Indianola, Iowa

Written By
Mirela Marinova, Hebros Bank – Credit Analyst Sofia, Bulgaria
Marius Macinca – Citibank – Financial Consultant, Iasi, Romania

Edited by
Cathy Searles – Dallas Center Grimes School, Grimes, Iowa
 

The Summerset Inn and Winery is located in Indianola, Iowa, near Des Moines. It is owned by Ron and Linda Mark, who have been producing wine since 1981. The business is mainly family run, with the assistance of some outside help. The winery employs about seven full-time employees, which includes drivers who ship supplies, marketing directors, retailer shop assistants, two sellers and equipment cleaners. As well as growing grapes, producing wine, and running the bed and breakfast inn, Ron Mark arranges tours through his winery and vineyard, holds parties and tours Italian wineries similar to his own.
 

Motivation

Ron’s wine producing business began as a hobby. He spent five years in Italy, where he learned a lot about wines. He started the winery in 1997 in a garage and the bottles of wine produced were sold out of the basement. When he started the business he was working for the Federal Aviation Services and the wine production was a part-time job that he did in his spare time. After conducting marketing research, Mark determined his target group is middle-aged Midwestern women. His research led him to the knowledge that 80 percent of middle-aged women prefer to drink sweet wine, while the other 20 percent like dry wine. This is the reason why Ron is currently producing more sweet wines than dry.
 

Business Development

When Ron Mark started his wine producing business, he was the first in the region. He started with twelve acres of land to cultivate. He held seminars for young wine producers and taught them how to grow grapes. Ron currently has 260 different grape growers that sell to him. Ron grows half of the grapes that he turns into wine and buys the other half from other grape growers. Before purchasing the grapes from other growers, the sugar, pH levels, and other things are tested to insure the quality of the fruit.  Ron has no official contracts with the grape producers. He will buy grapes from them only if the test results are good. At the moment eight different types of grapes are being grown. They are ready for harvest at different times of the year so production can be constant and spread out. The production process takes eight months.  On average 100,000 bottles of wine are produced by Summerset each year. In the last year the gross sales of the company reached one million dollars.
 

Market Access

When Ron Mark started his business he did not know how to attract people to his winery and inn. He began arranging parties for different holidays, weddings and jazz festivals to attract people. During the summer months the bands play outside the building for the visitors to see and hear.

Ron uses several marketing venues.  The most popular and important form of marketing from Ron’s point of view is word of mouth. The vineyard has a web-site that presents his entire business and other information such as which bands are going to be playing during upcoming months. Occasionally he uses the radio during popular listening hours to advertise his winery with commercials. He often prepares leaflets and puts them in hotels around Des Moines so that tourists will know that they can spend their time in the area at his facility.
 

Critical Steps

When Ron started his business one of his primary needs was to have a business plan. It took him a lot of time to learn how to prepare his plan in a way that allowed him to apply for government assistance. The assistance he was aiming to receive was made for people developing alternative businesses for Iowa not including corn and soybean production. One of the eligibility conditions that had to be met included having employees working for him. Ron succeeded in receiving the government assistance that he applied for.

Another critical marketing test for Ron has been to prove to wine consumers that Iowa wines can compete in quality, taste and ambiance of other regions.  The major competition for Summerset Winery has been to meet the test and competition from Californian wine. California is one of the leaders in the United States market for wine production. With the exceptional quality and prices of Ron’s wine products he succeeded in becoming a leader of Iowa wine production. For more than six years, he has been able to sell the wine he has produced all year long.
 

Unexpected Problems

One of Ron’s main problems was convincing the government that he was only a farmer and not an industrial company. The property tax assessments in Iowa are much less for farmland than commercial and industrial property.   In fact, companies often pay more than three times more in property taxes than do farmers. He succeeded in having his land assessed as agricultural property instead of commercial or industrial, providing him significant savings.
 

Success or Failure

The inn and winery business has been very successful for Ron and his family. When the business was started Ron did not expect things to turn out as they did. Each year the number of visitors and the amount of wine produced has grown rapidly.
 

Industry/ Market Changes

Ron’s current endeavor is to start a restaurant inside of the inn. Now all the parties are catered. The restaurant that he intends to open will serve Italian dishes. This will combine delicious food and home produced wine.
 

Lessons Learned

One of the most important lessons that Ron learned was the understanding that in order to achieve his goals he must be motivated and work hard. The slogan that he follows is “Learn how to make money from nothing.”