Getting Past Half-Full: Southern Oregon’s Wine Industry Looks Out-of-State for Growth
It is a simple economic reality: Wine-drinkers in Ashland and Grants Pass can only consume so many glasses of Quady North Syrah or Troon’s Riesling.
Although the wine industry in southern Oregon has been growing in numbers of vineyards and production—and steadily increasing the number of visitors to the region—to truly grow the industry will require consumers outside the region to start buying Rogue Valley and Applegate Valley wines as a matter of habit.
Towards that goal, data from the past decade is certainly encouraging: Tourism to Oregon has steadily increased every year, and wine-tasting is the third top most popular reason for that growth (after historical attractions and cultural trips, but still scoring a respectable 11 percent of tourists reportedly visiting Oregon for wine-tasting). Moreover, and keenly important for the growth of the wine industry, once tourists return home, they often buy reminders of something they “discovered” while in the state. Linea Gagliano, Director of Global Communications at Travel Oregon, references a study that found “more than 50 percent of visitors who get a taste of Oregon when they vacation in the state seek out Oregon products once they return home.” Specifically, she adds, “beer and wine topped the list.”
Yet, the equation for success isn’t as simple as demand finds supply: A wine-drinker in Santa Fe, needs to have a way to buy a bottle from the Rogue Valley once she is home, and that ability must navigate a complicated web of demand and distribution—a task that individual vineyards from southern Oregon have begun to do. A Jacksonville-based vineyard like Quady North has built distribution in 10 states, plus importers in Germany, Denmark, Sweden, the Netherlands, Hong Kong and Aruba; and, adds owner Herb Quady, the Syrah and Pistoleta are carried in Costco in Oregon.
But even once the wines are out there, getting them purchased requires a certain sophistication, or at least knowledge, from potential wine drinkers outside the state; that is, they cannot simply buy a bottle of Pinot Noir from Oregon, but to benefit the Rogue Valley, the buyer needs to know the specific vineyards—and, currently, the Rogue Valley still lags the popularity of Willamette Valley and Columbia Gorge.
Certainly that is changing, with glowing reviews of the region in national publications like Wine Enthusiast and Forbes. Even so, it is surprising to learn that the Columbia Gorge, with its marquee names and national reputation, only produces roughly half what the Rogue Valley does (9,716 tons of grapes produced versus 5,215 tons, and 5,466 tons crushed versus 2,283 tons).
To provide some more insight about how the wine industry can find those out-of-state customers and bring revenue flow back to southern Oregon, the Messenger caught up with Chad Day, owner and Manager for RoxyAnn, a leading winery in the region and one that is staking a reasonable portion of its sales (20 percent) outside the region.
Rogue Valley Messenger: What are the challenges for selling wine outside the region?
Chad Day: Awareness. People are slowly being educated about the Rogue Valley AVA, but it is difficult when people in our own state don’t understand where the Rogue Valley is. I have had many people in Portland ask me if the Rogue Valley was an hour or so past Eugene. I have to explain to them that the Rogue Valley is three hours past Eugene, and then there is a surprise in their eyes as they realize how big this state actually is. As someone that lives in Southern Oregon, we drive to Portland all the time, but the opposite isn’t necessarily true.
Education. Once the customer is aware of the Rogue Valley AVA, the next step is educating them that Oregon produces more than just Pinot Noir and Chardonnay.
Distribution. There are only 700 or so distributors nationwide and there is something like 5000 different wine brands. Gaining distribution in new markets is tough, as we need the distributor more then they need us. Getting a distributor is only the beginning. Then you have to manage the distributor to push your product to their markets and this is typically done by incentivizing the sales people and upper management of the distributors.
RVM: While gaining in popularity, Southern Oregon—the Rogue Valley and Applegate—are still not as well-known as the Columbia River Valley and Willamette Valley. How does that affect the ability to market and sell nationwide? Is that a factor? How do you overcome that?
CD: In order to get into new markets, I think it is currently important that we produce a Pinot and Chardonnay as that what Oregon is known for. Once we get our foot in the door, then we can show them what we do really well.
RVM: How do you establish markets outside the region? Is this from tourists coming into the area and then going home and requesting the wine? Is it from distributors? Or, do you do some of the “networking” yourself?
CD: We establish new markets through networking. I currently have hired a firm that has 12 smaller to midsize (10,000 to 20,000 case wineries) that they manage. The firm has sales people with feet on the ground in different markets throughout the US. The firm also helps manage our current distributors and sets sales expectations for those distributors. The saying goes, “You hire people smarter than you.” That is exactly what this firm is, they are smarter than me at managing and growing distribution for individual brands at the cost of about one salaried individual annually.
RVM: Part of the charm about wine is visiting and knowing where it came from. What is lost in the experience? How do you “export” that experience? Or, is something lost in the “translation”?
CD: The consumer’s experience while visiting each individual winery is definitely unique and difficult to replicate. However, I have found that the face-to-face interaction with a wine maker or owner is just as memorable as visiting the winery itself. This goes for the distributors sales force as well. They like brands to come to their sales meetings and have the owner or winemaker tell the story about the brand. Then, as an owner or winemaker, we spend a few days on the road with one or two sales people going to their accounts and talking about our story.