Pinot Noir drives Oregon wine economics

By on January 21, 2015
Winter's Hill Vineyard is in the Dundee Hills in Oregon's Willamette Valley.

Pinot Noir dominates Oregon vineyard plantings, particularly in the northern Willamette Valley. (Photo by Andy Perdue/Great Northwest Wine)

PORTLAND – Pinot Noir is plowing the way for the Oregon wine industry, which now adds more than $3.3 billion to the state’s bottom line.

“There’s no question that having a powerful and unique primary grape variety really acts as a snowplow in the marketplace,” said Tom Danowski, executive director of the Oregon Wine Board. “In a region of discovery, it really helps to be able to open the conversation with wines of a particular variety – especially of exceptional quality. That’s where Oregon has been able to shine.”

Danowski was beaming Tuesday about a new economic impact report released by the Oregon wine industry.

“It’s sensational,” he told Great Northwest Wine.

The $3.3 billion economic impact is up from $2.7 billion in 2010 and $1.4 billion in 2005.

Among the highlights of the report are:

  • Oregon has more than 600 wineries. That is a remarkable number considering Washington state has about 850 but produces more than three times as much wine. More than half of Oregon’s wineries – 384 – are in the northern Willamette Valley.
  • Oregon has more than 950 grape growers whose crop is valued at $128 million per year. This is more than twice as many vineyard owners as Washington.
  • In 2013, wine-related tourism contributed $207 million in revenue to Oregon’s economy.
  • Wine-related jobs in Oregon topped 17,000 in 2013, with wages nearly $530 million.
  • Oregon wineries and vineyards provide more than $11 million in annual donations to charities.
  • The Oregon wine industry generates more than $63 million in annual state taxes and fees.

Pinot Noir drives Oregon wine industry

A vineyard worker inspects a cluster of Pinot Noir grapes from the warm, large 2014 harvest in Oregon's Willamette Valley. (Photo courtesy of the Oregon Wine Board)

A vineyard worker inspects a cluster of Pinot Noir grapes from the warm, large 2014 harvest in Oregon’s Willamette Valley. (Photo courtesy of the Oregon Wine Board)

Oregon is famous for Pinot Noir – and for good reason. In 2013, winemakers crushed 28,565 tons of Pinot Noir. The No. 2 grape was Pinot Gris – a distant 7,423 tons. Pinot Noir makes up more than 60 percent of the state’s total wine grape production. And when someone says, “Oregon wine,” the immediate thought with wine consumers is “Pinot Noir.”

Washington winemakers and executives often lament the fact that Oregon has a single grape variety upon which to hang its hat, while Washington has five main grape varieties – Cabernet Sauvignon, Chardonnay, Riesling, Merlot and Syrah – and thus no cohesive marketing message.

Danowski is sensitive to the fact that of his 600 wineries, not all of them focus on Pinot Noir. However, the red grape most famous in France’s Burgundy region definitely drives the train.

“We have two dynamics going on at once,” he said. “There are two Oregons. First is always a Pinot Noir story. After that, it’s a diversified story.”

He also is quick to point out that even in Southern Oregon’s Rogue and Umpqua valleys, Pinot Noir is the No. 1 variety – though not by nearly the margin it is in the Willamette Valley to the north.

Ryan Pennington, director of communications for Erath Winery in the Dundee Hills, said the growth shown in the economic impact report certainly reflects what he’s seen at Erath. The winery is one of the oldest in Oregon, dating back to the early 1970s.

In 2006, founder Dick Erath sold the winery to Ste. Michelle Wine Estates in Woodinville, Wash. Since then, Erath has more than doubled its production to about 130,000 cases under the direction of winemaker Gary Horner.

“Our experience in the market is that demand remains strong for Oregon,” said Pennington, who worked for the Washington State Wine Commission prior to joining Ste. Michelle. “The opportunity is there to continue that growth to fill that pipeline.”

Pennington said that while Erath is not Oregon’s largest winery, he believes it is the state’s largest producer of Pinot Noir.

Grapes, land are premium in Oregon

Willakia Vineyard is in Oregon's Eola-Amity Hills.

Willakia Vineyard is in the Eola-Amity Hills south of Dundee. Ste. Michelle Wine Estates purchased it in 2014. (Photo courtesy of Erath Winery)

Last year, Ste. Michelle bought Willakia, its first Oregon vineyard. It has been a trend in recent years for top vineyards to be purchased because wineries want to have complete access to high-quality fruit.

Other examples of recent land purchases include Kendall-Jackson in Santa Rosa, Calif., purchasing Gran Moraine, Maple Grove and Zena Crown vineyards, Precept Wine in Seattle purchasing Yamhela Vineyard, Louis Jadot of Burgundy purchasing Resonance Vineyard, and Domaine Drouhin of Burgundy purchasing Roserock Vineyard.

In addition, Foley Family Wines of California bought Four Graces winery and Bacchus Capital Management of San Francisco bought Panther Creek Cellars and invested in Wine by Joe.

Pennington said this reflects how Oregon and Washington have evolved. In Washington, the industry grew because Ste. Michelle convinced farmers to grow wine grapes under contract. But in Oregon, the industry was built upon wineries with estate vineyards.

The fact that the Willamette Valley is on the edge of viticultural viability forces grape growers and winemakers to do everything in their power to grow low-tonnage grapes.

“In Oregon, you really need to be obsessive about quality,” Pennington said. “There’s nothing like owning your own vineyard to ensure you’re getting exactly what you want in terms of fruit.”

Oregon wine makes national, global splash

Founding winemaker David Adelsheim inspects the vines surrounding his eponymous winery in Newberg, Ore.

Founding winemaker David Adelsheim inspects the vines surrounding his winery in Newberg, Ore. (Photo by Andy Perdue/Great Northwest Wine)

Danowski can point to a lot of statistics to show that Oregon wine is heading in the right direction. Not the least of these comes from Wine Spectator Insider, a weekly electronic subscription-based newsletter. Danowski said that in the second half of 2014, Wine Spectator Insider rated 814 wines from around the world at 90 points or higher (on the 100-point scale). Of these, 202 were from France, while 103 were from Oregon.

“Here’s Oregon with far, far less than 1 percent of the world’s wine grape acreage, but it received almost 13 percent of the 90-plus-rated wines,” he said.

Pennington looks at Oregon wine from a different angle. He pointed out that once you remove Washington’s largest wine producers (Ste. Michelle, Precept, Charles Smith and Hogue), you are left with just a few wineries making more than 50,000 cases of wine.

“The drop-off in Washington is incredible,” he said. “It quickly gets to the point where wineries don’t have enough wine for national distribution.”

Meanwhile, Oregon doesn’t have any one truly dominant producer. Instead, it has several well-respected brands that have a national presence, including Adelsheim, Sokol Blosser, Ponzi, A to Z, Willamette Valley Vineyards, King Estate, Wine by Joe, Duck Pond Cellars, Bridgeview, Elk Cove, Argyle, Firesteed and Union Wine Co.

“The Oregon wine industry has really benefited from a chorus of voices that can tell the story nationally,” Pennington said. “For some time, Washington has relied on its larger players to sing that tune. There isn’t that mid-tier the way there is in Oregon.”

About Andy Perdue

Andy Perdue is founding partner of Great Northwest Wine LLC and a longtime wine columnist. He is a third-generation journalist who has worked at newspapers since the mid-1980s and has been writing about wine since 1998. He co-founded Wine Press Northwest magazine with Eric Degerman and served as its editor-in-chief for 15 years. He is the author of "The Northwest Wine Guide: A Buyer's Handbook" (Sasquatch, 2003) and has contributed to four other books.

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