News Release: Finance and Economics, International, People, Research

Jan. 5,  2011

Fighting Poverty Through Wine

With an estimated three quarters of its population living off less than $2 a day, Ethiopia is one of many African nations searching for different ways to jump start the economy.

A team of graduate students from a university halfway around the globe may have one answer.

In August, six MBA students from Emory’s Goizueta Business School traveled to Ethiopia to research a project that could change at least a portion of the social landscape in this East African country. Six months of work went into a feasibility study commissioned by the International Society of Africans in Wine (ISAW). The report concludes that — with proper funding and manpower — an economically sustainable, high-quality wine industry can be created with an ability to help combat poverty.

“It’s a poor part of the world but, when you go there, you see lots of opportunity,” said Peter Roberts, a professor of organization and management at Goizueta and head of the school’s Social Enterprise Initiative.

The team met with government and industry leaders in a country, and returned to Atlanta with notes on the climate, culture, history and economics of Ethiopia.

One look at the hillsides and the temperate climate and the group realized a wine industry is not only possible, but could actually flourish. Wine has been made in the region since the 17th century but now, with the availability of land and the right partners, the region is ripe for wine industry growth.

The plan calls for a co-operative system modeled after the Ethiopian coffee industry. Roberts’ team estimates domestic and international demand for any wine produced. For instance, existing studies point to a growing demand for wine within Ethiopia. Moreover, a preliminary survey of Ethiopain restaurants in the U.S. revealed an approximate demand of 9,500 cases per year.

With this kind of demand, an Ethiopian farmer could earn approximately 12,000 Ethiopian birr per quarter hectare plot compared to 2,500 birr with other crops. (One U.S. dollar is currently equal to roughly 17 Ethiopian birr). “The return is even higher… when farmers also receive a five percent ‘social premium’ from the downstream profits associated with making and selling wine,” according to the report.

Access to capital, a lack of industry knowledge and limited market access could prove challenging but the team hopes to mitigate concerns with government involvement and support from foundations, social impact investors and universities. The University of California-Davis and Cornell University have been contacted for possible contributions of the project.

“A lot of interesting things are going to happen just by Emory getting parities to the table,” said Melonie Chapman, a non-profit consultant in Atlanta that assisted the team in Africa.

The Goizueta students, who are all scheduled to graduate in May, plan to remain active. Two soon-to-graduate students — one on the research team — are now taking steps to launch an organization to carry the project into its implementation stage.

Sandhya Deshetty says the purpose of their venture is to pick up where feasibility studies typically stall.

“All too often sound recommendations that could drive economic growth and achieve social impact go unrealized,” she said. “Natalie (Reese) and I will not only design, but also implement market-based solutions to global poverty; and this project is a tremendous opportunity for us to help transform innovative thought into action.”

Stephen Satterfied, founder of ISAW, applauded the school for its continuing efforts and said he’s confident the process can draw social entrepreneurs and end with a positive impact on Ethiopian society.

“Ultimately, the vision embodied in the report is somewhere between 80 and 160 families in Ethiopia being on the cutting edge of viticulture in Ethiopia,” Roberts said. “Obviously, the next four to six weeks are going to be extremely exciting.”

View the Executive Summary of the report (PDF).

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