Salem, Ore.—While foreign investment pours into California’s wine industry (see “Wine Investors Think Globally”), California cash is bound for the Pacific Northwest.

Sonoma County’s Jackson Family Wines is declining to comment, but reports indicate that the company has gone firm on the purchase of more than 1,100 acres west of Salem in Oregon’s Willamette Valley from institutional investment firm Commonfund of Wilton, Conn. The purchase has yet to close.

The development follows a second investment by San Francisco-based Bacchus Capital Management LLC in Joe Dobbes’ venture Wine by Joe. Bacchus’ investment, announced last month, follows an initial deal between Dobbes and Bacchus in September 2011 (see “Wineries Win Financing for Upgrades”). While the value of neither investment have been disclosed, the initial investment allowed Dobbes to upgrade production equipment while the latest will, among other things, facilitate hiring of executive expertise.

Meanwhile, Napa’s Cakebread Cellars recently launched its Walla Walla AVA-based Mullan Road brand, and as Wines & Vines reported last month, the new Elkton Oregon AVA in Oregon is attracting interest in local properties from the likes of Frank Laurie Woods’ family, a former owner of Freemark Abbey in Napa (see “AVA Boosts Profile for Southern Oregon”).

The activity follows on last year’s purchase by E. & J. Gallo of Ascentia Wine Estates’ Columbia Valley and Covey Run brands in Washington state.

The spate of deals is driven by affordable assets and the long-term potential of the properties, said Mario Zepponi, a partner at Santa Rosa, Calif.-based Zepponi & Co., which deals exclusively in wine industry mergers and acquisitions.

“You’re going to continue to see that because the Pacific Northwest is somewhat of the low-water mark in the wine industry, at least in the Western region,” he told Wines & Vines. “You’re going to see a lot of these bigger wine companies taking a more critical eye to investment opportunities up in that area.…On a dollar basis, when you measure it against what you can do in California, it looks like a great opportunity.”

The rising prominence of specific grape varieties in each region—Pinot Noir in Oregon being the obvious example, as well as Cabernet Sauvignon and Riesling in Washington state—and steadily expanding acreage is also driving interest.

Washington state grape production in 2012 was 182,000 tons, up from 145,000 tons in 2008; in Oregon, the 2012 harvest topped 42,000 tons, up from 34,700 tons in 2008.

Moreover, the fruit is proving itself to be of high quality, and California companies see an opportunity to tap the supply to enter new markets.

This should be welcome news to the local industry, because the larger companies often have a reach that the smaller local players do not, opening doors to greater prominence and distribution opportunities for local wine.

“There’s not a lot of real big horses in those markets. So the ones that are going to be able to come in and change the market are the outsiders,” Zepponi said. “They’re big enough that they could come in and make use of all that fruit.”