Lower-end wines weather slump

Craig Reed/For the Capital Press Scott Henry, owner of Henry Estate Winery near Umpqua, Ore., pours a glass of 2007 Pinot Gris in the wineryÕs tasting room Oct. 12. Henry says overall sales of Southern Oregon wines has been steady despite the struggling economy. He says the bulk of wine sales are for bottles, such as the Pinot Gris, that sell for $15.

Smaller operations depend on customer loyalty to survive

By CRAIG REED

For the Capital Press

UMPQUA, Ore. -- With the economy still having its troubles, Southern Oregon grape growers and winemakers don't mind that they continue to be somewhat of an unknown in the wine industry.

Because of that, most wines from Lane County south to Jackson County have not inflated in price and sell for $15 to $20 a bottle. The bulk of sales are for wines in that price range.

"While the upper-end wines are suffering (in sales) a little bit, the lower-end wines are improving," said Scott Henry of Henry Estate of Umpqua. "People are still drinking wine, they've just lowered their sights a bit.

Henry defined upper-end wines as $30 a bottle and up.

Sasha Kadey, the marketing manager for King Estates located southwest of Eugene, Ore., said that winery has felt some minor effects from the economy. "But our product is typically not in the price range of ultra-premium wines," he said. "Our average wine is $15 to $30. Our sales cycle has stayed pretty true.

"Most Oregon wines don't sell for inflated Napa Valley (Calif.) prices," he said.

Oregon has a $1 billion wine industry, but the state makes less than 1 percent of the wine made in America. So at this time winemakers feel an impact from the economy, "but it's not very much," said Earl Jones, the owner of Abacela Winery near Winston, Ore.

Jones said California winemakers have more years of experience in the profession than developing wine areas, and with that experience comes more brand recognition and steadily higher prices.

"They had 40-, 50- and 100-dollars-a-bottle wine," said Jones. "During good times people thought they had to have those. But with the economy doing a reversal, those wineries are suffering the most."

The bulk of the Southern Oregon wineries are small, family-owned operations that have built up loyal customer bases, the result being that a substantial amount of business is done through their wine clubs and tasting rooms. The winemakers said that's especially true of their higher-priced wines, which are not overly abundant.

Stephen Reustle, at Reustle's Prayer Rock Winery near Umpqua, praised the loyalty of his wine club members. "Our sales are up over last year very significantly," he said. "There's a personal touch between our winery and our consumers, and even in a difficult year, when people are feeling the effects of the economy, they still remain loyal to us."

Michael Donovan of RoxyAnn Winery in Medford said that although nationally there's been a slack in the demand for wine, wine sales are still showing an increase of 4 to 5 percent over 2008. He said that in 2008, wine surpassed beer in terms of volume purchased.

"Off-premise sales have declined in 2009, but I know for a fact direct sales in tasting rooms and wine clubs are slightly above last year," he said.

A recent survey of eight large Oregon wineries conducted by the Northwest Farm Credit Services shows that overall sales are off by only 1 percent.

"We just want to make sure the growers make a little money, we make a little money and everybody survives," said Henry. "We're looking forward to the economy picking up and everybody doing well again."

"As long as we stay within a reasonable price range with our wine and not make it a luxury item, it's something people will continue to enjoy every day," said Marc Girardet of Girardet Wine Cellar near Winston, Ore.

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