Results of the 2006 Wine Business Monthly Wine Industry Compensation Survey reveal that 64 percent of the jobs showed an increase in annual base pay versus 2005's 77 percent. The average wine industry raise was 5.4 percent (compared to 2005's figure of 5.8 percent), slightly higher than the national average increase, across all industries, of about 3.5 percent. Salaries are up across the board for all major wine industry categories, though increases over 2005 average salaries were modest.

"Overall, there's definitively been increases," said Deborah Ranish of Recruiting Resources, a recruiting firm that specializes in wine industry job placements. "A true, significant trend that I am also seeing is that a lot of wineries are willing to negotiate. They may offer a certain kind of salary; but if the right person comes along, they are going to step up to the plate and look at the higher end of the range to get the right mix of talent."

Another survey finding is that people in marketing and sales positions are experiencing larger compensation increases than are those in other winery job functions. Marketing and sales salaries have shown an overall increase of 10 percent over the last five years while vineyard operations have risen an average of 3 percent in the same time frame. This is consistent with the trend over the past five years, where marketing and sales positions have grown strongly (by an average of 17 percent) while vineyard operations have increased only slightly (an average of 6 percent). Clearly, wineries are realizing the importance of paying top dollar to sell their wines in an increasingly crowded marketplace.

"The wine industry is maturing," said Donna Bowman, survey manager at Western Management Group (WMG), a Los Gatos, California-based research firm. "The manner in which the wine industry is doing business and competing with other companies and other wineries has made them more conscious of business sense. The people that are working within the human resources function are [now] compensation professionals. Consequently, the realization has been pressed upon the wineries that you need to compete. People are going to go where they will be well paid and compensated. Subsequently, over the years, I have seen that the job matching has been getting better, and it's just a more educated group."

Top Five Major Salary Categories

Winemaking functions have experienced the largest growth of the six top-level positions analyzed (winemaker, director of winemaking, vineyard manager, vice president of sales, tasting room manager and office manager). Both winemaker and director of winemaking positions have grown by 19 percent over the last five years.

In 2006, the winemaker's average salary continued its upward trend to reach $93,358, up 1 percent from 2005 (see Chart 1). Directors of winemaking are also benefiting, increasing their average salary to $89,250 in 2006, up 1 percent from 2005. "The winemaker is the signature of the winery, so people are going to place their salary resources in that area," said Ranish.

Vineyard managers' salaries are still lower than winemakers, but have jumped 4 percent in the last year and have grown 18 percent in the last five years (see Chart 2). In 2006 the average salary was $80,400, the highest in the last five years of the survey. However, pay increases for vineyard managers are not reflective of the overall health of the vineyard operations category (which has risen just 6 percent in the last five years). Vineyard operations include low-paying, sometimes seasonal jobs such as cellar workers, who see only minimal pay raises.

Sales and marketing compensation reflects the focus wineries have on attracting top talent to their companies. Salaries for vice presidents of sales have nudged up 1 percent in the last year to $155,530 while salaries in the category have increased 15 percent since 2002 (see Chart 3).

"Sales is where it's at," said Dave Blevins of executive search firm Dave Blevins & Associates in Monarch Beach, California. "Distributors and consumers have so many choices when it comes to high quality juice at really competitive price points. What you are really seeing is the investment toward maintaining and growing share of mind with both the wholesaler community and the consumer community."

The focus on sales "depends on the winery and where they are in the business cycle," said Ranish, who has also seen compensation increases for senior sales and marketing positions. "I think it's because the wineries put their resources into making sure that sales and marketing are going to make some significant increases [in the winery's profit]."

Donna Parker, of Santa Rosa, California-based recruitment firm WinePro agreed, but cautioned wineries to be cognizant of the differences between sales and marketing positions. "I would say sales [are growing the most] because the competition to get noticed out there is so severe," said Parker. "But I don't hear the word 'marketing' enough. They are two different things. The person who knows marketing is very different than the person who knows sales. Marketing professionals are creative people. They are not focusing on 'moving boxes' and commissions on sales, but rather growing the brand. They are motivated by how consumers are learning about the brand and wanting to reach for that bottle when they see it on the shelf. These people are incredibly important in our industry, and they have been the red-headed stepchild of the industry off and on for the last 20 years."

"I've seen more positions [opening up] and more compensation change on the upward trend in the sales and marketing positions than for any other job," said Carolyn Silvestri of The Personnel Perspective. "Anything that brands the winery or supports their reputation, whether it's their sales and marketing or their tasting room, [is growing]. As the wine industry continues to grow and everyone wants their brand to be known, the wineries will be generous to attract the people with the needed skills to increase their share in the marketplace."

By contrast, tasting room managers, who have benefited in recent years from large increases in annual salaries, have leveled off in salary growth. Between 2005 and 2006, salaries in this category actually dropped, though by only 0.5 percent, to $46,996 (see Chart 4). In 2005, the average salary was $47,217. Since 2002, tasting room manager salaries have increased 13 percent. However, several years ago, tasting room managers experienced a fairly large jump in salary: over the last six years, tasting room manager salaries have grown by 23 percent.

According to recruiting experts, the role of the tasting room manager is changing. "Wineries are really focusing on direct marketing because there is a higher profit margin there," said Dawn Wofford of Benchmark Consulting, an executive search firm in Sonoma, California. "Direct marketing funnels a larger percentage of profits directly back to the winery. By just having people pour and not focus on the environment in which they pour, I can see the salaries decreasing or not increasing dramatically."

As direct marketing becomes more important, the tasting room manager position will be forced to adapt. "I think there's a lot of room to grow," said Blevins. "Part of the problem with tasting room management salaries is that they are not tied to the profitability and sales volume of that tasting room. The tasting room should be the single most profitable segment of the business; the days of hiring people who are good hospitality managers versus people who are good business managers has to end," said Blevins. "The individual who is a consumer direct expert is going to command a higher salary than a hospitality person, simply because there are fewer consumer direct experts."

Office supervisors and office managers have followed a path similar to that of tasting room managers. Salaries of office managers have grown 1 percent between 2005 and 2006, nudging up to $49,147, and have gained 14 percent since 2002 (see Chart 5). However, several years ago, office managers experienced a fairly rapid increase in pay as wineries worked to stay competitive with salaries in other industries for similar positions.

According to Bowman, office managers at San Francisco North Bay wineries now earn a similar salary to office managers in other North Bay industries. "The reason is because that person can go out and work in any industry and get paid at a higher rate. Wineries realized they had to [pay more for office staff]," said Bowman.

"Wineries don't want to have as much turnover in those positions," continued Bowman. "People don't realize how expensive turnover is. For one, you have to run an ad, you've got to get someone in and train them again, and there's all this downtime. It's very costly. So, wineries realized they had to start compensating [these positions]. Now there's very little difference between industries for similar positions. It's a maturity of what's gone on in the wine industry."

Other Salary Categories

We will now look at the salaries and positions that fall outside of the five major wine industry positions, listed on the tables on page 51. (Salaries are listed only for categories that have complete and valid data. In addition, salary figures represent base pay only with no bonuses or other benefits included.)

The administrative category includes high-level administrative staff, such as CEOs, presidents, general managers and controllers. The sales category includes vice presidents of sales, national account managers and sales representatives. The vineyard category includes only vineyard managers. The marketing category, a diverse category encompassing many levels of staff, includes vice presidents of marketing, public relations media directors, wine club managers, tasting room managers, tasting room staff and special events coordinators. The winemaking category includes those involved in all aspects of winemaking: winemakers, assistant winemakers, winemaking directors, enologists, lab managers, lab technicians, cellar masters and cellar workers.

Administrative: The highest salaries in the wine business belong to the CEOs and presidents. CEO salaries are up from 2005. The average salary for a CEO at an extra-large winery was $326,743 (down from $369,170 in 2005), with a range between $192,000 and $585,950. CEOs at large wineries averaged $344,119 (up from $300,752 a year ago), with salaries ranging from $120,000 to $456,875. CEOs at small wineries averaged $191,826 (up from $172,340) and at medium-sized wineries, the average salary was $247,939 (up from $176,400).

Presidents at small, medium and extra large wineries averaged $133,167 (down from $153,767), $145,524 (no data in 2005) and $243,231 (down from $280,192), respectively. There was not enough survey data to provide accurate data for presidents at large wineries. The reason for this may be the structure of the polled wineries; large wineries might have either a CEO or a general manager, or both, but may not have a function that is defined as "president."

General managers at small wineries averaged $131,769 while GMs earned $142,827 at medium wineries. Large winery general managers earned $139,739 on average while the average at extra large wineries was $135,851. In 2005, general manager salary data was only provided for small wineries, an average of $113,949, and at extra large wineries, a $140,650 average.

"For those kind of positions you need a real business player, and so wineries are going to step up to the plate and compensate accordingly," said Ranish. "I am also seeing other areas that are strong as well, like certain CFOs and accounting professionals. Winery owners need to be able to get accurate data, and they need correct and timely information. It's a critical hire area."

Only wineries producing 100,000 or more cases provided data for human resources directors. Typically, smaller wineries do not have human resources (HR) directors; other staff, such as controllers or office managers, perform human resources functions. Salaries for human resources directors didn't vary much by winery size. Human resources directors at large wineries averaged $101,903 while they averaged $106,031 at extra-large wineries. Both figures are slight increases from 2005 when salaries were $96,000 and $101,976, respectively.

"We used to be a desert out there without HR," said Parker. "Now, I think, largely due to the fact that the mega-wineries all have to have an HR function, many smaller wineries [are hiring HR specialists]. One of the things that has changed is there are more human resources people in the wine business than ever before."

Sales: "The individuals responsible for sales and maintaining market share are the highest paid individuals," said Blevins. As such, competition for sales positions at wineries has become fierce in the last year.

Although wineries are increasingly turning their attention to building sales departments, increasing consolidation has left more candidates for seemingly fewer positions. "We have these larger wineries that are leaner machines; and because of that a large part of the force has been let go," said Wofford. "Sometimes it's due to their ability to perform, and sometimes it's not. The positions just aren't there for the [candidates]. For example, [a few weeks ago] I was knee-deep in the candidates-to-client ratio; now I am chest deep in the candidates-to-client ratio."

"Regional sales managers and candidates are finding it tough out there because of layoffs and consolidation," said Parker. "I am finding some good, solid, experienced wine people out there in Atlanta, Chicago and Texas who are looking for positions."

At the most senior levels, sales positions are highly compensated. In fact, vice presidents of sales are earning some of the highest salaries in the industry. Salaries for vice presidents of sales increased proportionately with the size of their wineries: mid-sized wineries averaged $130,752 (up from $121,342 in 2005), large wineries averaged $141,289 (up from $139,003) and extra-large wineries averaged $171,433 (up from $166,197).

Salaries for sales positions are also on the rise further down the executive chain. National account managers at large wineries averaged $103,602, up from $86,393 in 2005, and extra-large winery salaries averaged $94,643, a jump from $77,735.

Sales representatives at small wineries averaged $52,830, mid-size wineries averaged $69,805 (up from $65,654) and large winery sales representatives had an average salary of $59,676 (up from $43,600). Sales representatives for extra-large wineries averaged $62,829 (up from $52,509).

Marketing: Marketing personnel at wineries are also benefiting from the increased industry focus on increasing sales share. Salaries of vice presidents of marketing increased proportionately with the size of their wineries. Vice presidents of marketing at large wineries averaged $149,875, virtually unchanged from 2005. At extra-large wineries, the average salary is $174,802, up from $156,703 a year ago. No data was given for vice presidents of marketing at small or medium wineries.

Wine club managers' salaries increased with the size of the winery for which they worked also. At small wineries, the average salary was $44,880 (up from $40,999 in 2005); at medium-sized wineries, wine club managers averaged $54,648 (up from $45,800), the highest in the industry. At large wineries, wine club managers average $46,667 (up from $45,122), and at the extra-large wineries, salaries averaged $48,665 (a drop from $51,346).

Tasting room managers at extra-large wineries had the highest average salaries, $50,244, down from $51,270 a year ago. Tasting room managers at medium-sized wineries were not far behind at $47,454 (down from $48,135). Managers of tasting rooms at large wineries averaged $46,741 (up from $45,667), and at small wineries, salaries averaged $42,592, virtually unchanged from a year ago.

"We're having some trouble defining winery club managers and tasting room managers, and they tend to blend," said Parker. "Because of the new laws that are allowing us to do some direct-to-consumer sales now, job descriptions surrounding that are swirling and have not settled down. The result of this crossover effect on tasting room managers will be that you will find tasting room managers who are also wine club managers and commanding more money with a bigger job description. The stakes are so much higher, and the potential for additional sales at increased margins are so attractive."

Salaries for tasting room staff don't vary much by winery size. All the average salaries were between $27,000 and $30,000, with those at mid-size wineries averaging the highest at $30,126 (up from $26,880). Salary ranges were similar for all sizes of wineries too, with all salaries topping out at about $40,000. Again, though, bonuses and incentives were not included in this survey, so the actual amount earned by tasting room employees is likely to vary from these figures.

Vineyard Managers: While the salaries for vineyard managers are still low relative to some other key management positions within the winery, they have risen in three of the four size categories. In 2005, all average vineyard manager salaries were in the mid-$70,000s. In 2006, small winery vineyard managers average $83,676, medium-sized winery salaries average $84,013 and extra-large winery salaries in the category average $80,218. At large wineries, however, vineyard manager salaries dropped to $72,675, down from $74,969 in 2005.

Winemaking: According to regions in California, winemakers, across all winery sizes, earn $81,562 in the Central Valley, $87,645 on the Central Coast, $74,010 in Monterey Bay, $98,136 in Sonoma and $101,467 in Napa(see Chart 6).

When salaries for winemakers are measured according to small wineries only, salaries are again higher in Napa than anywhere else in the state. This year's survey shows the average Napa winemaker's salary (for small wineries, producing 50,000 or fewer cases) at $104,507 (a 16 percent increase over 2005), compared to Sonoma's average of $92,988(see Chart 7).

"Depending where you are coming in geographically, it's totally different compensation," said Wofford. "You are going to get more money in Napa and certain parts of the Sonoma County region than you are in Santa Cruz or Mendocino County. As I move people from area to area, I see an incredible increase in pay."

"Napa and Sonoma seem to be very close in salary range now, and the Central Valley is below that," said Silvestri. "The area that is starting to grow is down in the South Central and Coastal areas. We're seeing a lot of recruiting down there, down in the Paso Robles, San Luis Obispo, Santa Maria areas. They are all starting to blossom. I have a feeling that within the next year or two, they will be right up there in salary."

"There's no question Northern California commands the highest salaries of anyone in the wine community all across America," said Blevins. "The farther south you go from there and the farther north you go from there, all the way up to the Canadian border, you see a slowing trend in terms of salary. I think part of that is because of volume-the largest players in the industry are all in California. It's more competitive, and they are paying more."

Anecdotally, these recruiting experts report that salaries are lower outside of California. They also warn that wineries in these areas are making a mistake by not compensating their employees at the same rates. "They are underpaying for what they want and need," said Parker, noting that this includes large winemaking states like Oregon, Washington, New York and others.

"Their perception is because they have a lower cost of living, they can pay less," said Parker of outside-of-California wineries. "The reality is that you are competing within a restricted pool of people. If you are in Missouri and you want a winemaker, a really good winemaker, and you want to pay $35,000 for that person because houses cost less, it's not going to work. They don't understand that you still have to pay a wage that's comparable to California to get people out of California."

Winemaker Salaries by Case Production

Survey results also indicate that, with key positions, small (under 50,000 cases) and mid-size wineries (50,000 to 99,000 cases) have become very competitive in terms of salary with the larger wineries. "The winemaker is the driving force for the taste of your wines. So, the smaller wineries are making sure they are compensating and keeping their talent," said Bowman. "It starts at the top. What is the corporate philosophy of how you are going to pay and what you feel is important?"

Overall, winemaker salaries varied to some extent by winery size; winemakers at mid-size wineries received on average the highest salaries, at $112,844, while small wineries, at $100,843, and large wineries, at $101,166, pay equally as well. The lowest average salaries are for winemakers at extra-large wineries (producing over 500,000 cases), who earn an average of $85,344 (see Chart 8).

"A large winery can have a more specialized job role because they may have several people in the same position, where a smaller winery may incorporate a lot of different duties in the same job and job title," said Silvestri. "That can work in altering the compensation in two ways. In some of the smaller wineries, the budget may be limited-but that is not always the case because some of the small ultra-premium wineries have a larger budget and pay more than the large wineries. It really depends on the specific winery and how they are funded, what level they are at and what skills they are looking for."

There are several factors affecting a winemaker's salary. While small wineries, those producing less than 50,000 cases, may not have the budgets for an expensive winemaker, they may also be high-end boutique wineries focusing intently on wine quality and are, therefore, willing and able to pay top dollar for a top winemaker. "At the smaller wineries, they have one person, and that person is part of the identity of the brand," said Parker. "When a winemaker is truly an identity of the brand, they command higher salaries."

Conversely, at the largest wineries, those producing over 500,000 cases, there are likely to be a stable of winemakers, all performing different, specialized functions under the direction of the more highly compensated director of winemaking.

"What you see in a larger winery setting is that the winemaker's role is much smaller," said Wofford. "The winemaker may be involved in more managerial decisions. They may not be in the field as much as they were in a smaller winery. The smaller the winery, the more hands-on it is. Everyone wants to get back to the small winery-especially the winemakers. They don't fit very well into a corporate situation, and they find themselves wanting to be into a place where they can be creative. They can't do that when all they are doing is buying the supplies for harvest and directing labor issues."

The size of the winery seems to have little effect on salaries for assistant winemakers, however. Average salaries for assistant winemakers hovered around $60,000 for all but large wineries, where the position earned, on average, about $65,000.

There were also only minor variations in the salaries for cellar masters. At small wineries, the position averaged $68,450, at mid-size wineries $62,797, at large wineries $70,736, and extra-large wineries $66,002.

Average salaries for cellar workers hovered at about $32,000, regardless of winery size. The highest earners were at large wineries, with an average salary of $32,610, while cellar workers at extra-large wineries earned an average of $31,265, the lowest in the industry. The salary range for cellar workers, however, is relatively large, ranging from $19,000 per year up to $47,000. The wide disparity reflects the differing levels of skills and responsibilities for the position.

The Future of the Wine Industry

Several of the recruiters interviewed for this article discussed how the wine industry is currently in a time of flux as it grows and matures. "Everybody in the industry has to be cross-functionally trained now," said Blevins. "A winemaker can't be a production guy; he's got to be a sales guy and a public relations guy. Everybody who touches that bottle has to be a salesperson and marketing person and a PR person. Every chance they get to talk to somebody about that product and that process, they have to do it.

"People are having to think much more. The business has changed, and the consumer thinks they are driving the bus," continued Blevins. "Consequently, because they have more choices and the consumers really are driving the bus, we have to work harder to consistently get our product into the hands of the consumer."

In terms of the business, wineries are now requiring top executives to be both highly business-savvy as well as wine-savvy. Employees are being asked to expand their job responsibilities but not necessarily their salaries. Overall, wineries have demonstrated that they are willing to increase their compensation levels as long as the increased pay results in increased profit.

In the coming year, it is expected that consolidation and cost-cutting will negatively impact the number of sales positions while at the same time those positions are becoming more highly compensated. Tasting room management and staff will be shouldering a greater responsibility for the winery's profit margins, though it is unclear whether this will result in greater compensation. wbm

Methodology

This is the second year that Wine Business Monthly has partnered with an independent consulting firm, Western Management Group (WMG), which specializes in compensation and salary surveys. WMG has been conducting the Wine Industry Compensation Survey since 1991 and is uniquely qualified to provide accurate, comprehensive data on wine industry salaries. (For more information, visit www.wmgnet.com or call 408-358-0450.)

This year's survey polled 120 wineries: 25 percent of the surveyed wineries produce fewer than 50,000 cases, 18 percent produce between 50,000 and 99,999 cases, 22 percent produce between 100,000 and 499,999 cases, and 35 percent produce more than 500,000 cases.

Geographically, 33 percent of respondents were from Napa County, 18 percent were from Sonoma County; California's Central Coast, Central Valley and Monterey Bay areas each represented 9 percent of responses. The remaining respondents were from one of several other regions in California, as well as respondents from Washington or Oregon.

Seventeen percent of surveyed wineries have fewer than 25 employees, 20 percent have 25 to 49, 16 percent have 50 to 99, 16 percent have 100 to 249, and 31 percent have 250 or more.

The survey was designed so that each category: received at least three wineries reporting data; each winery had to have at least three existing employees in the category; and no single employer could account for more than one-third of the data. wbm