Oregon Wine Research Institute (OWRI) researchers, in collaboration with their colleagues at Oregon State University and other universities, have been conducting research, outreach, and educational efforts related to wine industry economics and the dynamics of wine markets that range from local to global. Areas of focus have included economic issues related to vineyard operations, the economics of market structures and performance, and the competitiveness and profitability of business models at each stage of the supply chain. When combined with OWRI’s viticulture and enology research, wine economics initiatives complete the tripart mission of the OWRI as it strives to comprehensively serve the needs of Oregon’s wine industry.
The Economics of Vineyard Operations
Three areas of interest for vineyard managers and owners have been pursued in recent work. Enterprise budgets have been developed to establish wine grape vineyards in Oregon and other wine-producing regions. Examples include:
- Vineyard Economics: Establishing and Producing Pinot Noir Wine Grapes in the Willamette Valley, Oregon (2018) by Beau Olen and Dr. Patricia Skinkis, available here.
- Organic Vineyard Establishment: Trellis and Planting Stock Considerations (2018) published by Washington State University Extension faculty. This budget is posted on their Economic Tools: Grape and Wine Production webpage.
- Cost and Return Studies for wine grape production are published by UC Davis researchers, available here.
- Vineyard Enterprise Management Tool (2020) for small vineyards in the Eastern United States has been developed through a collaborative effort by researchers at Cornell University and Virginia Tech. Download the excel worksheet file here.
Primarily using crop insurance, has been evaluated to understand rates of participation in Oregon’s industry and to review incentives to adopt. These efforts have included:
- Graduate Student Chase Adams and Dr. James Sterns, associate professor in OSU’s Department of Applied Economics, recently completed a research project that examined participation rates in crop insurance programs in Oregon. This work is currently under review for publication.
- Outreach efforts highlighting incentives to adopt crop insurance have included a video, Oregon Grower Experience with WFRP Crop Insurance (2020), developed by Dr. Alec Levin, assistant professor and viticulturist at OSU’s Southern Oregon Research and Extension Center (SOREC), and Dr. Kent Fleming, adjunct professor and extension economist available here.
- Published research includes an article by Beau Olen, Analysis Identifies Need to Educate Wine Grape Growers on Crop Insurance Issues (2019). The Journal of Extension, 57(5), Article 15. https://tigerprints.clemson.edu/joe/vol57/iss5/15
Recent efforts related to the economics of managing smoke exposure have also been initiated. They will be developed in the coming years as part of the multi-state, multi-year USDA specialty crops grant project for researching smoke exposure in the Pacific Northwest wine industry.
Market Structure and Performance
This area of research includes evaluating the ongoing market implications of the current three-tier system of distribution in the US relative to Direct-to-Consumer marketing efforts such as Wine Clubs and Tasting Rooms. Much of this research is ongoing, though the after-effects of the COVID-19 pandemic have complicated this research, given that the pandemic will have a lasting impact that is still emerging. Additional research by James Sterns is evaluating issues of economies and diseconomies of scale in both Oregon vineyards and wineries, while researchers at the University of British Columbia are evaluating the viability of establishing a sustainability certification program and understanding wine territory competitiveness. Faculty at Sonoma State University have developed a video series that examines decision-making and best practices among wine business leaders as they build world-class brands, develop product innovations, and adapt to an evolving global wine industry.
The American Association of Wine Economists (AAWE) provides an important source of additional research findings related to wine economics. AAWE publishes a working paper series and a peer-reviewed Journal of Wine Economics, which has been published since 2006. These resources can be found on the AAWE website.
If you have further questions, please contact James Sterns in the Department of Applied Economics, College of Agricultural Sciences. Either by email at email@example.com or by phone at 541-737-1406.