As summer turned to autumn in 2022, many Oregon wine growers were a bit antsy. The previous two years had been challenging from a production standpoint, and frost in the spring had put everybody on edge. However, the worrying was largely for naught, as vintners are reporting a quality harvest with varying but generally high yield levels. 

“We had some real challenges the past two years,” says Jim Bernau, founder and CEO of Willamette Valley Vineyards. “In 2020 there was the smoke effect on many growers, and that dramatically cut into the total volumes. Then in 2021 we had a fairly short harvest. In 2022, the early frost had us worried.” And while a late bloom and a late growing season was risky, Bernau notes that the cold and rain held off, so his winery ended up with a 23% increase in harvest yield. 

“It turned out to be a great vintage,” agrees Amy Prosenjak, president of Oregon business for Ste. Michelle Wine Estates. “All the winemakers were scared and we kept having to remind ourselves that we’re in business with Mother Nature and just be patient. It turned out that the set really came back and the quality was high; everybody’s feeling pretty good across the industry.” 

The successful harvest is the backdrop to what continues to be a strong demand trend for Oregon wines. The small volume but high value segment of the U.S. wine industry has outperformed overall wine in 12 of the past 13 years, including 2022, Impact Databank estimates. Oregon wines have been riding that wave of premiumization in an environment that has increasingly been favorable to wines priced above $15 a bottle. 

Pinot Noir remains Oregon’s superstar varietal, accounting for more than 60% of the annual grape crush and an even higher percentage of volume in some of the state’s most prominent brands. While Oregon Pinot Noir is world-renowned, other grape varietals are making headway from a much lower base. “We’re noticing a sharp interest in white wines from Oregon,” Bernau says. “There’s a higher interest in Chardonnay from the Willamette Valley, and keen interest in Sauvignon Blanc. The problem is supply.” 

Prosenjak also points to growing Chardonnay demand. While Pinot Noir might be growing at a 7%-10% rate, she says, Chardonnay is growing at 20%-30%. “People are realizing that Chardonnay grown in Oregon is actually really good,” she adds.

Oregon Outperforms

Led by Pinot Noir, Oregon wines continued to outperform the overall wine industry in 2022. Last year, despite the seven leading brands combining for a 0.5% decrease to 1.7 million cases, overall sales increased an estimated 3% to 5.3 million cases—an all-time high for the sector—according to Impact Databank, continuing a long stream of production gains as Oregon wines broaden their appeal to U.S. consumers. 

The premium nature and the consumer move toward higher priced wines was evident in the value data. In 2021, the value of Oregon wine grew more than 20%, far outpacing the volume growth. Total wine value reached nearly $900 million in 2022, up from just $470.7 million in 2015, according to Impact Databank. The premiumization trend has thus far stayed strong, says Ryan Harms, founder of Union Wine Co. The company’s Underwood brand ($14 a 750-ml.) was the largest Oregon wine in 2021 at 385,000 9-liter cases, but fell to No.-2 in 2022. 

After growing vibrantly during the latter half of the 2010s, Harms says Underwood faltered in 2022, with volume down in the high single digits. “Like lots of companies, we took a price increase that was phased and not one moment in time,” he says. “We started increasing price at the end of 2021 and in the beginning of 2022, all driven by what’s been happening with increased costs in packaging materials, labor, etc. While we know some brands surged even with a price increase, Underwood saw sales slow a little bit.” Harms also says the quality of the smoke-impacted 2020 vintage may have been a factor with consumers as well. 

Other Oregon brands in the Union Wine portfolio fared better. “When you look to brands that aren’t Underwood, there’s some green and really nice business,” Harms says. “With premiumization taking place, Kings Ridge ($19 a 750-ml.) is going to be up a solid 6%-7%, We started increasing price and it’s growing nicely. It’s not a huge brand for us but it’s showing some healthy growth.” 

Harms also co-owns Amity Vineyards with his brother, Eric. “Amity is going to be up somewhere between 8% and 9%,” he says. “Again these are smaller brands but with high price points and it’s nice to see some growth.” Amity Pinot Noir retails for $25 a 750-ml. 

After Underwood, other leading Oregon wine brands had mixed performances in 2022. A to Z Wineworks gained 1.5% to 380,000 cases, followed by Ste. Michelle Wine Estates’ Erath, which fell 1.5% to 320,000 cases in 2022. The two brands now both reside in the Ste. Michelle portfolio after last year’s purchase of A to Z.  “There are two pieces of integration going on,” says Prosenjak. “We’re rolling A to Z and it’s sister brand, Rex Hill, up to the Ste. Michelle company, then we’re also creating this infrastructure where Erath, A to Z, and Rex Hill will all reside. We have separate facilities, of course.” 

Prosenjak adds that the company is still strategizing on marketing plans for the two major brands. “We believe that strength is in the numbers,” she says. “As we look at this as a whole, we feel we have a lot of value to add.” A to Z is being merged into the Ste. Michelle distribution network, requiring moves in 32 markets, she notes.

The Willamette brand from Willamette Valley Vineyards ranked fourth among Oregon wines in 2022 with volume at 200,000 cases, a 2% decline, according to Impact Databank. Bernau says 2022 continued strong and heavy recent investment is expected to pay off in the coming years. “We raised over $40 million in capital from wine enthusiasts over the past five to six years and we’ve essentially deployed that in the last six months,” he says. Bernau says they’ve “added significantly more winemaking capacity at the winery,” opened a sparkling wine facility, and opened three new restaurants and tasting rooms. 

Acrobat, from Foley Family Wines, rose 2.8% to 158,000 cases in 2021, according to Impact Databank. Foley president Shawn Schiffer says both Acrobat and sister brand Four Graces have been challenged by supply issues. “The fires in 2020 essentially knocked out an entire vintage of Four Graces Pinot Noir for us, and then Acrobat Pinot Gris ,” he says, noting that Four Graces, at least, is back to full supply, but the loss really slowed down the trajectory of Acrobat. “We’ve been trying to get a production facility up in Oregon as well, but we’ve run into some issues. But outside of the manufacturing efficiency perspective, things couldn’t be going better for us in Oregon.” 

At King Estate Winery, COO and winemaker Brent Stone notes that the brand remained in positive territory against the rest of Oregon’s declines. King Estate had a strong performance in 2022, with volume growing 4% to 156,000 cases.  

Elouan, from Copper Cane Wines & Provisions, also had a positive year in 2021. Owner Joe Wagner says Elouan has come back strong in the on-premise, which is contributing to the positive momentum. “We have a very healthy on-premise business,” Wagner says. “We invest a lot into our by-the-glass program; we’re running somewhere between a 40% and 45% on-premise share throughout the year, and that’s predominantly by the glass. There’s a lot of exposure to the wine,” driving consumer trial. 

Stone says King Estate is also regaining its footing in restaurants. “Our on-premise business has grown by 8% over the past year,” he says. “That’s consumers continuing to return to pre-pandemic behavior. Over the next year we’re anticipating on-premise growth, getting closer to 35%, which is closer to where King Estate has historically been in the on-premise.” 

However, at the same time, the off-premise boom due to the pandemic is waning. “You’re not seeing the growth from the pantry-loading days of the pandemic, where all people had to do was go shopping and then go home and drink,” says Bernau. 

Bernau also warns that tasting room visitations are down sharply across the entire wine industry, a phenomenon that began in the second half of 2022. The direct-to-consumer channel is being negatively impacted, he says, although others say their DTC sales remain strong.

Economic Uncertainty

Oregon wines have long been known for their premium pricing. Very few brands compete in the under-$12 sector, and most are firmly entrenched in the $15-$25 range, with some higher. That’s translated into high value despite relatively low volume numbers. 

Most wineries have increased prices in the past couple years to offset the rising cost of labor, grapes, and other materials. Price hikes haven’t historically been a problem for Oregon producers, but as economic uncertainty continues in 2023, some wonder how long the premiumization trend will last. “I don’t know what’s going to happen the first half of this year, but we’re looking at it with some concern,” says Wagner. “But we’re continuing to see that the consumer is trading up, predominantly to between $17 and $50. People are drinking a little less wine but drinking much better wine. We have not seen signs of that really softening.” 

Wagner is betting on continued strength at the higher end and is launching a Reserve Elouan label this year. “We’re looking at the end of the third quarter,” he says. “It’s going to be a vineyard-designated Pinot Noir priced somewhere around $40 a 750-ml.” 

Looking forward, it might be a case of less, but better. “People are getting sensitive about spending,” Bernau says. “They still drink wine, they just take it out of their cellar. We’ve seen them draw down what they have at home. Then they forgo some new wine purchases and pull in their horns.” 

For Union Wine Co., a bit of trading down might be welcome. “We as a company are well positioned at sub-$20 retail,” Harms says. “The amount of wine we sell at sub-$15 is significant to our business. So if consumers are looking at trading down, we represent a great value for Oregon Pinot.” 

When it comes down to it, the sector may not see much of an upheaval as a result of an economic downturn. Wagner points out, for example, that an Oregon wine like Elouan delivers on multiple levels. “In these economic times, and whenever there’s some turbulence out there, people are looking for something they can rely upon,” he says. “At $19-$20 a bottle, it delivers every bit of luxury that’s expected.”