NEWS: Huge growth in WA wines, but still a small player

[Jenise]

By Andy Perdue on September 14, 2015

SEATTLE – Washington’s wine industry continues to grow at a remarkable rate, according to a new economic impact study.

The study, prepared for the Washington State Wine Commission by Community Attributes Inc. (CAI) in Seattle, indicates that the wine industry has increased in every positive measure since the last study took place in 2009.

A few of the highlights, from 2009 to 2013:
•The number of wineries has grown to 800 from 650.
•The amount of grapes crushed has grown to 212,000 tons from 156,000 tons.
•Total economic impact of the wine industry went to $4.78 billion from $3.45 billion.
•Washington wineries selling wines out of state went to 106 from 73.
•Wine-related jobs in Washington increased to 26,900 from 18,700.
•Washington wineries paid $10 million in direct state taxes, up from $6.6 million. The wine industry’s overall contribution to state taxes in 2013 was $61.9 million, which includes retail sales and tourism contributions.


Washington wine a distant No. 2

For at least two decades, the Washington wine industry has been No. 2 behind California. And it is a distant No. 2.

Currently, California produces about 85 percent of all the wine in the United States, while Washington is second at 4.1 percent. That’s up from 3.6 percent in 2009.

The Washington wine industry’s market share in state is 23.6 percent. This means that out of every 100 bottles of wine sold at retail locations such as grocery stores, fewer than 24 are made in Washington. Traditionally, California has a market share of 70 percent, while such wine-producing nations as France and Italy enjoy nearly 100 percent, as their residents tend to drink primarily local wines, with few outside wines being imported.

CAI indicated this is an area of opportunity for the Washington wine industry, though it cautioned that these numbers do not include direct sales to consumers from wineries, only sales through retail stores. Many small wineries sell a majority of their wines through their tasting rooms and wine clubs.

“Growth opportunities for Washington State wine sales rely on increasing market share in Washington as well as in key target markets in the U.S. and abroad,” the report stated. (New York is the No. 3, and Oregon is No. 4.)

Interestingly, Washington wineries sell a lot of wine outside of the state, thanks primarily to Ste. Michelle Wine Estates, owner of such wineries as Chateau Ste. Michelle, 14 Hands, Columbia Crest, Michelle Sparkling Wines and Snoqualmie.

In 2013, Washington wineries sold $659.9 million worth of wine outside of Washington. That’s up 48.7 percent from 2009. The top five winery companies for out-of-state sales were:
1.Ste. Michelle Wine Estates: $533.9 million.
2.Novelty Hill: $31 million.
3.Charles Smith: $24.8 million.
4.Hogue Cellars: $18.4 million.
5.Karma Vineyards: $15.8 million.

Foreign exports make up a much smaller sector of Washington wine sales. In 2013, Washington wineries had foreign exports of $24.9 million, up from $10.3 million in 2009. The top five countries that Washington wineries export to are:
1.Canada: $7.3 million.
2.Denmark: 2.3 million.
3.Japan: $2.2 million.
4.Germany: $1.9 million.
5.Finland: $1.5 million.

[Jenise]

Of all the things that surprised me in this article (like who is Karma Vineyards?), the one that surprised me the most was the market-share data point that only 23% of the wine Washingtonians drink is Washington wine, especially if you compare that to California whose residents have access no less than ours to wine of other origins.

Of course, thanks to CellarTracker, I am forced to admit to being part of the problem as 49% of my cellar is French, 22% Californian and only 9% Washington (which puts it close to on par with California and Burgundy and slightly ahead of Italy). However, that only addresses what I store/age. The news is slightly better when viewed as what we drink based on my tasting note history, where 17% of wines I've written up are Washington, but the number for California is almost 50% higher than that so, once again, I'm bad. (But I was born in California, doesn't that give me a 'pass'? )

Almost makes me wonder who we sell our wine to. Aside from all the reisling we send to Asia, the probable answer is the rest of the PNW--walk into a store in Idaho or Montana, and the wine selection is primarily Washington. And maybe Oregon--they probably drink our cabernets in a somewhat comparable ratio of us drinking their pinots.

Admittedly, I'm surprised that Washington production is only just over 4% of the nation's home product. I knew California was huge but I might have guessed we were at 15 or 20% of their production vs. less than a tenth. On second thought, driving up I-5 this past April and seeing all the vineyards stretching all the way up to Monterey that didn't used to be there, perhaps I shouldn't be.