COMMENTARY

Dynamics of an Industry

By Karl Klooster

At the end of 2006, Oregon Wine Press compiled production statistics for a report never before published by any media or other industry-related source in the state.

The objective was to compile listings of the top 20 Oregon-based wineries for 2007, ranked by total case production at a single facility and by brand or group of brands marketed by a single winery.

Although the case production figures are only estimates based on grape tonnage processed, we reasoned that this would give readers a clear, comparative snapshot of the industry.

Production from one vintage to the next, growth, rankings and fruit sources of individual wineries and processing facilities are indicators of what, where, who, how and how much is happening in the ever-evolving landscape of a dynamic industry.

The two-dozen entities listed in the 2007 and 2008 reports numerically represented only some 6 percent of the nearly 350-plus bonded wineries in the state. But their combined annual production constituted 44 percent of the total in 2007 and 53 percent of the total in 2008.

Why such a large percentage jump in just one year? Both an increase in production by the largest wineries and by the custom-crush wineries account for it.

A nominal factor as little as five years ago, custom crush facilities—those that make wines for clients—now process a significant share of Oregon’s annual production.

From 44 percent to 98 percent of the wine produced at the largest of them—Wine By Joe, NW Wine Company, 12th & Maple, Eola Hills Wine Cellars and Foris Vineyards Winery—was made for others in 2009.

At 374,000 cases combined, these five facilities alone were responsible for 31 percent of the wine among the top 20 producers and 17 percent of all the wine made in Oregon from the 2008 vintage. They accounted for 501,000 cases or 32 percent of the top 20 in 2009.

Although the industry’s total production for last year won’t be known until the National Agricultural Statistics Service releases its annual report in February 2010, it’s almost a sure bet that 2009 will see the largest harvest on record.

Given the top 20 wineries’ total production of 1.53 million cases in 2009, and assuming that will be approximately 50 percent of total production, simple two times two multiplication arrives at just over 3 million cases or 23 percent more than the previous high of 2.43 million cases in 2007.

Whether or not such a robust scenario will actually come to pass remains questionable, however. Although quantity was up in the Willamette Valley, Southern Oregon AVAs were closer to normal and yields were down significantly in Eastern Oregon.

One thing seems certain. The 2009 vintage will be both large, perhaps the largest ever, and high in quality.

All of this is intriguing for Oregon wine industry watchers, who also know well that Beaver State production is a tiny pond in an ocean of wine vinified around the world.

In that regard, production figures are merely internal milepost markers. Through this year, Oregon Wine Press has limited its survey to wines made in Oregon from grapes grown in Oregon.

After discussions with industry members, we have concluded that next year—to the extent information is available—we will include production of all Oregon wine brands whether from Oregon grapes or others, whether made in state or elsewhere.

We feel that approach will provide a better perspective of the marketplace. Wineries such as Duck Pond and Owen Roe make a significant percentage of the wines for their labels from grapes grown and processed in Washington.

Sokol Blosser’s highly successful Evolution and Meditrina blends are made from grapes grown in California, Oregon and Washington. Many of Oregon’s smaller wineries use Washington grapes for some of their wines as well.

Just how dramatically the inclusion of these out-of-state production sources could alter the picture is exemplified by Duck Pond Cellars.

In 2009, the winery processed 765 tons of Oregon grapes at its Dundee facility, which translates to approximately 51,000 cases. That amount placed Duck Pond in the 10th position for total production and in seventh as a brand.

If their Washington production of 1,224 tons had been included, however, the roughly 77,000 additional cases would have put them in fourth place as a brand.

It appears inevitable that changes, many yet unforseen, will continue as wineries adapt to conditions in an increasingly competitive marketplace. And it is our goal to track those changes and continue providing pertinent information about them.

We only regret that, among a few industry members, the spirit of openness and mutual support for which the Oregon wine industry has long been known and appreciated, has, itself, undergone change.

It is our hope that they will remain few or come to realize that the best way for Brand Oregon to succeed is with everyone joining forces, cooperating, sharing and pulling together.

CORRECTION: In the 2009 Oregon wine production charts that appeared in the January 2010 edition, Bridgeview’s total production figure was incorrectly reported as 41,000 cases both in the brand and facility listings. The correct figures are 50,000 cases as a facility, putting it in 11th place and 75,000 cases as a brand, which earns the 4th place ranking.

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