Premiumization Leads Oregon Wine Category To New Heights

Despite sobering conditions, the Oregon wine industry forged ahead last year. Growth has slowed somewhat in 2021, but Oregon wines’ strong retail pricing continues to benefit producers across the state, especially as consumers increasingly move upmarket. Oregon wines boasted an average retail price a bottle of $15.78 a 750-ml. in IRI channels in the year to date through August 8—more than twice the national average of $7.62. Oregon table wine’s off-premise volume growth was a modest 2.1% year-to-date according to IRI, but still outperformed California and Washington wines (both down 12.2%, on a tough comparison after last year’s off-premise surge) as well as imports (down 4.1%).

According to the Oregon Wine Board, the Oregon wine industry generated revenues of $699.6 million last year, up 4%. That compares to less than 2% dollar growth for the total wine market in 2020, according to The U.S. Wine Market: Shanken’s Impact Databank Review & Forecast, 2021 Edition. Prices could potentially move higher still in light of the fact that wildfires resulted in a 29% drop in Oregon’s wine grape harvest last year. Pinot Noir remains the dominant wine grape variety—accounting for 59% of all planted acreage and 49% of wine grape production—with Pinot Gris a distant second.

Union Wine’s Underwood brand leads all Oregon wines in volume terms, spurred primarily by the burgeoning popularity of canned wines, followed closely by A to Z Wineworks and Ste. Michelle’s Erath, according to Impact Databank. Going forward, Oregon’s growth will continue to be challenged by uncertain economic conditions, and declines in consumer spending could lead to a shakeout among the state’s wineries.

The wine market in general is also facing increased pressure from the continued popularity of hard seltzer and pre-packaged cocktails, and as the on-premise sector still hasn’t returned to full capacity, the full effects of the pandemic have yet to be felt. Still, consumers are clearly gravitating to up-and-coming upscale regions like Oregon, whose premium positioning and reputation for Pinot Noir are drawing increased interest regardless of the state of the economy.—Juan Banaag

Tagged : A to Z, Acrobat, Erath, Underwood, Willamette vall

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