Fruit of the Vine: Oregon’s Grape and Wine IndustrySeptember 12, 2016
As Oregon businesses struggled during the Great Recession (2007-2009) and the years to follow, the state's grape and wine industry flourished. In 2007, there were 792 vineyards and 351 permitted or bonded wineries in the state; by 2009, that number had grown to 835 vineyards and 377 wineries. This growth has accelerated during the post-recessionary period, and by 2015 there were 1,052 vineyards and 702 Oregon wineries, of which 590 were permitted or bonded. Wine grapes ranked ninth on Oregon's top 20 commodities list for 2015, valued at $147.6 million.
A Time-Honored Legacy
Oregon's grape growing and wine industry has its roots in the Old World. Fossil evidence of vines, discovered in the Black Sea region, dates back some 60-million years; evidence of wine making dates from around 4100 BC. Commercial viticulture and enology are attributed to the ancient Romans.
Oregon's participation in this time-honored legacy of cultivating grapes and making wine can be traced to early settlers who planted the first vines in 1847. The state's first recorded winery was established in today's Rogue Valley in the 1850s. The following years saw new growth extending from southern Oregon, through the Umpqua Valley and north into the Willamette Valley. Oregon's wine-making industry was nipped at the bud in the early 1900s due to growing competition from California's wine industry, as well as the influence of the conservative Temperance Movement. Passage of the 18th Amendment (Prohibition) which outlawed the manufacture, sale, and transportation of intoxicating liquors (1920-1933), coincided with a period of economic highs as well as the lows of the Great Depression. Oregon's wine industry lay dormant for years afterwards.
The modern era of Oregon's grape and wine industry began in the 1960s when vines were again planted in southern Oregon's Umpqua Valley. Other pioneering vintners traveled north and planted pinot noir grapes on Willamette Valley hillsides; today, the area is considered the epicenter of winemaking in the state. Many Oregon wineries operate their own vineyards and are often family owned and operated. Oregon's industry has a national reputation for unusually high average returns per ton and higher than average revenue per case. Oregon's sustainable agricultural practices are an integral part of many operations as is the internationally recognized "green" certification of qualifying wine production practices.
The impact of the industry has been felt and fostered on various levels. In 1973, Oregon's legislature passed a landmark land-use law. Hillsides previously zoned for residential development were set aside as agricultural land, perfect for vineyards. By the late 1970s, Oregon Pinot Noir was beating out top wines from France at major wine-tasting events, marking the entry of Oregon wines on the world stage.
Vines from the Good Earth
Wine grape vineyard development entails many considerations. Depending on the vineyard's location, ground preparation can be time-consuming, labor-intensive, and expensive. Soil scientists, vineyard designers and their construction crews, irrigation experts, grapevine nurseries, horticultural specialists, and agricultural laborers all play an active role in making new vineyards operational. Once planted, vines take two to four years to bear a commercial crop.
Between 1986 and 2015, Oregon saw a 488 percent increase in the number of vineyards and a 629 percent increase in the number of acres planted in wine grapes. Investment in wine grape cultivation, especially just prior to the Great Recession of 2007 to 2009, can be seen in the surge in acres planted – a 37 percent increase between 2005 and 2008. This vineyard expansion corresponded with a 17 percent increase in the number of wineries.
Oregon's vineyards are found in many places; they may cover large expanses of rolling hillsides or be tucked away in sunny, sheltered valleys. There have traditionally been five recognized growing regions in Oregon. Of these regions, in 2015, the expansive North Willamette Valley was home to 58 percent of the state's vineyards and accounted for 61 percent of the 28,034 acres planted. Further to the south, the smaller Umpqua Valley – site of the newly designated Elkton Oregon AVA (2013) – hosted 7 percent of Oregon's vineyards and accounted for 10 percent of the acres planted. Between 2010 and 2015, the number of Umpqua Valley vineyards increased by 33 percent, and the number of acres planted increased 241 percent – making this the fastest growing region in Oregon. Statewide, pinot noir continues to be the leading variety followed by pinot gris and chardonnay. Wine grape production has increased as the acres planted and harvested have grown over the years. However, as with all other agricultural products, the yield per acre is impacted by weather, pests, and other, often uncontrollable, factors.
Turning Grapes into Wine – From the Field to the Bottle
In the 2015, Oregon Vineyard and Winery Census Report, produced by the Southern Oregon Research Center (SOURCE), there were 1,052 vineyards across the state of Oregon. The Oregon Employment Department (OED) records counted 87 firms. The discrepancy between the SOURCE and OED data is primarily due to the large number of vineyards that are not covered by the Unemployment Insurance (UI) program, usually because they are too small to meet required payroll thresholds, use mostly contracted farm labor, or almost exclusively employ family members. For those 87 reporting vineyards, OED records showed an annual average employment of 850 with an annual average wage of $27,750. It should be noted that given the seasonal nature of growing, tending, and harvesting wine grapes, growers often use contract and migratory workers, who are not reported under the UI system. Thus, actual vineyard employment could be much higher.
Wineries differ from vineyards in that their primary function is the manufacture of wine. In 1970, there were five permitted or bonded wineries in Oregon and 35 vineyard acres. By August 2016, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) reported 590 permitted wineries in Oregon and 28,034 planted acres. The TTB is the federal agency tasked with enforcing laws relating to the collection of taxes as well as labeling, advertising, and marketing alcoholic beverages.
As with vineyard employment data, OED records reflect only those enterprises participating in the UI program. In 2001, OED reported 65 wineries; by 2015, that number had increased to 271 – an increase of roughly 14 wineries per year. Between 2007 and 2009, the depths of the Great Recession, the number of reporting wineries increased from 144 to 170. Employment also increased during this period, although numbers then dipped slightly over the next few years. The industry's employment shows a distinct seasonal pattern. The most labor-intensive portion of production takes place at roughly the same time of year as the harvest, October. Total payroll in Oregon's wineries in 2015 was $91.2 million with an annual average wage of $31,732 (like vineyards, this includes seasonal and part-time workers).
Into the Stream of Commerce
In addition to direct employment in Oregon's vineyards and wineries, other businesses are engaged in getting wine grapes from the field and into the bottles. A 2015 report from Full Glass Research discusses the employment and wages in these other (indirect) industries: grapevine nurseries, farm equipment and suppliers, vineyard and winery chemical and pesticide suppliers, stainless steel tank producers, cooperage and barrel-related services, bottling and filtration services, glass producers, wine label designers and printers, and wine-testing laboratories, to name but a few.
Other allied industries include those in the distribution chain (wholesalers, brokers, importers); retail sales; trucking, transportation, and warehousing; banking, consulting, accounting, and insurance; and tourism-related. In January 2015, Full Glass Research reported indirect employment estimates (2013) in excess of 17,000 jobs and $527 million in wages.
In 2015, OED records counted 25 establishments in the "wine and spirit merchant wholesalers" industry, the majority of which are wine wholesalers. These businesses employed 340 people and had an annual payroll of nearly $15.8 million. Annual average wages are higher in wine wholesaling compared with the production side of the industry because there is more full-time and year-round work. The annual average wage for 2015 was $46,311.
Wine-related tourism includes travel agents, tour operators, restaurants, hotels, and other businesses in Oregon. Full Glass Research estimated that in 2013, Oregon wine-related tourism employed 2,620, paid $67.8 million in wages, and generated $279.6 million in total revenue. These figures do not include tasting room revenues but they do cover hotel, food, entertainment, transportation, retail, and other business generated by visitors to Oregon wineries.
Growing the Future
Oregon's wine grape cultivation and wine-making enterprises are well-positioned for future growth. The Southern Oregon Wine Institute, established at Umpqua Community College in 2008, is the first viticulture and enology program in Oregon outside the Willamette Valley. A new state-of-the-art facility includes a student-cultivated vineyard, commercial-scale winemaking facility, private testing facility designed to serve all regional winemakers, wine incubator to assist entrepreneurs in developing and marketing their wineries, and an event center. Educational programs through the college include a one-year certificate in Viticulture and a two-year degree in Enology. For those interested in positions in wine sales and distribution, there is also a Wine Marketing Assistant Pathway Certificate.
Further to the north and deep within the Willamette Valley, the Northwest Viticulture Center operates at Chemeketa Community College. In addition to coursework for the Vineyard Operations Certificate, there are two-year degrees in Vineyard Management, Winemaking, and Wine Marketing. The latter program prepares students for such occupations as tasting room sales manager, wine steward, wine buyer or broker, wine marketing or sales manager, or winery public relations manager.
Oregon State University, one of five universities in the nation with programs in both grape and wine production sciences, has been instrumental in the development of the Oregon Wine Research Institute. This statewide institute is a partnership between the Oregon wine industry and Oregon State University and promotes the multidisciplinary collaboration of research and outreach specialists. Undergraduate programs in viticulture and enology are administered by the departments of Horticulture, and Food Science and Technology; the three major areas of focus are viticulture, enology, and business. Graduate degree programs are also available.
In less than 30 years, Oregon's grape and wine industry has gone from 179 vineyards to 1,052, added over 24,000 acres planted in wine grape, and seen the addition of more than 870 new wineries. This growing industry is leaving an ever-expanding footprint across the hills, valleys, and marketplaces of Oregon.