Over the past three months OWA has continued to represent the views of membership in a series of meetings convened to discuss commercial activity on farmland. The working group meetings include a broad range of interested parties and are chaired by Governor Kitzhaber's Natural Resources Advisor Richard Whitman. The group has been working to find consensus on sunset provisions of HB 3280 leading into the 2013 Oregon Legislative Session.  Attending on behalf of your Board have been OWA Land Use Committee Chairman and OWA Vice-President Bill Sweat, OWA President Emeritus Michael Donovan and OWA Board member Sam Tannahill. As noted in the last Land Use Bulletin on October 15, the legislative concepts unanimously adopted by the OWA Board on September 11 were presented to the working group on September 17 and have served an important role in framing the discussions. OWA's two land use surveys and statewide Listening Tour feedback have also helped OWA's Board representatives articulate membership positions. The working group is expected to meet at least one more time before the Oregon State Legislature convenes its general session on February 4 with the goal of introducing legislative language agreed to by all stakeholders. 

Concurrently OWA has also been working with the Willamette Valley Wineries Association, Southern Oregon Wineries Association, Walla Walla Valley Wine Alliance, Winegrowers Association of Central Oregon, and the Columbia Gorge Winegrowers to find a path that will allow the Oregon wine industry to speak with a unified voice and present a common position to the Governor's land use working group and the Oregon State Legislature.  
  
As part of the effort, your OWA Board voted unanimously on Dec. 10 to further clarify OWA's position on the 18 special event days as follows. Special event days 1-6 will be subject to an administrative process, allowing the county to impose conditions as outlined in OWA's Legislative Concept 2. These first six events would not be subject to a local appeal and would not be a land use decision. This is a safe harbor for wineries that may want to hold an event from time to time. A special events license allowing 7-18 event days would be subject to the same administrative process, but would be treated as a land use decision subject to public notice and the opportunity for a local appeal. A final local decision would be appealable to the Land Use Board of Appeals. The OWA Board also agreed that all wineries on land zoned exclusively for farm-use, including wineries that secure conditional use permits, should be subject to the 25% income limitation outlined in Legislative Concept 3. OWA positions, adopted unanimously by your Board in Sept., which clarified marketing vs. non-marketing events and food service, remain unchanged.    
 
OWA hopes to receive endorsements from AVA's around the state in the coming weeks.

This is interesting news considering the recent numbers released by Silicon Valley Bank regarding statistics within our industry in 2012. A special thank you to our locals, Michael Donovan & others for representing the interests of Southern Oregon.

Great quiz question that stumped me today...

The term Flurbereinigung refers to what?
 

• A. Dividing German wine estates among multiple inheritors
• B. German sweet dessert wines
• C. Re-consolidating German vineyards previously split under quasi-feudal inheritance laws
• D. The process of farming steep hillside vineyards in Germany

Flurbereinigung is the post Word War II re-consolidation of land that previously, due to old inheritance laws, divided (what were previously single) German wine estates among multiple owners. Prior to Flurbereinigung, after many centuries this equal division of farmlands among heirs meant that many German farmers owned small non-adjacent vineyard plots, creating a logistic nightmare for accessing and farming those vineyards.

Thanks for the lesson localwineevents.com!
Contributor: Joe Roberts
Visit Joe Roberts's Website

From winespiritsdaily.com on January 8, 2013. Great updates on the industry and some surprising stats in categories you would not expect...

While perusing Nielsen data for the 52-weeks ending December 8, one of the key takeaways we noticed is that price increases in 2012 did not hinder the category's growth. Pricing was up 17 cents for all table wine and still maintained respectable sales and volumes increases of 4.4% and 1.6%, in all Nielsen-tracked channels (plus liquor and c-store).

However, things continued to slow down a bit in the 4-week period despite a stagnant price increase (+19 cents) in both the 13 and 4-week periods. Sales did increase about 3% in the 4-weeks, but that's down from a 3.5% increase in the 13-weeks. Volumes came in at -0.1% in the 4-weeks, compared to a 0.4% growth in the 13-weeks.

For the 52-weeks all wine price segments grew with the exception of the $6-$9 segment, which has been ailing for a while. Sales for the underperforming segment decreased -3.1% for the 52-weeks, and only got worse from there. Sales were at -4% for the 13-weeks and -5.8% in the 4-weeks. Volumes are the same story at -3.1% for the 52-weeks and -6.4% for the 4-weeks. Pricing for the segment remained flat for the year, while most other segments went up a few cents.

All of the wine price segments at $9 and up took dollar share from the segments with an average price below $9, for the 52-weeks. Wines in the $9-$12 sweet spot gained the most dollar share at 1.6%. Wines priced between $3-$6 lost the most at -0.7%.

Wines in the $9-$12 price segment had the best showing in 2012 with sales up 13%, which was outpaced by volumes up 14.2%. We should note, it is also the only brand to decrease pricing for the year at -10 cents.

Wines priced at $20 and above proved the theory that they have the easiest time raising pricing. The segment increased the average price by 59 cents, by far the highest increase, and delivered a 6.5% sales increase and volumes growth of 4.2%.

The growth for pricing segments $12 - $15 and $15-$20 were nearly identical for the year. Sales for the $15-$20 price category grew 7.7%, while volumes grew 7.2%. For the $12 - $15 segment, sales grew 7.5% and volumes grew 7.1%. As for pricing, the $15-$20 price segment raised the average price by 9 cents, compared to the 5-cent increase from the $12-$15 segment.

NAVIGATING THE DISTRIBUTION BUSINESS WITH VISION WINE AND SPIRITS

Vision Wine & Spirits importing company (VWS) has been in business for roughly two years and has already grown to operate in 47 states with eight of its 0wn brands and several agency brands. Some of the most popular include Txt Cellars and Funky Llama wine brands, and John B. Stetson bourbon. Your editor recently sat down with Dan Lasner, managing director at VWS and former executive vp at William Grant & Sons, to discuss VWS's strategy for navigating distribution and retail relationships.

One of VWS's toughest challenges has been getting distributors "to buy into" the company philosophy. Dan says the plethora of new products clamoring for distribution puts a lot of pressure on them, especially large suppliers that require a lot of time, attention and inventory. "That makes it a little more challenging for us."

Dan believes a successful distribution strategy involves more than the relationship with each distributor. "We have to develop relationships not only with the distributors, but with retail and the on and off-trade to help push our products through the system," says Dan.  "It helps the distributors do their jobs. "

VWS works with both large chain accounts as well as multiple independents. "When we're talking with retailers we try to find out what works best for them. We're always questioning the retailers in terms of, what's working today, what's not working today, what are consumers buying, what consumers are looking for."

Although he believes distributor consolidation will likely continue over the next several years, he doesn't believe it will add to the challenge. "I think that's always going to be an issue in our industry. We see it in the beer industry too. Going back 15 years ago, there were three-times as many distributors as there are today."

Instead, Dan sees it as an opportunity for entrepreneurship. "At the same time, there are a lot of mid-sized and small distributors with operations that see there is a void and that the big distributors just can't handle everything in the market. As much as there is consolidation, I think there is a lot of entrepreneurship that you'll see over the next couple of years."

So, what are the key trends VWS is hearing about? For one, Dan believes consumers are transitioning from traditional varietals to lifestyle brands.  "We see that happening with brands like Cupcake and other categories, so we got into the lifestyles in a very heavy way."

One of VWS's best-selling lifestyle brands is Txt Cellars, billed as a "unpretentious" and "easy to drink" wine. The line includes WTF pinot noir, OMG chardonnay and CYA syrah etc. It was designed to appeal to Millennials with contemporary packaging and the tagline: "The times have changed... has your wine?" However, he says they're finding that the average age is closer to the late 30's.

As for spirits, Dan says there's no question that premium brands are doing well and will continue to do so. He believes better packaging is the way to differentiate a brand in this category. "Better packaging creates better price points," he says.

Going forward VWS will continue to grow the business on a national basis with an eye out for brands that fall under one of their four essential categories: prestige, premium, value or innovation/lifestyle. "The change in the consumer trends are constant and we're just trying to stay one step ahead of the next trend."

BERNSTEIN PREFERS PERNOD TO DIAGEO

As the No. 1 and 2 spirits companies in the world Diageo and Pernod Ricard are in very good standing, currently. However, in a recent note to clients Bernstein Research concluded that Pernod "has a slight edge over Diageo, " at least in terms of investor value. While Diageo has the upper hand in Scotch, especially in Latin America, Pernod benefits primarily from premium cognac in China and future growth from Jameson. "Overall, we have a slight preference for Pernod Ricard given current relative valuation and the fact we believe Pernod Ricard's growth model is perhaps slightly more top-line oriented," writes Bernstein senior analyst Trevor Stirling.

WSD BRIEFS:

BLACKHEATH EXTENDS PARTNERSHIP WITH ATLANTICO RUM. Blackheath Beverage Group will now represent the Atlantico Rum throughout the US in 2013. Blackheath will serve as the Dominican Republic rum's exclusive sales agency, while Park Street Imports will remain as the exclusive importer.

BEAM ADDS BOURBON AMBASSADOR. Adam Harris, long-standing employee of Beam Inc, has been promoted to the position of bourbon ambassador, North America. As part of the new role he will represent Beam's premium and super-premium bourbon brands through the US. Prior to the promotion Adam worked as Beam's distillery specialist in Austin, Texas.

BUCKEYE VODKA MOVES INTO KENTUCKY. With the addition of Kentucky, Crystal Spirits' Buckeye Vodka will now be available in 35 states through The Party Source. Buckeye retails for approximately $17 a 750 ml and will be represented by Heidelberg Distributing.

MERRYVALE AND STARMONT HIRE NEW COO. Mark Evans will take over as coo of Starmon winery as well as Merryvale vineyards. Mark has 26 years of experience in the industry, most recently as manage director at Negociants/Yalumb USA. Before that he held stints at Kendall Jackson Winery, and Schramsberg & Trefethen Vineyards. In his new role he will be responsible for  day-to-day operations at Starmont, focusing on sales, marketing and general management, as well as broad market sales for Merryvale.

Until tomorrow, Emily

"Look for the ridiculous in everything and you will find it."
- Jules Renard