Oregon wine production, sales broke records in 2011

Oregon wine production hit new heights in 2011, with case sales reaching 2.2 million.

It was the first time the industry had surpassed 2 million cases, including bulk wine, according to a new report.

The state's $2.7 billion wine industry outpaced much of the rest of the country, the Oregon Wine Board said today in releasing its 2011 Census conducted and produced by Southern Oregon University's Southern Oregon Research Center.

"The last couple of years have provided just excellent news for the Oregon wine industry," said Michael Donovan of RoxyAnn Winery and chairman of Oregon Wine Board. "Along with our economic impact study of 2010, showing that our industry has risen from $1.4 billion to $2.7 billion, this is what we want to see. We've had a significant impact during the recession, being a sector of agriculture that's continuing to grow."

Oregon's 463 wineries recorded 9 percent growth both in volume and sales revenue, making 2011 the biggest year in the industry's 50-year history. The 2011 results benefited from a record harvest of 42,033 tons of grapes.

"The overall production was higher than we were expecting, but it was not unusual, considering grape production was up last year, that cases would be up," said Michelle Kaufmann, a spokesperson for the Oregon Wine Board. "We've been on a continual upward trajectory with a couple of down moments."

Nationally, wine sales grew at a 2 percent rate, according to Nielsen Co. research. Oregon's production was significantly higher than the 5.6 percent growth posted by wineries in California, the nation's largest wine-producing state.

While the census showed Oregon wine exports were flat in 2011, there was strong growth in Asian markets. Sales to Japan and other Asian countries represented 36 percent of total exports, up from 28 percent in 2010. Sales in Japan, one of OWB's targeted export markets, grew 11 percent.

Custom crush production rose 65 percent from the previous year, reinforcing the diversity and accessibility of the industry to new wineries. Linda Donovan, winemaker at 3-year-old Pallet Wine Co. in Medford, said her business experienced similar rapid growth in 2011.

During the year, sales directly to consumer accounted for 21 percent of total sales, while sales from tasting rooms grew 5 percent and made up 14 percent of overall revenue.

Oregon is still the largest single domestic market for Oregon wine with 20 percent of the total sales through distribution sold within the state. However, this does not include direct sales to Oregon residents through tasting rooms and other direct means such as wine clubs.

"We're clearly finding new markets," Donovan said. "The issue for Southern Oregon wineries has always been that they have not stepped up to take advantage of even statewide distribution as well as national distribution or export. Wineries making above 8,000 to 10,000 cases are not distributed much more out of state."

The number of wineries grew by 10 percent over the previous year.

— Greg Stiles

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