One of the most-often-asked questions I hear is about the sustainability of the growth of Washington’s wine industry. Are there too many wineries and too many grapes? How much bigger can we get?
Washington isn’t nearly big enough. Here’s one of many reasons why: Washington has pretty much run out of red wine grapes, particularly Cabernet Sauvignon and Merlot.
In mid-December, Ste. Michelle Wine Estates announced that it would be taking the Columbia Crest Two Vines tier (pretty much its lowest-priced Washington wine) and turning it into its own brand. That isn’t a big deal. But this is what is: The new Two Vines label includes a quarter-million cases of Cabernet Sauvignon and Merlot made from grapes grown in California’s Central Valley.
There are two reasons for this. The first is that Washington red wine grapes are too valuable to sell for $6 per bottle, so a lot of the production that was going into Two Vines now will move into the midpriced categories of Columbia Crest Grand Estates and H3 (and likely other brands, such as 14 Hands).
The second reason is that Ste. Michelle Wine Estates has, essentially, run out of red wine grapes in Washington. Kari Leitch, vice president of communications for Ste. Michelle Wine Estates told me this: “All of our sourcing across the portfolio is tapped.”
Ste. Michelle Wine Estates owns the state’s three largest wineries: Chateau Ste. Michelle (2.7 million cases annually), Columbia Crest (1.7 million) and 14 Hands (1 million-plus). It uses two out of every three wine grapes grown in Washington state. And now it’s looking to California out of necessity for its lower-tier wines.
This is the loudest signal that the Washington wine industry is nowhere near big enough.
In 2012, an economic report came out showing the Washington wine industry — the nation’s second-largest wine-producing state — is worth $8.6 billion per year to this state. When that report was released, Ste. Michelle CEO Ted Baseler told me that a crisis is looming, that within five years, the American wine industry won’t have enough grapes to slake the thirst of the wine-drinking public. America, by the way, is the world’s largest wine-drinking country.
“As an industry, we need more vineyards,” he said.
Last year, Washington topped 50,000 acres of wine grapes. How much more do we need? Baseler said another 10,000 acres “would be a nice start. If there are not substantial amounts of vines planted in California, Oregon and Washington in the next five years, there will be a shortage of premium grapes.”
Where will these vineyards go? For the most part, there are two primary regions of opportunity: the Horse Heaven Hills and the Wahluke Slope. Both are warm, and both have abundant space.
The Horse Heaven Hills, a 570,000-acre swath of land south of the Yakima Valley and the Tri-Cities, is turning out to be the sweet spot for premium Cabernet Sauvignon. Ste. Michelle began planting grapes there in the 1970s and is well aware of the opportunity.
Indeed, since 2009, Horse Heaven Hills acreage has grown from 9,053 to 11,731. That’s a 30 percent increase in five years. Of that, Cabernet Sauvignon has gone from 2,917 acres to 4,291 — a 47 percent increase in Cab alone.
These days, vines rarely go into the ground without a contract, and I can guarantee you that most of these new vineyards are being planted for Ste. Michelle.
The Wahluke Slope is smaller — 81,000 acres in size — and has fewer acres (more than 6,000), but it is as warm as Red Mountain, the land is less expensive, and water is reasonably plentiful. It is perfect for growing Cabernet Sauvignon, Merlot, Syrah and other red grapes.
These two areas fuel the Washington wine industry’s engine.
Another reason to believe Washington is far from large enough is market share. Out of every 100 bottles of wine purchased in Washington, only about 40 are made in Washington. In other words, Washington residents buy way more wine from outside of our region than from inside. The opposite is true in California, which enjoys a 70 percent market share. In France, Italy, Germany and other traditional wine-producing countries, market share is closer to 100 percent: The French primarily drink French wine.
Washington will never achieve 100 percent market share. For one thing, it doesn’t make jug wine (it can’t because the grapes cost too much to grow here). For another, enjoying a diversity of wine from around the world is healthy. We don’t want a wine monoculture.
But a market share of 60 to 70 percent is more than reasonable, and that means Washington can easily grow by 50 percent just to supply in-state needs.
More vineyards, more winemakers, more wine. It needs to happen, and it will.
-- Andy Perdue is the editor and publisher of Great Northwest Wine and wine columnist for The Seattle Times. Learn more about wine at www.greatnorthwestwine.com.