Sales at Oregon Wineries Exploded in 2014

Wednesday, February 11, 2015

Joanna Evoniuk, GoLocalPDX Contributor

More people are buying wine directly from Oregon wineries. Oregon saw the nation’s fastest growth in direct wine sales to customers last year, over double the next leading region, according to the 2015 Wine Sales Report by ShipCompliant.

The state was singled out in the report, for its increased number of direct sales that was helping accelerate demand for Pinot Noir wines across the country.

Oregon’s wine industry has been taking strides to earn a national reputation. Compared to Washington and California, Oregon produces a smaller quantity of wine and has few wineries.

Yet the state’s small, boutique wineries are turning towards the private market, relying on quality wine and tourism to make a name for themselves.

“It’s exciting news. The Oregon wine industry is a very small part of the national industry, so this increase is something we are happy to be a part of,” said Jana Mckamby, public affairs manager for the Oregon Winegrowers Association.

Direct Wine Sales

In 2014 Oregon increased the volume of direct shipments of cases of wine by 46 percent. The next leading region was Washington, with an 18.9 percent increase in volume of sales. Regions in California and the rest of the U.S. were all below 16 percent for increases in volume.

With more business, the value of Oregon wines also jumped. There was a 52.5 percent increase in the value of the state’s total shipments. The average cost of a bottle was $39.72, a 4.2 percent increase from 2013.

Most of Oregon’s wineries are small, with 60 to 75 percent producing 5,000 cases or less a year. Overall, 90 percent are family owned, according to Michelle Kaufmann, communications manager for the Oregon Wine Board.

For smaller operations, farming and commercial distribution is expensive. So many focus on selling directly to customers, through wine clubs and direct shipping.

“More direct sales—more revenue goes back to the winery,” Mckamby said. “It’s a very important part for small wineries.”

Commercial distribution is not only expensive, but can be exclusive towards wineries. There are few distributors who are highly qualified, and building a relationship can be difficult, according to Tom Danowski, executive director for the Oregon Winegrowers Association.

“It’s very hard for an Oregon winery to crack that,” Danowski said. “As a result, a number of wineries are working hard to develop wine clubs.”

Crafting Quality Wine

If wineries lean on direct sales for revenues, then they must build up a reputation for high quality wine.

“Quality is where we have to pour our time and energy and we are seeing returns,” Kaufmann said.

The leading wine magazine, Wine Spectator, released a list of 814 wines around the world with quality ratings of 90 points or more. From the list, 103 were from Oregon.

“A wine region with less than 1 percent of the world’s wine, yet over 12 percent of the highest rating wine global number—it means good things for Oregon,” Danowski said.

Wine has been creating economic returns for Oregon. The wine industry added $3.35 billion to the state’s economy in 2014, according to a report by Full Glass Research. Of that, $207.5 million came from wine-related tourism.

Tourists are a crucial part of the direct sales industry. Kaufmann said the Oregon Wine Board works with Travel Oregon to get the word out about small and family-owned businesses.

“So many people in California and Washington visit for tourism, and having a great wine experience all fuels direct sales to custumers,” Danowski said.

Almost half of Oregon’s direct sales went to California, Washington and Oregon.

Pinot Noir has long been known to be Oregon’s staple grape. With high demand for the wine across the country, the report said it was rare for a popular brand to see even more of a jump.

“[Demand for]Pinot has been rising consistently the last four years and continues to perform,” Sam Straka, direct product manager at ShipComplaint, who published the report. “It’s hard to find a lot of high-end Pinots in stores through national distributors. Oregon has a great fit for direct consumer sales.”