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Oregon Wines Expand Reach

As sales figures escalate statewide, a popular gift basket company is contracting for its own wine label

by Peter Mitham
wine grape vine cordon
Gift basket retailer Harry and David is now selling wine under its own label and hopes to reach 5,000 cases in 2013. Photo by Steve Johnson
Medford, Ore.—While the Oregon wine industry toasted the news the state’s wineries shipped more than 2 million cases of wine last year, the staff at Harry & David Holdings Inc. were packing gift baskets with a line of wines that promise to further boost shipments.

In business since 1934 and based in the southern Oregon city of Medford, Harry and David sells gift baskets filled with locally produced fruit and snacks. Wine from Southern Oregon will now be part of the mix, through an arrangement with Medford vintner Pallet Wine Co. Pallet winemaker Linda Donovan is making the wine for Harry and David, which is bottling it under its own name and license.

“We’ve been offering other labels, but we decided it was time for us to offer our own label, from an Oregon-based company,” Pete Kratz, executive vice president of operations for Harry and David, told Wines & Vines this week, the company’s busiest of the year. “Our roots are from Oregon, with our pears....So it was a natural fit for us.”

Harry and David has long offered a selection Northwest wines, including offerings from King Estate, Adelsheim Vineyards, L’Ecole No. 41 and Chateau Ste. Michelle. The growth in wine production in Southern Oregon made tapping into local grapes a logical progression.

Production on the rise
Southern Oregon wineries produced 1.6 million gallons of wine in 2011, according to a recent report by the Southern Oregon University Research Center, up from 1.3 million gallons in 2010. The production contributed to total state shipments of more than 2 million cases in 2011.

“There’s no question: This year we’re seeing a big increase in the wine that we’re selling that’s Oregon wine, and that’s really driven by our own label,” Kratz said.

Kratz wasn’t able to provide sales figures for the volume of wine Harry and David sells, or to break out the volume of its Northwest wine sales, but the company hopes to bottle 5,000 cases of its own wine in 2013—up from 2,083 cases this year.

With overall sales of $342.6 million in the year ended June 30, 2012, and 70% of Harry and David’s customer base east of the Mississippi, the new winemaking venture is giving Southern Oregon wines high-profile national distribution.

“We’re not the first blazing a trail for great Oregon wine, but it’s nice that we’ve got that reputation out there and we can build on that reputation,” Kratz said. “We think we’re going to have pretty significant exposure.”

Wines include a red blend made from Merlot, Cabernet Sauvignon and Carménère, as well as single-variety wines including Gewürztraminer, Sauvignon Blanc and Viognier; Merlot, Syrah and Tempranillo. Prices range from $15 to $35 per bottle.

“We’re pleased with the initial response,” Kratz said.

Who can buy?
Harry and David can ship direct to customers in 21 states right now and looks forward to maximizing the number by spring 2013. The outlet Harry and David provides for Southern Oregon growers and Oregon wine generally is consistent with long-standing calls for Oregon wine to claim a more prominent place on the national stage.

Several speakers at the 2011 Oregon Wine Industry Symposium in Eugene, Ore., pointed to the opportunities private-label wines offered to heighten the profile of the state’s wine in order to grow sales. And earlier this year, following a market outlook session at this year’s symposium in Portland, Ore., Rob McMillan of Silicon Valley Bank noted that Oregon producers need to leverage the appeal of the state’s wines, which offer good value on the national stage.

“How do you get the message out there that (Oregon wine) is worth as much as these other wines?” he asked.

Raising the profile of Oregon wine promises to be a hot topic at the 2013 Oregon Wine Industry Symposium to be held in Portland on Feb. 19-20. Scheduled speakers include Ted Baseler, CEO of Ste. Michelle Wine Estates regarding “The Importance of the Oregon Brand;” the Wall Street Journal’s Lettie Teague looking at “Oregon from a Global Perspective,” and Chris Sarles and Dan Grunbeck, of Young’s Market offering regional and national perspectives on the makings of a great brand.

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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
July 2014 $557 million
$7,577 million
July 2013 $533 million $7,128 million
Direct-to-Consumer Shipments » Month   12 Months  
July 2014 $61 million
$1,674 million
July 2013 $56 million $1,517 million
Winery Job Index » Month   12 Months  
July 2014 312
July 2013 283 187
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