The Times, They Are a-Changin’

The 2013 vineyard land rush in Willamette Valley

Yes, that Bob Dylan song is still relevant today after almost 50 years since its release. The jury is still out and will be for some time, on how the vineyard land rush in Willamette Valley will affect the wine industry and culture here. I’m hopeful that large corporate players will acclimate to our collaborative way of doing things. I have a vested interest in that as I’ve been making a living for over 5 years now in Willamette Valley and like things the way they are. I have some concerns longer term however.

I can’t help but wonder about the optimism expressed by many in our community about all of the outside investment we’re experiencing in 2013. I want to believe that things won’t change. Vineyard and Winery owners said the same thing 40 years ago in Napa Valley. Yes, this is certainly a confirmation of the legacy that has been built by many pioneers and folks committed to growing grapes and producing wine in Oregon. Yet, Oregon vineyard land is still a value play, and an opportunity for large producers to add high priced niche brands to their portfolios.

I decided to seek the studied opinions of wine industry people that I know and respect. I tapped Alan Goldfarb for his view from Napa Valley (full disclosure: He’s my partner in our media consultancy business). Alan is a 25 year wine journalist and publicist who covered Napa Valley for the St. Helena Star and AppellationAmerican.com amongst many others. I also reached out to several local wine industry folks for their thoughts and opinions. You’ll find some areas of concern and lots of reasons for hope. Keep your eyes on this dynamic region, and fingers crossed for the best. Bob Dylan offers lyrical advice that may be relevant for all of us in the wine industry here. “You better start swimming or you’ll sink like a stone, because times, they are a-changin’”.

One perspective from Napa Valley

“It’s an old story” say Alan Goldfarb, “I’m guessing that 75% of Napa winery brands are corporate owned and of those, 25% are internationally owned. That leaves 25% that are true family wineries. Is Oregon headed down this path? In Napa, prices were driven up over time – for property, grapes, wine and labor. Locals say it’s not a small town any longer. As Napa moved toward mono-culture (less Ag diversity), small farmers were put out of business, there were adverse impacts to the land; including singular types of bugs and disease”.

Goldfarb says, “One of the reasons why many of the wines seem the same in Napa is that terroir is being mitigated by what is happening in the cellar. Can this happen, and how long before it does in Willamette Valley? It may take a generation, but it’s beginning to happen. This is a manifestation of the success of Willamette Valley, and we all know that money and the political clout chases success. That said, what is there to be done about it?”

Opinions abound from local growers and winemakers

Note – the proceeding is a compilation of winery owners and growers in Willamette Valley that expressed opinions and agreed to be quoted on the subject (full disclosure: several of the folks quoted here are clients of my wine marketing and/or PR services businesses).

David Adelsheim, Adelsheim Vineyard

Regarding the Domain Drouhin venture into Oregon in the late 1980’s – “It raised the bar for the wineries, it raised the bar for other looking in at what Oregon was doing, it gave gravitas, seriousness, to the industry, which up until that time had been a bunch of people who had been underfinanced”.

Ken Wright, Ken Wright Cellars

“This is another incredible validation of the quality of Pinot Noir coming from our region.  The fact that Jadot, a venerable producer from Burgundy, chose Oregon as their first purchase outside of their homeland says everything about their respect for our wine. As we did with Domaine Drouhin, they will be welcomed with open arms and embraced in our community”.

Don Hagge, Vidon Vineyard

“Corporate wine investors need large tracts of land, to yield enough wine to satisfy the requirements of large retail outlets, and to make an impact on their bottom line. Kendall Jackson went to South Willamette Valley for that reason – three 500 acre parcels. In North Willamette the subdivisions and parcels are much smaller and have many individual owners so they will be harder to assimilate. The land is also more expensive for that reason and attractive to life style investors”.

John Grochau, Grochau Cellars

“I think it is a good thing.  While we have made a lot of headway in the last decade, we are still a ‘niche region’. These new investors have large distribution networks and deep pockets to push Oregon Pinot Noir further into the consumer’s mind”.

“That said, this will make it harder on wineries that are my size (less than 5,000 cases). A lot of vineyard land has been purchased, land that has supplied many wineries with grapes. Pinot Noir and Pinot Gris have become harder to find and the prices are going up. All of this puts more pressure on small businesses, as we run on thinner margins and don’t have buying power. Relationships with growers are more crucial than ever in this type of business climate.  I count myself lucky to have been working with many of my growers for 5-10 years”.

Tom Feller, Artisanal Cellars

“You know this is the classic question. As we become more successful and more highly regarded as a wine growing/making region, more outside groups enter the market.  This both grows our market and leads to some producers being forced out, both small and large”.

“In some ways I think the bigger question is, what is the future of the wine industry in general? It seems we are seeing more big producers acquiring wineries in wide number of global regions – Chateau Ste. Michelle or the Jackson Family for example. Couple this with the national distribution market being controlled by two major companies and I think this outside investment could make it more difficult for small producers to compete in the national market. The issue of wine market consolidation and shrinking of distribution channel is happening whether new groups enter Oregon or not”.

“But on the upside, I believe that with this increase in national visibility, these companies can help the region in terms of tourism. I think for a small producer, building a more direct relationship with consumers is the key to our long term success. We are still a very tiny part of the national wine production and we need to grow to be more present in wine consumer’s minds. If these investors leverage the uniqueness and quality of the place then it can only help the region’s visibility nationally and globally in the long run”.

 Wayne Bailey, Youngberg Hill Vineyards

“In summary, I would say it will put us on the map. That may seem like a strange comment, but it continues to surprise even me how few people across the country and across the world know that we have a thriving wine industry in Oregon, let alone world class Pinot Noir from the Willamette Valley. Even a wine blogger like Snooth, clearly feels the NW does not produce wines worth seeking. And because we produce such a small amount of wine, exposure to Oregon Pinot Noir is still quite limited.

Therefore, the investment of Jackson Family Fine Wines and Louis Jadot (in addition to Chateau St. Michelle and DDO) will bring much need awareness and marketing clout to our wine community. In addition, a producer like Jackson will bring a different scale of production that will get more Willamette Valley Pinot Noir to the masses, bringing much needed exposure”.

“Will it affect the culture? It won’t change the mindset of the hundreds of us that are small family farmers, considering each other as neighbors, and working together to further our cause. Hopefully, the new players will acclimate to the culture of grape growing and production here and, at the same time, change our myopic marketing mentality”.

Mark Huff, Stag Hollow Vineyard

“Size really does matter in this case. Oregon wine industry has over 400 wine producers, and a majority are small, and many are thriving.  Unlike many other U.S. industries, consumers seek out small family run winery operations because they still have direct access and can connect with us, hear our stories. As the Oregon wine industry continues to grow, there will be a natural evolution to larger and larger operations dominating the face of the Oregon wine industry and its marketing arm.  As a result, the share of the marketing spirit that small producers bring to brand “Oregon” will be at-risk of slowly shrinking away unless a unified effort is put forth to develop specific long-term marketing strategies directed at small and even moderate size family producers. Hopefully the unique community culture we’ve built in the Oregon wine industry will survive.”

Kevin Johnson, DION Vineyard

“Well, you should probably get someone who buys Southern Oregon fruit on record, but, in a nutshell, Southern Oregon fruit should costs less – ton for ton – than Willamette Valley fruit.  Southern Oregon land prices are generally cheaper and the sites are generally warmer, which means they can ripen more fruit.  Smaller numerator, bigger denominator. Their transportation costs will be somewhat higher – but not so much as to overcome the cost/ton advantage over the Willamette Valley”.

“To compete with that difference in fixed costs – i.e. mortgages – Willamette Valley growers will likely try to find a way to increase the prices paid for their fruit. Those of us in the sub-AVA’s – Chehalem Mountains, Dundee Hills, etc., will probably continue to emphasize their AVA’s, a shift that is already underway. For all the growers outside the sub-AVA’s however, the only differentiation available is the Willamette Valley AVA.  So I would expect an effort to emphasize the difference that those growing regions have and new AVA’s as well”.

“This works in France – Burgundy to Cote de Nuit to Vosne-Romanee to La Tache – as an example – of price stepping up with differentiation. I’m not sure how well it’s going to work for Oregon – yet”.

50 Year History of Oregon Wine

Kudos to Katherine Cole (again)! Even if you don’t need to brush up on the history of Oregon Wine, this Oregonian special article is a great and concise review hitting most high points over the last 50 years: http://topics.oregonlive.com/tag/history/index.html

I found it particularly heartwarming having just seen many of the luminaries Katherine mentions in the article at Salud! this weekend. The pioneers and leaders  in Oregon Wine have a history of taking care of each other and the environment.

Part of the evenings entertainment at the Salud! event was a special video production highlighting the importance of the program. Paraphrasing a quote from a vineyard worker regarding the impact of healthcare for seasonal vineyard workers as provided by the Salud! program: ‘The Salud! program takes care of me and my family; we take special care of the vines’. Nice!

Winery PR and Social Media

A wine writer friend of mine Alan Goldfarb is doing a piece for WBM on the ‘Changing Landscape of PR Campaigns. He interviewed Steve Heimoff who published this article about PR strategy:  PR still vital after all these years

I agree with the premise entirely, but since I work with small production wineries and PR Campaigns are expensive, I offered Alan a different perspective:

“Engaging in social media is almost like having your own PR department. You are initiating a conversation about your winery and presenting your brand to the public, although for small wineries this can be a little scary due to perceived loss of control. Traditional media approaches like press releases, advertizing, and submitting wines for review are still important, but for small wineries the potential new audience reach and low cost of entry around social media are very compelling”.

 

Connecting with Consumers

I think we all know that social media is not going away. If you are currently involved in social media marketing, you are a leader and early adopter. Most small wineries in the Willamette Valley know they need to have a social media plan and a program but just can’t find the time or justify the effort. Don’t we all survive on ‘word of mouth’ marketing? Think of social media as conversational media. It is one and the same. You are sharing information about your winery, and creating a conversation where the consumers are and how they want to communicate. Here are answers to the top 3 questions I get from winemaker/owners on this topic:

1.        Will it help me sell more wine? No, it will not … directly. However, it will help drive consumers to your website or tasting room where you can transact Consumer sales

2.       What is it going to cost me? Virtually nothing but your time. It’s like having your own media department! The most important thing to remember is that it does take time … social media is not an immediate return on investment opportunity.

3.       Where will I find the time? Make the commitment, keep it simple, carve out 1 hour/day, and use social media tools like TweetDeck and HootSuite to your advantage; there are countless resources via the web. By the way, the mobile applications for these sites are very easy to use, so you don’t need to be tethered to your desktop to be engaged.

You may already have setup the basic platforms such as Facebook, Twitter, LinkedIn and a winery blog. Be sure you understand the rules, etiquette, appropriate content and frequency for using these tools. An important rule for engaging is that for every one self-mention, talk about others four times (80/20 rule).  Promote everyone else and you will benefit greatly—that’s what makes this type of engagement “social.” Have a marketing plan and be consistent. There is plenty of talent right here in the Chehalem Winemakers Association. Reach out, and get the conversation started!