Settlers from Europe in colonial days knew that Virginia was in the same latitude as the wine-producing regions of Spain and Italy. The earliest European visitors considered the possibility of making wine from Virginia grapes. Durand de Dauphine noted in 1686 that native grapes were common in the colony in the areas which received bright sun:
However, the New World grapes were better suited for the wild foxes to eat than for the Europeans to convert into wine. Today some species of grapes native to Virginia are still called "fox grapes," but the wine we drink is coming from French grapes. The plants in the vineyards are often hybrids, with French plants grafted onto Virginia roots. The Virginia plants are resistant to disease, while the French grapes are far better for wine production. (However, if you have the taste buds of a fox, you might disagree...)
Until the 1960's, it was generally accepted that American wines could not equal the quality of French wine. However, California used its university system to research new techniques for growing grapes and producing wine in the Mediterranean climate of that state. After years of state subsidy, innovative California winemakers developed new mechanisms for crafting fine wine. After they began to win medals *and* earn a profit, grape growing expanded north intro the Alexander Valley, to Mendocino, and to other cooler sections of California.

Virginia farmers in the Piedmont recognized that they could mimic California's success. Marginal pastureland converted to vineyards would generate far more income, if people would buy Virginia wines. In the 1970's and 1980's Americans began drinking more wine overall, and the Virginia gamble paid off. Virginia Tech is the center of "viticulture" in the state, providing a source of expertise, but many wineries are still cooperating with each other.
Unlike California or New York producers, Virginia wineries are small producers, not trying to sell high volumes of wine to the mass market. Such operations must maintain very low production costs, in order to compete on price rather than quality or esthetics.
Production by Virginia wineries is limited; there is sufficient demand within the state to purchase all the wine bottled in Virginia. Virginia wineries are closer to boutiques or even hobbies that do not make a profit. Virginia wine is a niche product, rather than a commodity.
The Virginia wineries make a profit by attracting visitors. They purchase wine directly, maximizing the winery's profit by eliminating middlemen such as grocery stores. Tourists who enjoy the experience will return for another visit, and generate future wine sales. To stimulate the tourist business, Virginia wineries engage in joint marketing efforts such as the Passport To Virginia Wineries. Wine is more than an agricultural product - it is a tourist product as well.
NOTE: There are now wineries on the Coastal Plain and Shenandoah Valley, as well as in the Piedmont and Blue Ridge.
(A winery in Central Virginia searched for an evocative historical Virginia name for its new wine in 2003. The least-appropriate name might have honored Theodore Roosevelt's retreat - but would you drink wine named after "Pine Knot"?)