Oregon Wine -Washington Wine - Oregon Pinot noir - Wine Reviews



Oregon Wine

Oregon Wine Board:

Impact of Oregon Wine Industry
on State Economy Nearly Doubles in Five Years

Industry leaders surprised by economic impact report

July 14, 2011
By Christina Kelly, Avalon Senior Editor

A new study commissioned by the Oregon Wine Board (OWB) revealed that the economic impact of Oregon's wine industry nearly doubled to $2.7 billion since the last study in 2005, stunning industry leaders who were prepared for declining numbers in a weak economy.

The study, conducted by Full Glass Research, a Berkley, Calif.-based marketing and industry research firm specializing in food and wine, was released Thursday (July 14).

"I am extremely and pleasantly surprised by the numbers," said Sam Tannahill, chairman of the Oregon Wine Board and partner in A to Z Wineworks and Rex Hill Winery. "I didn't think that in these economic times, the Oregon wine industry would have such amazing growth and impact on the Oregon economy."


Download a pdf
of the Press Release

Van Duzer Vineyard

Although the 2003 movie "Sideways" certainly increased the popularity of Pinot Noir, the increase in the economic impact of the Oregon wine industry since the last report has been substantial. A spurt of investment in the industry from 2005 to 2008 boosted acreage, the number of wineries and industry employment. Despite a severe recession in 2008-2009, the Oregon wine industry's efforts to improve marketing and quality have paid off, with increased revenues and a broadening of markets.

Since the last study was conducted in 2005, Oregon's wine contribution to the economy has grown by 93 percent during a time when the Oregon wine industry weathered the worst consumer recession in its history.

Sam Tannahill

"I am astounded by the numbers," said Tannahill.

Even more surprising, says Tannahill is when the numbers are compared to California and Washington, Oregon has shown dramatically growth in the past five years, growing faster than California's grape production (17 percent), and Washington (21percent). Last year, Oregon's wine production increased by 38 percent.

- at right, Sam Tannahill

- at left, the mid-Willamette Valley's
Van Duzer Winery "Flag Block" Vineyard on July 4th, 2011

In addition, wine-related jobs in Oregon totaled 13,518 and related wages totaled $382 million. Oregon's wineries produced 1.7 million cases of wine worth $252 million in 2010 with half of that sold to customers outside of the state. The report states that compared to other agricultural products, wine typically adds more value and keeps more of its profit margin inside the state's economy than other agricultural products. Oregon wine producers capture more of the overall revenue stream because they crush grapes and produce wine, but also do the packaging, marketing and selling to wholesalers or foreign importers.

Oregon wineries have made significant strides in increasing their markets outside the state through wine tourism, direct-to-consumer shipments and expanded relationships with distributors throughout the U.S. and overseas, according to the report. Oregon wine in out-of-state distribution increased 94 percent and direct-to-consumer sales - including tourists and out-of-state residents - increased 133 percent since 2005.

Although the increase is significant, Tannahill admits that the industry needs to work harder to expand distribution channels. The issue, says Tannahill is that many of the wineries throughout Oregon are small producers and don't have enough product to distribute throughout the U.S.

"There's a lot of opportunity there, but we don't want to over-market wine we don't have," he added. "We are working on it."

Recession and Recovery

Oregon Wine Industry at a Glance

The sum of all economic activity in Oregon related directly or indirectly to wine is more than $2.7 billion. The net economic contribution, a measure of value added, is $1.56 billion. Some other key statistics:

In 2010, wine-related jobs in Oregon totaled at least 13,518; related wages topped $382 million.

More than 848 Oregon wine grape growers produced a crop whose total value in 2010 was $63.2 million.

418 Oregon wineries bottled 1,752,963 nine-liter cases of wine and had revenues of over $252 million in 2010. Oregon wine and grape sales to other states/countries were $123 million.

Retail sales of wine in Oregon from all sources was approximately $707.8 million in 2010.

In 2010 wine-related tourism contributed $158.5 million in revenues to the Oregon economy.

Wine-related activities contributed more than $65 million in tax and licensing revenues to the state government in 2010

The Oregon wine and wine grape industries contribute an estimated $6.8 million annually to charities.

The 2005-2009 surge in planting invested $126 million into the Oregon economy.

Number of Wineries - 419

Number of Vineyards - 849

Acreage - 20,500

Top Five Grape Varieties
Pinot noir -12,406 acres
Pinot gris - 2,747 acres
Riesling - 798 acres
Cabernet Sauvignon - 639 acres

In 2010 Oregon sold
1,930,763 cases of wine!

The growth in sales of higher-priced wines ($20 and higher) came to an abrupt halt with the "great recession" of 2008, according to the economic impact report. Wine sales fared reasonably well during the previous two recessions, and in fact the volume of wine sold continued to increase throughout the 2008-2009 recession. However, the current recession has had a distinct and unprecedented impact on the high end of the wine business.

Sales of wine more than $20 a bottle fell during this time; most indicators suggest a decline of at least 5-15 percent in both 2008 and 2009. Consumers traded down - the Wine Opinions panel, which tracks high frequency and high end wine consumers across the U.S. showed 39 percent of consumers reducing purchases of $20 or more wines in 2009, while only 10 percent increased, a reversal of the trend from 2005-2007. One quarter of high frequency consumers had left the $30 and higher category altogether.

However, the report states that Oregon winery sales increased 16 percent in volume and 25 percent in revenue in 2010. In addition, perceptions of the economy's strength are improving, especially among core wine buyers.

The economic impact report also highlights a few problem areas including the perception that Oregon is mostly Pinot Noir, and many of those wines are expensive. Tannahill said that a number of wineries have reduced their prices to become more competitive. And the state needs to do a better job promoting other varieties such as Pinot Gris, Chardonnay, Syrah and Tempranillo, he said. There is unequal growth between the various wine regions, and that is something that will be addressed in an upcoming long-term strategic plan.

"We need value at every price point," Tannahill said. "I don't think we can compete at the $6-$7 dollar level, but I think we can compete at the $12 to $15 range and we need to get that message out there."

Wine Tourism Benefits

Steve Burns, interim executive director for the OWB says the report is mostly good news for Oregon's 419 wineries and 849 vineyard owners who produce grapes grown in four primary regions of the state-the Willamette Valley, the Columbia Gorge, the Walla Walla/Milton-Freewater region and Southern Oregon.

With those numbers, Burns said it validates the wine tourism industry, since wine tourists tend to spend at a high rate on hotels, restaurants and shopping while visiting Oregon.

Todd Davidson, CEO of the Oregon Tourism Commission said his agency's research found that 43 percent of Oregon visitors said they are much more likely to purchase Oregon products than before their trip to Oregon. "Wine is a significant destination driver," he said.

With the good news, Tannahill said the OWB is putting new plans in place to expand the industry's outreach, increase communications between the OWB and the public, and rebrand the industry to reflect the diversity of wines and styles.

"This is a huge opportunity, and the numbers show it," he said.


Wine Clubs | Oregon Wine | Washington Wine

Privacy Policy | View Cart | Customer Service | Contact Us | Sign up For Newsletter

503.206.8589 store@northwest-wine.com
Avalon Wine Inc. 3115 NE Sandy Blvd. #127 Portland, OR 97232

Purple Wine Company, Inc., a California limited liability company,
and its AVALON brand are not in any way affiliated with Avalon Wine, Inc, an Oregon corporation,
or Avalon Wine's store at its physical location in Oregon.

1997-2016 Avalon Wine Inc. All Rights Reserved. Reproduction of any part of this site prohibited without permission.