California firm buying, leasing Oregon vineyards

SALEM — A group of developers from the Napa Valley is launching a new business model for Oregon's wine industry, after spending the past several years developing six vineyards in Polk and Yamhill counties.

Backed by pension-fund cash from California, the company, Premier Pacific Vineyards, is neither a winemaker nor a grape grower, in the traditional sense.

Instead, investors hope to enter into long-term vineyard-lease agreements with wineries or sell the vineyards in five to seven years.

Premier has formed a venture with the California Public Employees Retirement System, which has provided $200 million to develop vineyard property in the Northwest and California. About $20 million of that is dedicated to Oregon projects.

The Californians say their presence is a vote of confidence in Oregon's smaller-scale wine entrepreneurs, not an attempt to steamroll them. The pitch to potential winemakers: Stick with making wine and let someone else shoulder the capital cost of owning vineyards.

Premier began developing its Oregon vineyards just as some industry observers worried about an oversupply of wine grapes. But demand for pinot noir grapes — an Oregon specialty — has continued to surge.

"Look at how smart they were. The timing of their investment was incredibly fortuitous," said Jim Bernau, the president of Willamette Valley Vineyards. The Turner winery has talked with Premier and hopes to obtain fruit grown at its local vineyards.

Premier officials say the company's vineyards can generate good returns for investors.

The cost of vineyard land has soared in Yamhill County, with the county assessing developed vineyard land at $35,000 per acre, said Don Olson, who runs Torri Mor Winery in Yamhill County. He owns 20 acres of property and leases 60 acres of vineyards from Premier. Leasing has been a practical way to expand production, he said.