The Niagara Region has embraced high-end dining and Reif Estates for example o!ers `Cuban Sunsetsa where guests are invited to try four red wines paired with dishes prepared by a top local chef along with Cuban cigars as the sun sets over the vineyard. Niagara cuisine was recently featured in Maclean's, a Canadian weekly newsmagazine and Gourmet, a prominent American culinary magazine. Vineland Estates Winery is planning to open an international culinary institute with lodging for 70 students, visiting chefs and agritourists (Chidley, 1998) and another of the wineries interviewed is currently building a seven-storey hotel with a restaurant on the top #oor with views of the vineyard. Niagara cuisine is also showcased at Savour Niagara, a yearly event sponsored by the Small Business Club of Niagara which links wine and food along with educational seminars, exhibits and cooking demonstrations. Four wineries interviewed have restaurants and/or cooking schools. The "rst winery in the Region to open a cooking school is hoping to lease out space in their winery to an independent restaurant owner. Five other

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wineries indicated that they would like to open a restaurant in the future if developments proceed. One of these wineries has included a restaurant in their original site plan to be constructed in the future if they felt demand was high enough. Another "ve wineries have limited existing facilities to cater for food including a barbecue or a patio (open courtyard often with enclosed walls for outdoor dining). The advantage being that the winery can bring in a chef for a special occasion without having to go to the expense of maintaining a full restaurant. It also does not put them in direct competition with existing restaurants. Cha( teau des Charmes for example, opened a large cha( teau in 1994 that has kitchen facilities, which can be rented out for weddings and special events. While there is a natural "t between wine and food, several of the wineries identi"ed potential con#ict of interest with local restaurants and the high cost of securing a top chef as constraints to opening full restaurants. Thirteen of the wineries indicated they have no intention to open a restaurant or cooking school at the winery. One of the innovative evolving strategic alliances receiving increasing recognition is `Tastes of Niagaraa. Marketed as `A Quality Food Alliancea, Tastes of Niagara is an evolving strategic alliance among the region's food producers, processors, distributors, hotels, wineries, restaurants and chefs (Telfer, 2000b). The objective of the alliance is to promote the use of local products in the tourism industry. All of the wineries interviewed except two belong to Tastes of Niagara. The organisation has 143 members including 21 wineries. The organisation produces an Agri-Hospitality Resource Guide for Niagara containing a listing of the region's food producers, processors, chefs and restaurants. Tastes of Niagara o!er special events where wine and food are paired. Tastes of Niagara for example hosted six weekends at Cha( teau des Charmes Wines, where local top chefs highlight local foods and wines. At a recent Annual Tastes of Niagara Showcase 22 restaurants and 20 wineries were represented. A sell-out crowd of over 800 attended. Chefs prepared sample dishes using products from the Niagara Region. The event has grown from 120 visitors at the "rst Showcase to predictions for over 1000 visitors for 1999 (Benner, 1998). The respondents have recognised the importance of this organisation and clearly recognise the important link between wine and food. As one respondent indicated it is a chance to work together with local and regional businesses, wineries and farmers who have similar interests in bringing travellers to the region. The organisation allows for the promotion and selling of speciality items including wines and local produce that enhance the visitor's interests. 6.3. Alliances between wineries and tour operators The link to tour operators is becoming increasingly important in the wine tourism industry. All of the wine-

ries but one indicated that they usually have multiple buses stopping at their wineries on a regular basis. While all of the wineries recognise the importance of on site sales, some of the larger and more established wineries have taken an aggressive position with respect to developing alliances with tour operators. As the maturity of the winery increases, the wineries often develop hospitality departments and create formalised agreements with tour operators to bring in tour buses. The more established wineries have links with tour companies bringing visitors in from further distances. Inniskillin, for example, focuses on high-quality VQA wines and has developed strong ties with the Japan Tourist Board (JTB). The winery makes e!orts to cater to the Japanese market by posting signs on the self-guided tour in Japanese. Inniskillin, is known for producing Icewine, a premium product made from grapes harvested while frozen on the vine. Icewine has become an exclusive item very popular with Japanese who buy cases at a time. Inniskillin has recognised the importance of Icewine to the Japanese and has developed a discounted wine tasting package with JTB (see Telfer & Hashimoto, 1999). Sample sized bottles of Icewine have also been produced with the Japanese market in mind. The Winery has become very successful and has reached the stage it has to screen bus tours as they are approaching capacity levels. AndreH s, one of the largest and most established wineries has links to over 50 tour operators. At the other end of the scale, some of the newer, smaller wineries have tour buses that visit their wineries on an informal basis. Often it is the local tourcompany or bicycle company that have chosen to included their winery on the route however there are no formal agreements. It must also be noted that some of the newer wineries have quickly embraced tourism and are quickly forging links with tour operators. 6.4. Visitor statistics and on-site sales On-site wine sales from individual and group tourists are becoming increasingly important as they make up a signi"cant contribution towards overall sales for many of the wineries. Of the 24 wineries that responded to the question, 14 indicated that they sold at least 50 per cent of their wine on-site. Some of the smaller wineries indicate that they sell as much as 100 per cent of their wines on-site. The town of Beamsville, located in the Niagara Region will see four new boutique wineries open in 1999 and all of them will sell the majority of their wine on-site (Waters, 1999). Despite the recognition of the importance of visitors to the wineries and the contribution towards overall sales, only 8 of the respondents (30 per cent) indicated that they keep accurate statistics on the number of visitors. Some of the wineries suggested that they could make a guess as to the number of visitors by looking at sales records or looking at the number of people who had signed the guest book. Those that did

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Table 2 General merchandise sold at wineries Wine related

Food

Clothing

Books

Crafts

Others

Wine glasses Bottle-openers Wine racks Decanters Coasters Wine bags Accessories

Jellies Jams Chutney Cheese Gourmet foods Juices Cookies & crackers

Hats T-shirts Sweat-shirts Ties Aprons Jewellery

Cook books Wine books Niagara books Wine Magazines

Cups Candles Plates Gift Baskets Pottery Candle holders

Cigars Table cloths Napkins Posters Post cards CDs Spoons

Interviews 1999.

keep accurate records tried to record the number of visitors per hour and per month. The number of tour buses was also recorded. One of the wineries keeps track of the origin of bus tours and are attracting American, Japanese and European tours. The wineries were reluctant to reveal visitor numbers and estimates were given ranging from 150 000 to 300 000 visitors per year. As the wine tourism market continues to evolve it will be important for managers to keep more accurate records to better understand their customers. All of the wineries sell some wine-related merchandise as presented in Table 2. While this is not a complete list, it contains the general range of merchandise sold at many of the wineries. There are varying opinions on the role of merchandise. One of the larger wineries that attracts a lot of tourists believes that their mission is only to sell wine and therefore do not stock a lot of related merchandise. The links to high-end products can be seen at a few of the wineries through the sale of gourmet food items and cigars. The inclusion of wine-related merchandise also generates jobs and alliances with local artisans who produce local pottery and craft items sold at the wineries. 6.5. Future strategies for wineries in attracting visitors All of the wineries interviewed belong to the Wine Council and hence bene"t from joint promotion and being part of the Niagara Wine Route. To varying degrees most of the wineries advertise through newspapers, magazines and the more established wineries have marketing departments. In the future, wineries want to continue to improve their advertising across a number of media including the Internet. Respondents also indicated they would like to see more customer events and promotions year round. The continual development of strategic alliances with other tourism-related industries such as tour operators, hotels and the food industry, is an additional area of interest for the future. Inniskillin, for example, has made links with area hotels drawing their customers while providing wines to their restaurants. One notable strategic alliance is the &Elegant Traditions' package that includes a visit to the winery, tickets to the

local theatre, historic fort and a stay at an area Bed and Breakfast establishment. All of the respondents feel very positive about the Wine Route and it has been a great asset in attracting customers. There is an expectation by all that the number of wineries will increase in the future. The di$culty the wineries have with the Wine Route itself is the existing map, which is out of date resulting in many visitors getting lost. The wineries would like to see the map upgraded and some suggested a large sign should be erected at entry points to the Wine Route. All of the wineries felt that the key to attracting customers in the future is producing good wine and winning awards. Along with this, the respondents indicated that the physical infrastructure related to the production of the wine such as larger presses would be added in the future. Producing VQA Wine or Ice Wine is an important step in product di!erentiation leading to building a base of loyal customers. The improvement of the appearance of the buildings and landscaping for customers is also considered to be an important strategy in attracting customers. As the commitment towards wine tourism and the level of "nance increases, the inclusion of special attractions/features also increases with the construction of elaborate wine tasting facilities, patios, and restaurants. Several wineries have renovated historic buildings as added attractions and many indicated that they want to expand their wine shops. This trend echoes Peters' (1997, p. 139) comment that `most wine owners are aware that visitors are an important source of potential revenue; well-kept grounds (often wonderfully landscaped), and cordial tasting rooms with knowledgeable personnel are more important to many visitors than ostentatious displays and expensive wines.a The future of tourism in the Niagara Region looks positive. Several new developments have gone ahead in recent years with the construction of new high-end hotels and the approval of a large new permanent casino. The wineries are expecting the spin o! e!ects of these developments to further enhance wine tourism in the region. The low value of the Canadian dollar in relation to the US dollar has also helped wine tourism. As a result of the

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projected growth, many respondents stress the need to continue to work together to promote the Wine Route. As well as promoting the Wine Route, many indicated that the region should be promoted as a whole and there should not be a focus on a particular industry such as the casino or the wineries.

7. Implications for tourism managers Improvements in the quality of wine in the Niagara Region along with developments in legislation have fostered the growth of small boutique wineries leading to a burgeoning wine tourism industry. Based on growing trends, the results of this research have implications for managers as well as for academics. To take full advantage of the projected growth in wine tourism, managers will have to continue to reach out to their competitors and promote a uni"ed Wine Route. Similar to the "ndings of Su et al. (1997), the research has shown the importance of not only formal agreements but also informal agreements between wineries and other members of the tourism industry. In terms of horizontal strategic alliances, formal associations such as the Wine Council of Ontario and the rules identi"ed by the VQA have helped give the Wine Route an identi"able image. The Wine Council has given the wineries a sense of direction and a uni"ed voice in dealings with the government as well as reducing con#ict between members. The smaller wineries are able to take advantage of joint marketing initiatives and festivals that are becoming more important as the industry continues to grow. Brochures for the Annual Grape and Wine

Festival and the Six Unforgettable Weeks of Summer along with the Internet are just a few of the sources of joint marketing. At an informal level the wineries also share customers by recommending other stops along the Wine Route furthering attempts to promote a wine destination. The importance of vertical strategic alliances for wine tourism with the food industry, local crafts industry and tour operators were also identi"ed in the research. As Magun (1996) suggests, vertical strategic alliances add overall value to an organisation. The move to promote the Niagara Region as a culinary destination has prompted many of the wineries to enhance their links with food by either opening a restaurant or patio or by linking up with a top area chef and hosting special events pairing wine with food. The development of Tastes of Niagara is a blueprint for other destinations to try to establish links between the various sectors of the tourism industry. Caution, however, must be exercised as some of the wineries indicated that there might be a con#ict of interest in opening a restaurant as they enter into competition with area restaurants that have long been serving their wine. Table 3 summarises examples of both horizontal and vertical strategic alliances in Niagara Wine Tourism. The commitment to tourism is in part related to the age of the winery and "nances available. Some of the more established wineries have taken a much more aggressive approach in attracting tourists by opening a hospitality department and developing detailed marketing plans. Those that have extensive links with tour operators are in some cases attracting customers from

Table 3 Examples of Niagara wine tourism strategic alliances Level

Type

Selected examples

Horizontal (Inter-Winery alliances)

Formal organisations or Boards

E VQA, Wine Council of Ontario, NOTL Wine Marketing Board, Niagara Wine Route, Northeast Wine Route E Niagara grape and wine festival E Wine Council of Ontario, Internet, Wine Trails Newspaper, Brochures for six unforgettable weeks of summer and the Niagara grape and wine festival E Referring customers to other wineries for tastings E Bottling and storing wine for others, sharing of research, Brock University Wine Institute

Festivals & Events Marketing } Formal

Marketing } Informal Operations/Research Vertical (Multi-sector alliances)

Tour operators Accommodation Food sector Festivals Sponsors

Alliances can cross both vertical and horizontal boundaries.

E Inniskillin Winery and Japanese Tourist Board, AndreH s Wines links to 50# tour operators, bicycle tour companies E Niagara-on-the-Lake Wineries links with area B & Bs and hotels E Tastes of Niagara, chef appearances at wineries, Savour Niagara E Tastes of Niagara, Grape and Wine Festival E Sponsorship of wine and food festivals by "nancial institutions (Canada Trust), small business club

D.J. Telfer / Tourism Management 22 (2001) 21}30

abroad and have bene"ted more from wine tourism than those wineries just relying on word of mouth. Newer wineries have also recognised the way paved by the more established wineries and are moving to take advantage of the potential of wine tourism. Overall, there needs to be greater recognition of the role of wine tourism in light of the number of potential visitors and the potential bene"ts that can be passed along to other agricultural related sectors. Surprisingly, most of the wineries do not keep statistics on the number of visitors and as a result do not have detailed marketing information. This gap in information is important to bridge as many of the wineries indicated that they sell a majority of their wine and related merchandise through on-site sales. For a variety of reasons, many of the wineries have not yet taken full advantage of wine tourism beyond the general joint marketing initiatives through the Wine Council. While some may only want to concentrate on making wine, they are potentially losing customers and wine sales. Both formal and informal links between all wine tourism-related industries should be enhanced. This paper has illustrated the bene"ts that can be obtained from working together in a highly competitive market. Many of the wineries are small and there is greater power in working together as a uni"ed front sharing knowledge. The more links with a variety of industries will help enhance the multiplier e!ect of tourism and promote rural development. At present, no concern was expressed about the number of new wineries opening and several indicated they welcome the opening of new wineries to help establish the Wine Route. Operators in the future however, will have to strategically position themselves within the market as more wineries open. The area of wine tourism is relatively underresearched, as is the area of tourism and the strategic alliances with agriculture (Telfer, 2000c). Recent international conferences on wine tourism in Australia (Dowling & Carlsen, 1998) and the UK (Telfer & Hashimoto, 1999) have helped raised the pro"le of the link between the two industries. It is important to further investigate strategic alliances both at the horizontal and vertical levels in order to document success stories. The focus of this research was on the wineries themselves and additional research including in-depth interviews need to conducted with the other related tour industries such as tour operators or those in the food industry (see Telfer, 2000b) to get their perspective on strategic alliances. In addition, this study revealed that the wineries need to conduct more detailed marketing research on their customer base. As the links between tourism and agriculture continue to grow, there is greater potential to stimulate rural development. It will be important to understand the emerging markets and managers must be prepared to take steps to work together in a competitive environment to fully bene"t from a Wine Route.

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