Something unusual is happening here in the Willamette Valley
of Oregon. One big California industry is migrating north, and
moving into the fertile rolling hills of Oregon.
That industry is the wine industry. And its expansion
may change the face of farming in area and create real estate
profits for those in the region.
Within the last year, California wineries and investment firms
have been snapping up wineries and vineyard properties here in
the Willamette Valley. This is particularly uncommon because most
Californians think that their state is the only decent producer
of wines in the country.
No doubt, California produces an impressive 90% of the wine in
the U.S. In a $35 billion industry that grew 2% last year, that
gives the state a near monopoly.
California's wine industry is extremely established, with
vineyards planted on just about every ideal piece of land.
Vineyard property is extremely expensive too. An acre of prime
planted vineyard land sells for $200,000 - $300,000. And land
that could be developed into a vineyard (if you can find it) will
sell for $100,000 - $165,000.
In comparison, land in Oregon is relatively inexpensive.
My recent research found
23 acres of "plantable" vineyard land
in the Chehalem Mountain AVA for $835,000 or $36,000 per acre. I
for the bargain price of $175,000. And a small Pinot
vineyard with a modest house, tasting room and 3+ acres of Pinot
Noir vines recently
sold for $689,000
Prime Oregon vineyard land is now attracting big money, thanks
to the high quality vineyard sites that are selling at a 50 - 75%
discount to California land.
This spring the big Kendall-Jackson Winery bought up 670 acres
of land in the Willamette Valley in order to secure fruit for its
And San Francisco investment firm Bacchus Capital Management -
named for the Thracian god of wine - is snapping up properties
here too. Led by Sam Bronfman of Seagrams and Diageo fame, the
firm has spent $50 million on vineyard acquisitions in Oregon and
Bronfman - like most of the revered wine experts - views
Oregon as one of the premier regions for Pinot Noir. The grape
thrives in France's Burgundy region and the Willamette Valley,
making this small viniculture area a growth sector within the
Commenting on his recent acquisitions, Bronfman said,
"We think Oregon is a great place for wine, and its
importance is growing in the nation and the world… the Willamette
Valley is the best places to grow pinot noir [which is]
delicious, and it's a great example of a noble variety."
Several high profile Bacchus acquisitions and investments in
this region include Panther Creek, Wines by Joe, and Dobbes
During the last decade, I've frequently visited this amazing
part of the country. And I've become a wine lover and collector,
with Pinot Noir being my favorite varietal.
Small producers have long dominated the Oregon wine industry.
These are family farms, many of which are committed to the land,
sustainable farming practices, and the highest quality product -
even if that means the bottom line suffers.
The influx of new investment in Oregon by outside wineries and
investors here highlights the value of the land, relative to
other viniculture regions.
Next week, I'll write to tell you about a way to invest in the
growing real estate boom without buying land in Oregon to setup a
vineyard. Stay tuned…