Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
ADVERTISEMENT
 
 
 
04.01.2009  
 

Northwest Vintners Strategize

Blending with bulk wines adds value, builds inventory

 
by Peter Mitham
 
 
Alternative text
 
Bernau plans to blend some purchased wine into his 2007 vintage Pinot Noir to meet demand.
Turner, Ore. -- Short supplies rather than a sagging economy were the primary cause of a decline in revenues for Willamette Valley Vineyards Inc., which released its year-end 2008 financial figures yesterday. Revenues for the year ended Dec. 31, 2008, totaled $16 million, down 4.2% from revenues of $16.7 million during the previous fiscal year.

"We do have some slippage, but it's not that much," said Jim Bernau, co-founder, president and chair of WVV. Bernau told Wines & Vines that supply of three Pinot Noir releases fell short of demand, cutting into overall sales volumes and reducing the cash available to cover expenses related to implementation of a new inventory management system.

General and administrative expenses rose to $6.5 million from $5.6 million a year earlier, driven largely by the cost of implementing the management system. Profits dropped 58% in 2008 to $708,594, down from a record $1.7 million profit in 2007.

Alternative text
 
Willamette Valley Vineyard chairman Jim Bernau.
"We didn't have enough to feed the pipeline in 2008, so that's partly why we have reductions in profits. We just don't have the inventory, despite my best efforts to get my hands on fruit supplies," Bernau said. While sales outside Oregon were down about 5.5% in 2008, dropping to $6 million from $6.3 million in 2007, Bernau said distributors sold customers the same volume of WVV wine. Distributors and customers were just slower to restock inventories.

"It was almost like the distributors knew something was coming, because in the first quarter of 2008 they shrunk their inventories by almost half," he said. Bernau is optimistic that the strategy distributors took will mean steadier sales in 2009, provided consumer demand remains the same. Though he doesn't believe the end of the recession is in sight, Bernau is optimistic that WVV's sales figures for the first three months of 2009 will tell the tale. They're due out in mid-April.

Right now, he notes that WVV's retail store in Turner is busy, as are the events he attends. "In 2008, when the economy was supposed to be in the tank, we were about even to the best year ever in our history," he said. "People, I think, are still choosing wine--and recreation and entertainment around wine."

That said, the wines that WVV sells for $20 to $28 in Oregon are more of a premium product in other states, and that means a focus on working value into its products.

While fine dining establishments have cut orders significantly, more affordable products such as Pinot Gris have been picking up the slack. WVV also tapped 204,400 liters of bulk wine from Willamette Valley wineries in 2008 to address inventory shortages. About 70% will be used to produce 2007 Vintage Pinot Noir.

Juice from the 2007 season, which was cool and damp, wasn't necessarily up to snuff for wineries making $50 bottles of Pinot Noir, but Bernau will be able to mix the juice into his own bottles--lending extra value to wines that retail for less than $30 a bottle. (Other wineries in the Pacific Northwest, including British Columbia's CedarCreek Estate Winery, plan to mix upper-tier juice into their value-tier wines this year.)

The strategy is not only helping WVV boost inventories, it's providing an outlet for some smaller wineries that don't have access to the distribution channels that WVV does, thanks to its size and reputation.

"A lot of these younger brands, a lot of these younger wineries have inventory that's hard for them to sell," Bernau said. "They're finding it's nice to have us as an option, and we definitely need the wine."

Bernau's optimism underlines the point A to Z Wineworks managing partner Bill Hatcher made at the Oregon Wine Industry Symposium at the end of February, concerning the need for smaller wineries to move inventories in order to weather the recession and associated cash crunch.

It also shows how Oregon wineries can expand markets for their products, another concern expressed at the February symposium.

"Oregon has just scratched the surface of national distribution. You can fly all over this country and go out to dinner and not find Oregon wine on a wine list," Bernau said. "We can grow our sales in a down economy. It just takes time and preparation, and getting out there and getting that distribution."
SHARE »
Close
 
Currently no comments posted for this article.
 
CURRENT NEWS INDEX »


 
Wines & Vines Home
 
866.453.9701 | 415.453.9700 | Fax: 415.453.2517
65 Mitchell Blvd., Ste. A San Rafael, CA 94903
info@winesandvines.com
Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
March 2015 $622 million
7%
$7,995 million
5%
March 2014 $582 million $7,588 million
     
Direct-to-Consumer Shipments » Month   12 Months  
March 2015 $252 million
19%
$1,863 million
14%
March 2014 $213 million $1,634 million
     
Winery Job Index » Month   12 Months  
March 2015 356
22%
243
16%
March 2014 292 210
     
 
MORE » Released on 04.15.2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Direct To Consumer
Wine Shipping Report
2015
 
Download full report »
 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

CALENDAR
  • May 5-7
     
    Cabs of Distinction Media and Trade Tasting
     
  • May 6-8
     
    Craft Beverage Expo
     
  • May 14
     
    RAVE at UC Davis
     
  • May 14-17
     
    Paso Robles Wine Festival
     
  • MORE »
 

READER COMMENTS
 
Article: Bedroom Communities Seek Vineyard AVA »
 
Why not just bottle under a vineyard designation? The bond will have a city or...
Reader: Guest
 
Article: Is Organic Grape Growing Possible in the East? »
 
FWIW, We make a few wines from a certified Organic vineyard growing cabernet franc, merlot,...
Reader: southoldfc
 
Article: Specialty Tanks Encourage Oak Extraction »
 
According to the manufacturer, the logs are made through compression and not with a binding...
Reader: Andrew Adams
 
Article: Specialty Tanks Encourage Oak Extraction »
 
What is the bonding agent of the Pressed Oak Logs?
Reader: Guest
 
Article: Is Organic Grape Growing Possible in the East? »
 
Some Long Island, NY, vineyard farmers are already using nearly organic methods. They have worked...
Reader: envcat
 
 


Directory/Buyer's Guide — Your Wine Industry Marketplace
 
 
WINERY SEARCH
 
 
Advanced Search »
SUPPLIER SEARCH
   by Product
 by Company Name or Brand
 
Browse by Category »
2015 Directory/Buyer's Guide
The Wines & Vines Directory and Buyer's Guide
 
 
EXPANDED ONLINE SEARCH INCLUDED WITH PURCHASE
 
ORDER NOW »
 
LEARN MORE »
 
 
Wines & Vines Magazine
 
 
LEARN MORE »
 
SUBSCRIBE »
 
Digital Edition Now Available!
Wines & Vines Digital Edition Now Available
 
LEARN MORE »
 
ORDER NOW »
 
 
The Wines & Vines Online Marketing System
 
The Industry Standard winery marketing application
 
FREE LIVE DEMO »
 
VIEW VIDEO »
 
 
 
 
Latest Job Listings
 Sales Guru
 Yountville, CA
DTC, Tasting Room and Retai
 Experienced Tasting Ro...
 Sebastopol, CA
DTC, Tasting Room and Retai
 Bookkeeper
 San Francisco, CA
Finance
 Wine Team Member
 Tarpon Springs, FL
DTC, Tasting Room and Retai
 Harvest Intern Positio...
 Oakland, CA
Cellar, Lab and Production
 Service Support Positi...
 St. Helena, CA
DTC, Tasting Room and Retai
 Sales And Bookkeeping ...
 St. Helena, CA
General Administration and
 Lift Truck Operator
 Oakville, CA
Cellar, Lab and Production
 Bottling Operator Ii
 Oakville, CA
Cellar, Lab and Production
 Customer Care Represen...
 Ukiah, CA
General Administration and
 
More Job Listings >>
Follow Us On:
 
 





Home  |  About Us  |  Editors  |  Subscribe  |  Print Edition  |  Digital Edition

Advertise  |  Site Map  |  Contact Us  |  Privacy Policy
 
 
Copyright © 2001-2015 by Wine Communications Group, Inc. All Rights Reserved.
No material may be reproduced without written permission of the Publisher.
Wines&Vines does not assume any responsibility for any unsolicited manuscripts or materials.