Is the Migration Out of CA to Oregon Good or Bad For Wine Sales?

Posted by Tom Wark on May 14, 2018

For quite some time, California has lived with a negative migration issue. That is, more people are moving out of California than are moving in. I wonder what this means for wine sales in the Golden State.

Between 2007 and 2016, a net 1,000,000 more people have moved out of California than have moved in. The primary reason is the ongoing housing crisis. There is simply a deficit of housing in California and this is causing housing prices to rise tremendously.

On the face of it, this wouldn’t bode well for California’s wine industry. Fewer people in the state means fewer people to visit wineries and buy the wine, let alone buy wines on the predominantly California-heavy wine lists in restaurants and stocks on retail shelves in the state. But consider who is leaving and who is arriving.

A report released by California’s Legislative Analysts Office showed that people leaving California tend to be low income, low education folks struggling to afford the State’s cost of living. Meanwhile, the report showed those moving in tend to be high income, high education individuals. The latter is far more likely to be premium wine buyer than the former. In addition, those moving in tend to be middle-aged, while those moving out tend to be younger. This does bode well for sales. In essence, the entire state of California is gentrifying under the burden of high housing costs. (I suspect high taxes play a role too).

Another interesting tidbit is the states to which Californians are moving. According to the same report, Californians are moving to Texas, Nevada, Arizona and Oregon. This is very interesting to me. My bride and I have long considered a move to Oregon and are again thinking very seriously about relocating to the Willamette Valley. For us, its a question of housing prices and find a good place to raise Henry George. Consider that the median price of a home in Napa in 2017 was $625,000 in 2017. The median price of a home in Salem, Oregon (the main city in the Willamette Valley) in 2017 was $230,000.

It turns out that in 2016, Oregon had the third-highest rate of in-migration of any state in the country, with most folks entering the state coming from California. Meanwhile, United Van Lines reported that Oregon was the second most popular state to move to in 2017 after Vermont.

Moreover, those migrating to Oregon tend to be younger (20-30 years old), single, educated and taking down less income. But what’s interesting is that those who move in their 20s-30s are much less likely to leave once they arrive. They are in their “root setting” years. Does this bode well for Oregon?

Oregon’s wine industry has been on something of a terrific roll the past few years. There is no indication that this trend is in decline. More importantly, those moving into the state are likely to state as they move into their peak income-earning years. This is good for the state’s industry.

Despite Oregon’s reputation as a premier location for Pinot Noir, it’s ability to support a wide range of varieties is solid. The warmer southern AVAs in Oregon produce much more than Pinot Noir and with great quality. However, the Willamette Valley, with its focus on Pinot, is reaching a very unique position. In the United States, Napa is a Cabernet region. You might point to a few other places in California that are defined by a single variety, but nothing like Napa Valley and Cabernet and nothing like the Willamette Valley and Pinot Noir. Now, only Napa Valley and the Willamette Valley are in the position of Burgundy and Bordeaux and Chablis, where their reputation is made solid by their ability to excel by producing great bottlings of a specific variety. I don’t see this changing.

And this brings us to another question best left for another post. Are Californians “Cab People” and Oregonians “Pinot People” and if so, what does this say about these two groups?