Wines & Vines Home
Welcome Guest

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."
Currently no comments posted for this article.

Wines & Vines Home
866.453.9701 | 415.453.9700 | Fax: 415.453.2517
65 Mitchell Blvd., Ste. A San Rafael, CA 94903
Wine Industry Metrics
Off-Premise Sales
IRI Channels »
Month   12 Months  
October 2015 $604 million
$8,267 million
October 2014 $572 million $7,790 million
Direct-to-Consumer Shipments » Month   12 Months  
October 2015 $288 million
$1,919 million
October 2014 $284 million $1,751 million
Winery Job Index » Month   12 Months  
October 2015 179
October 2014 139 226
MORE » Released on 11.13.2015


Direct To Consumer
Wine Shipping Report
Download full report »


Practical Winery & Vineyard Library
Search the PWV archive »

  • December 2
    2015 UC Davis Grape Day
  • December 3
    North Coast Wine Industry Expo
  • December 5-6
    Holidays in the Vineyards
  • January 13-14
    DtC Wine Symposium
  • MORE »

Article: Kronenberg Leaves Legacy of DtC Opportunities »
This is amusing. While I do not quarrel with Paul's many contributions over the years,...
Reader: Guest
Article: Kronenberg Leaves Legacy of DtC Opportunities »
Wow! This this a re-writing of history! As a founder and namer of Family Winemakers...
Reader: Guest
Article: Can Wine Grapes Be Grown Without Chemicals? »
It sounds like your problem is with semantics, not with the application of products to...
Reader: Carol Collier
Article: Cuvaison Upgrades to Second Generation of Pellenc Sorter »
I'd like to know what they are doing with the sorted stuff, especially the first...
Reader: Matthew Delicata
Article: Growers Suffer Low Yields in Paso Robles »
This year's Paso Robles/San Miguel "mature" Cabernet Sauvignon yields were down to 30% of normal while...
Reader: Guest

2016 Directory/Buyer's Guide
The Wines & Vines Directory and Buyer's Guide
Wines & Vines Magazine
Digital Edition Now Available!
Wines & Vines Digital Edition Now Available
The Wines & Vines Online Marketing System
The Industry Standard winery marketing application
Latest Job Listings
 Bottling Line Technici...
 Clarksburg, CA
Cellar, Lab and Production
 Regional Sales Directo...
 Northeast Us, NA
Sales and Marketing
 Direct To Consumer Man...
 Stonewall, TX
DTC, Tasting Room and Retai
 Senior Hospitality Man...
 Sonoma, CA
DTC, Tasting Room and Retai
 Compliance Specialist
 Santa Rosa, CA
General Administration and
 Wine Club Manager
 St. Helena, CA
DTC, Tasting Room and Retai
 Hospitality Lead
 Yountville, CA
DTC, Tasting Room and Retai
 Director Of Sales
 Southern California, CA
Sales and Marketing
 Vice President-Sales A...
 Napa, CA
Sales and Marketing
 Key Account Manager-Of...
 Midwest- Multiple Positions In Selected Cities, FL
Sales and Marketing
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.