Why Oregon is the Most Dynamic Wine Region in America
Last week Nancy Keates investigated the Oregon wine industry for the Wall Street Journal. In general, the article profiled a number of folks who have spent lots of money building wineries, building homes in Oregon wine country and generally gentrifying their way to happiness and profit.
However, buried in this story was a fascinating factoid: in 2014 the number of wineries in Oregon increased by 12% to 676. That’s HUGE! I don’t know how the figure was derived, but let’s assume it was fact checked.
Meanwhile, this summer the Oregon Wine Board released its annual report and found the following concerning growth of the Oregon wine industry in 2014 versus 2013:
• Vineyard operations in Oregon increased by 8 percent, to 1,027 in 2014
• Planted acres increased 14 percent to 27,390
• Sales increased 14 percent, to $430 million
• International sales increased 50%
These are big numbers that dwarf the overall U.S. wine industry numbers for 2014. They clearly are not sustainable indefinitely, but there is no reason to doubt that excellent growth will continue for at least few years as Oregon continues to impress and to attract investment.
I’ve been to Oregon three times in the past year and can report that not only are the wines WillametteValleyremarkably good (they have been for many years), but also the winemaking regions—particularly the Willamette Valley—are absolutely beautiful, as well as accessible.
In particular, from a hospitality perspective, the Willamette Valley is similar to both Napa and Sonoma insofar as it’s not far from a primary transportation and population hub (Portland). This is important not only because it allows easy access to wine country from that spot where most of the people live, visit and travel to, but also because support from the food, art and cultural world of a nearby sophisticated metropolis is what makes the difference between a successful wine country hospitality industry and a wildly successful wine country hospitality industry.
There is another key fact that makes Oregon my pick for the most dynamic wine region in America right now: Relatively low vineyard and land prices. While an acre of vineyards in Napa Valley can run between $275,000 and $350,000, a planted acre in Oregon’s Willamette Valley will run you between $75,000 to $100,000. This is also below the average price of a Sonoma County acre of vines.
Add another item to this parade of wonderfuls: The average price of a bottle of Oregon wine shipped direct to the consumer in 2014 was $40.00, considerably higher than the average price of wine shipped direct from both Sonoma County and Washington wineries.
Oh, and then there is the issue of Pinot Noir. The surge in Pinot sales over the past decade is no fluke. Americans discover and liked the grape…very, very much. And there is no reason to believe they will be abandoning that love of Pinot Noir, a grape that as we know is Oregon’s signature wine.
All this helps go a long way toward explaining why Oregon is looking very good to investors. It means Oregon will continue to see pasture and orchard land transformed into vineyards. How the local community reacts to this transformation will be important to future wine industry development in the region.
Those who oppose the planting of more and more vineyards will certainly be reminded that with more vineyards comes more wine and more wineries. With more wine and more wineries come more visitors to the region. With more visitors to the region come more supporting amenities, more businesses and more jobs. With more jobs comes more residents and more homes. With more residents, homes and visitors come both a larger tax base and more stress on infrastructure.
It will be fascinating to watch and see if local communities can adequately plan for the ongoing transformation. It could go terribly wrong or be a model for other growing wine regions.
One thing that makes Oregon truly unique I mentioned earlier. Sixty percent of Oregon’s wine production is Pinot Noir. In the Willamette Valley Pinot Noir represents 70% of production. This doesn’t make Oregon or the Willamette Valley mono-varietal. But it’s pretty darned close. Napa Valley, with its commitment to Cabernet Sauvignon and Cabernet blends has demonstrated this isn’t a problem. However, Americans drink more Cabernet than they do Pinot Noir. If I were Oregon wineries I might think about spending promotional dollars on the promotion of Pinot Noir as much as I thought about spending promotional dollars on the promotion of Oregon wine.
Either way, there is no question that the sun is rising on Oregon and it looks to me like it’s going to shine pretty brightly for some time to come.