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Oregon Wine’s U.S. Sales Poised To Cross 3 Million Cases

February 29, 2016

It took from 2000 to 2011 for Oregon wine to rise from 1 million cases to 2 million cases in the U.S. market. Now this ascendant region, favored by Millennials and other adventurous consumers, has added nearly another million cases in just the last four years. According to Impact Databank, Oregon wine sales hit 2.9 million cases on 6% growth in 2015, led by the state’s two signature varietals, Pinot Noir and Pinot Gris, which respectively account for 55% and 25% of volume.

With 90% of its sales above $11 a bottle, Oregon is now a force in premium Pinot Noir, with younger consumers driving exploration of the category. In its recently released annual survey, the Wine Market Council found that Millennials are far more likely than Baby Boomers to branch out and include Oregon (as well as Washington and New York) in their wine purchases.

Oregon’s production base remains fragmented, with more than 70% of the state’s 676 wineries producing fewer than 5,000 cases annually, according to the Oregon Wine Board. But that’s starting to change as ambitious players like Ste. Michelle Wine Estates, Jackson Family Wines, Foley Family Wines and Copper Cane Wines & Provisions continue to invest alongside local mainstays like King Estate, A to Z Wineworks, Argyle Winery and Sokol Blosser.

One challenge is that Oregon’s upscale skew can also mean higher operating costs for producers. “Although Oregon wine premiumizes a company’s portfolio, growing cool-climate Pinot Noir isn’t a low-end proposition,” says John Caruso, vice president of Dreyfus, Ashby & Co. The company markets the Domaine Drouhin Oregon portfolio, as well as Cloudline and the soon-to-be-launched RoseRock label. “Oregon has strong price pressures, huge vintage variations and low yields, so it’s hard to keep the price and quality consistent,” Caruso adds.

Expanding Oregon’s wine business from its prominent Willamette Valley region into areas like Walla Walla could help ease some of those pressures. Walla Walla, which straddles Oregon’s border with Washington, is drawing investment. “Most of Walla Walla’s prime vineyards are on the Oregon side,” says Oregon Wine Board vice chairman Steve Thomson, noting that Cabernet Sauvignon and Syrah dominate and land values are rising fast. Thomson predicts that more wineries will invest in the Oregon side of Walla Walla in the next few years. SND sister publication Market Watch has a full report on Oregon’s rising wine industry on its website.

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