Better with age

A 2009 Applegate Valley pinot noir is one of several wines produced at the Wooldridge Creek Vineyard and Winery. Oregonís wine industry has nearly doubled to $2.7 billion in the past five years. Mail Tribune / Julia Moore

Julia Moore

Oregon's wine industry has nearly doubled to $2.7 billion in the past five years, lifting Rogue and Applegate Valley vintners on the rising ride.

A study commissioned by the Oregon Wine Board underscored the industry's rapid growth and contributions to tourism.

Wine's contribution to the state economy has grown 93 percent, amid a lengthy recession, since a previous study was conducted by Full Glass Research, a Berkeley, Calif.-based market and industry research firm.

Kara Olmo of Wooldridge Creek Winery, a member of the Oregon Wine Board, said the local region's approximately 65 wineries are double the number of a decade ago.

Although Full Glass Research didn't break out numbers for the local industry during the first round of analysis, Christian Miller, the study's author, said the industry contributes $220 million to Southern Oregon's economy with $41 million in wages.

"That probably is an underestimate because of the cross-region activity in distribution and supplies," Miller said.

Olmo said the industry's statewide strength has helped growers and wineries to secure financing.

"Numbers like we're seeing attract interest and support from both investors and banks," Olmo said.

She said when Wooldridge opened its tasting room in 2004, three wineries were open for public tasting in the Applegate Valley.

"Next summer there will be 20," Olmo said. "Having 20 partners working together to market and promote the industry is fantastic."

Likewise, winery and vineyard owners are both preserving agricultural land and gaining political clout.

"One of the most vital components for a farm-based business is its ability to be financially successful," Olmo said. "If our farm-based businesses are not financially successful, the pressure to develop Oregon's farm land is increased. When we went to Salem to talk with our legislators, the response was very positive, officials were listening to what we needed."

Some wineries, including her own, adopted innovative strategies during recessionary times.

"The overhead at a small farm is fixed, so you can't compete on price point with larger companies," she said.

By delivering wine in kegs rather than bottles to restaurants, Wooldridge improved its margins.

"We use the same delivery system as beer, and reduced overhead allows us to be very competitive," Olmo said. "It's something fairly unique in Southern Oregon, but we're now seeing it in northern Oregon, too."

The report noted demand for pinot noir, Oregon's leading grape, continues to grow at a faster rate than most other varieties, while maintaining a price premium for its leading white grape — pinot gris — despite heightened competition from California. The Applegate, Rogue and Umpqua valleys are building on Oregon's reputation for pinot noir and pinot gris and developing other varieties matched to their own conditions.

"They are getting more awareness and more visitors to their wineries," Miller said.

But few wineries here are capable of making enough wine for "vast U.S. distribution," he said. "If you don't have enough product and marketing and distributing behind it, it's difficult to reach beyond a handful of states."

Although Southern Oregon wine production is a fraction of that in the Willamette Valley, growth and stability of existing wineries bodes well for the future, and new investment is narrowing the gap.

"It's mainly from people out of state looking to get into the wine industry, and they are choosing Southern Oregon for their new enterprise; we're starting to see significant investments of $5 (million) to $10 million," Olmo said.

With those substantial investments come estate properties of 100 acres where vineyards are planted, wineries are built and equipment is installed.

"A decade ago, people moved here and began in the garages, looking to grow a very small business," she said. "Now we're starting to see those business become a financial success, encouraging additional investment. They are aiding and attracting new businesses with larger visions and larger initial capital input."

Beyond that, Olmo said, those newcomers often arrive with more than passing business skills.

"We have a new neighbor who is building a winery who has lots of experience with international exports," she said. "He's helping us understand where there is an opportunity for our products not only outside of Oregon, but outside the U.S. For the majority of us in Oregon, those things weren't part of our original business plans."

With growth, however, come obstacles as competition from other wine regions intensifies. Small, family wineries can expect greater difficulty navigating through the wholesale tier in many states.

"The Willamette Valley pinot noir is well known, but particularly for Southern Oregon, there is still lot of work to be done on awareness and visibility," Miller said.

Additionally, the surge of planting between 2005 and 2008 is coming to fruition. History suggests that grape growers and wineries have the most financial difficulties when there are too many grapes.

"Over-supply is always a present danger for the wine industry," Miller said. "It's easy to over-plant. When you get a surge in demand for a variety in the region, everyone plants — they don't pay attention to what others are planting. You have to know how to sell the volume and have a concrete and reasonable plan before you add capacity."