Wine inventories low, demand up

PORTLAND — Oregon's wine-grape harvest won't begin for another month, but early signs point to a trend not seen since 2001 price increases.

Grape-laden vines now slowly ripening across nearly 14,000 acres in the state don't carry price stickers, of course. But portents of a second consecutive year of unusually low yields, combined with continuing record consumer demand for Oregon wines, make the outcome as predictable as lessons from the first day of Economics 101.

"Inventories are down and demand is up," said Ted Casteel, vineyard manager and co-owner of Bethel Heights Vineyard in Salem. "It's an industrywide phenomenon and you're going to see upward price pressures as a result."

Toss in a veritable plague of mice in some vineyards, highly unusual ripening patterns in others and the inevitable vagaries of harvest-time weather in Oregon, and 2005 should be a ride to remember.

"That's why the French invented the word 'vintage,' " said Earl Jones, co-founder of Abacela Winery in the Umpqua Valley. "It's all different every year."

A lot hinges on this year's harvest, as Oregon's 350 wineries — a number that has more than tripled in the past decade — try to show they can produce a consistently high-quality product despite changing weather conditions that put the state on the fringe of grape-growing climates.

A marked difference this year over the past several vintages is the price consumers can expect to pay for a bottle of wine.

Wine grapes, unlike agricultural products such as filberts or apples, don't have a set uniform price between growers and buyers. Each winery establishes its own price for a bottle of wine, based on measurable benchmarks such as operating costs and the less-tangible factor of how much consumers are willing to pay.

In an ideal growing season, producers of Oregon's signature grape, pinot noir, cultivate their vines to bear about 2 tons of grapes per acre for harvest. Normally, they need to prune or "drop" nearly that amount before harvest to guarantee that the remaining grapes ripen before autumn rains.

But following a string of six straight clear-sky vintages, rains hammered the 2004 harvest, cutting some yields in half. Compounding the problem, rains and cool weather hit at a critical juncture in May, just as new buds on the 2005 vines bloomed for pollination.

For Ken Wright, owner of Ken Wright Cellars in Carlton, this year's weather effects, taken alone, would be minimal.

"Nature saved us a lot of work this year," he said. "She did most of our pruning for us."

The 2004 harvest was a different story. It produced less than 1 ton of grapes per acre, essentially cutting Wright's salable product in half.

Despite the reduction, Wright held the line on prices, causing a significant loss in revenue. He can do that because his production is sold before the wines are even bottled.

He notes that Oregon producers lacking similar guarantees that they'll sell everything they make are bound to get hurt by the back-to-back crop losses.

"A lot of people are going to have to raise their prices just to make it to next year," Wright said. "And even with those increases, some are still not going to make any money."

Growers in Southern Oregon's warmer climes, by comparison, say conditions this year have been near-perfect.

"We're going to be awfully close to where we want to be," said Bryan Wilson, vineyard manager at Del Rio Vineyards in Gold Hill. "The vines are looking beautiful."

Even some northern Willamette Valley producers say their crop loads are about normal. But others are reporting significant weather-related reductions this year, some as high as 60 percent.

The effect has been to evaporate a sea of bulk wine that drove prices down and got consumers used to seemingly endless great deals.

"Only three years ago, we had a miniglut of grapes in Oregon," said Stirling Fox, whose Oregon Grape Management tends 25 vineyards in the northern Willamette Valley. "All of that has been absorbed and upward price pressures are the likely result."

Even so, wine lovers are likely to get their money's worth, he said.

"Low crops with small clusters usually translate to high quality," said Fox, comparing growing conditions this year to those in 1994, when Oregon wines made a significant splash in national and international wine tastings.

One anomaly he's seen so far? Mice and voles. Lots and lots of mice and voles.

"It's like a miniplague," Fox said. He's responded by building owl boxes to attract natural predators. "I'm not sure why, but you walk through some vineyards and there are little rodents everywhere."