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Jun-25-2014 17:45TweetFollow @OregonNews
Oregon Wineries Become Targets for TurnoverSalem-News.com
The market is ripe for the picking when it comes to investments in the wine industry.
(SALEM, Ore.) - Recent polls showed that nearly 10-percent of Oregon winery owners are considering a sale in the next five years. In addition, 31-percent said they’d be open to a sale right now if conditions were favorable.
While the sheer number of wineries considering sales looks problematic on the surface, it opens up the market for opportunistic entrepreneurs that are primed to make their mark on the industry.
In the past, wine entrepreneurs could just pick a plot of land and start their own winery rather than purchasing an existing winery. All they needed was the right plot of land and a good winemaker. It wasn’t uncommon to see the hungriest of the entrepreneurial wine crowd sell every last drop of wine and see growth in the 20-plus percent range each year.
After the recession, things changed on the wine front. With banks less willing to lend money, it became increasingly harder to secure the financing needed to support the operation during the lean opening years while winery owners were still trying to secure distribution deals.
And then it came to a complete halt. With distributors tightening the number of brands they carry and less of a demand for premium wine from smaller growers, the wine industry dried up (no pun intended) for these smaller growers.
Now, the smaller operations are faced with the choice of continuing to grow, process and distribute bottles for ever smaller profits, or to shut the doors completely. This leaves the market ripe for the picking when it comes to investments in the wine industry.
Oregon is quite attractive to investors due to the land prices being substantially cheaper than equivalent plots in California or Washington, and fewer bureaucratic hoops in which to jump through just to open the doors.
While on the surface, these craft wineries are facing huge challenges in finding distributors; the opportunity for bigger wineries to swoop in and secure the land is ever present.
McMilan stated that he’s aware of at least half a dozen interested buyers from the burgundy region in France, as well as more established players in the California region that are looking to secure the lush and fertile Oregon ground for their own operations.
In addition to the bigger wineries, there still exists a place for the smaller operations that have adopted a “local” attitude when it comes to distribution. These smaller wineries have mastered the art of turning their back on bigger distributors in favor of more lucrative deals with local restaurants, as well as sponsorships for festivals, and tours or tastings right on their own property.
Big or small, opportunities are ever present for savvy entrepreneurs with a new school attitude. It appears that, for Oregon wineries, a changing of the guard (so to speak) is underway. Gone, or on the way out, are the founders in the region who sought out to make Oregon a world class wine region 40+ years ago and in are the established wine producers with distribution deals and the savvy entrepreneurs that are looking to make their mark on an industry that hasn’t changed much in the last several decades.
It’s an interesting time in Oregon wine country.
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