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08.18.2014  
 

Pinot Noir Still King in Oregon

Red varietal brought highest average price per ton of $2,655 in 2013

 
by Peter Mitham
 
 
“oregon
 
Source: USDA-NASS (1992-2011); Southern Oregon University (2011-present)
Eugene, Ore.—The rebound in pricing for Oregon grapes during the past four years suggests that growers will see stable or slightly higher prices this season.

Preliminary results from the 2013 Oregon Vineyard and Wine Production Census indicate that statewide, growers received an average of $2,252 per ton in 2013, down 3% from 2012.

Pinot Noir topped the crop with a price of $2,655 per ton, with white varieties including Sauvignon Blanc, Chardonnay and Müller-Thurgau coming on strong. Chardonnay is now the state’s second most-expensive grape at $2,236 per ton, up 28% in 2013 compared to 2012. This follows on appreciation of 46% since 2009, and 88% since 2004—the strongest of any grape in the state.

And those numbers are just the averages.

“I’ve also seen fruit prices for premium Chardonnay topping Pinot Noir,” said Ben Howe of King Estate Winery near Eugene. “It is very volatile at the moment, but hopefully the fruit prices will ease up with new plantings.”

The numbers back up the confidence expressed at the Oregon Chardonnay Symposium this past March, when 40 examples of a potential 70 expressions of the valuable grape were poured (see “Oregon Winemakers Rally Behind Chardonnay”). 

“We have the right clones, and it’s proven that Oregon makes high-quality Chardonnay that stands up with other regions (such as Burgundy or California),” noted Michelle Kaufmann, assistant communications manager for the Oregon Wine Board. “I can easily see how the market price would increase.”

However, the advent of major players into the state during the past year has thrown a new factor into the pricing picture.

“We’re starting to see multiple-year contracts, so (pricing) is kind of locked-in-place,” said Dave Minick, vice president of vineyard operations for Seattle, Wash.-based Precept Wine, which farms 600 acres in the state including the Yamhela property it acquired near Yamhill in 2013. “Before it used to be year-to-year contracts…but some of the smaller wineries started getting nervous, so they started doing longer term contracts because they were worried they’d lose those grapes to Kendall-Jackson.” 

While among the Northwest’s biggest vintners, Precept sells a portion of what it grows in the state and has found itself having to reassure buyers that it won’t claw back its production for its own use.

“We’ve noticed that some of the higher end fruit that we sell to the wineries, they want multi-year contracts because they’re worried,” he told Wines & Vines. “It’s changed the thinking process.”

While longer term contracts may help smooth out fluctuation in prices, stabilizing expectations, Minick pointed out that rising prices should be taken with a grain of salt, given production costs and variables such as weather.

While the high price for Pinot Noir looks attractive, returns on the so-called “heartbreak grape” also risk breaking bad.

“The average crop over five years is like 2.3 tons an acre, and you times that by some contracted prices of $2,800, $3,200 an acre from certain wineries, and it just doesn’t pencil,” he said.

While the crop in 2012 was a record, checking in at 50,186 tons, and 2013 is expected to top even that (the numbers are due in September), only the weather will tell what 2014 will bring.

Rains that swept into the state in September 2013 dampened vines and spirits, and growers—who escaped a blast of cold weather last winter—hope the phenomenon won’t repeat. On the plus side, the latest long-term forecast shows the onset of El Niño “not affecting the region much if at all,” according to Greg Jones, professor of environmental studies and director of the Division of Business, Communication, and the Environment at Southern Oregon University.

In the meantime, growers have been dropping fruit to keep the harvest in check.

Jones, for his part, said, “If we don't have a catastrophe like last September’s typhoon, then the major determinant will be supply,” he said. “If yields are high, as expected, then prices will be likely be flat; if yields are average or low, I would expect prices to climb slightly (2%-6 % or so).”

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Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
October 2014 $570 million
6%
$7,775 million
6%
October 2013 $539 million $7,342 million
     
Direct-to-Consumer Shipments » Month   12 Months  
October 2014 $284 million
18%
$1,751 million
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October 2013 $240 million $1,556 million
     
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October 2014 139
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18%
October 2013 131 192
     
 
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