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When Will Washington Go National?

May 2014
by Jim Gordon

A stampede of vineyard deals confirms that Washington state has arrived as a wine region. Northwest correspondent Peter Mitham pulls together the recent mergers and acquisitions in Washington and Oregon in the Top Stories section on page 14. But anyone who has visited Woodinville, Wash., in recent years already knows that wineries have sprouted thicker than Starbucks locations due to the fertile influence of affluent consumers in the Seattle area who are thirsty for wine.

The local/regional demand has triggered the multiplication of wineries in the entire state to 689 today, according to Wines Vines Analytics, solidifying the state’s No. 2 position after California in number of wineries. The question, however, is when will Washington wine reach critical mass on the national level?

The easy answer is that Washington wine already has spilled out of the Northwest through the brands of Ste. Michelle Wine Estates, the largest wine company in the Northwest. But Ste. Michelle’s success begs the question of how and when wine shops and wine lists across the country will want to add Washington sections.

I consumed plenty of food for thought on this topic—as well as dozens of terrific wines—during a recent trip to Woodinville and Seattle before and during the big annual Taste Washington festival.

Woodinville, wow
Woodinville is an unlikely winery center. This small suburb (pop. 11,000) sits on the west side of the Cascade Mountains, where most of the state’s population resides, while the arid east side of the state is where the majority of the vines grow. Woodinville is 18 miles northeast of downtown Seattle and only five miles from Redmond, Wash., which is the home of Microsoft.

Chateau Ste. Michelle built its chateau-style winery and visitor center here in 1976, choosing to be close to its customers rather than close to its grape sources. The strategy paid off and eventually lured many others to cluster close by. Woodinville has grown from a handful of wineries in the 1990s to 78 in the 98072 ZIP code today, according to Wines Vines Analytics. The Woodinville Wine Country association counts 96 on its latest map, including many tasting rooms that are not production facilities.

It seemed like half of the wineries I visited were just setting up to host a wine club event with Microsoft employees or mopping up from an event the night before. One could substitute other Seattle area companies in that scenario such as Amazon, Starbucks, Boeing, Nike and Nordstrom. Woodinville is also a draw for winemakers. They can live in Seattle and enjoy its world-class amenities and commute 30 minutes to their jobs in the cellars.

Going national
With local demand so high, what would it take for Washington wineries to venture outside the area for more sales? From a pure economic standpoint, the supply of Washington wine (beyond that of Ste. Michelle Estates) will need to exceed its domestic demand. More vineyard acreage will be necessary to achieve this, and more acreage has been planted recently.

Washington vineyards have surpassed 50,000 acres, and several recent high-profile purchases of vineyard land indicate that the economics are there for expansion.

Washington wineries will need to make more high-quality wine at a low enough cost to sell it through the three-tier system and still make money. Wineries will need to develop or pay for expertise in national distribution. Columbia Winery, located in Woodinville, was purchased by E. & J. Gallo Winery of Modesto, Calif., in 2012, and plans to test this proposition in the next year by going national with a new lineup of Washington-grown varietals.

Finally, the Washington wine industry may have to coalesce around a more focused varietal or style identity for the state as whole, as California has with Cabernet Sauvignon and Chardonnay, and Oregon has with Pinot Noir. Washington wanted to mean Merlot 20 years ago. It came to mean Riesling, and it still does. It could mean Syrah, but U.S. consumers are fleeing from the varietal.

Instead, much of the talk I heard during this visit was about Cabernet Sauvignon, and 70% of the 226 wineries at Taste Washington chose to pour Cabernet Sauvignon or Bordeaux varietal blends.

But does the U.S. wine consumer need another source of Cabernet? The flip answer is no, haven’t you heard of Napa? But Cabernet consumption is continuing its long, steady growth in popularity across the country. It wouldn’t be a brash decision if Washington chooses to go this way.

Only time will tell. One thing that’s certain: Washington wineries and vineyards are exciting places to be working in 2014, since opportunities abound.

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