KENNEWICK, Wash. — Washington wine experts said the industry must change its narrative from problems growers and producers face, such as a “crushing” oversupply of bulk wine that has depressed grape prices.

“We are a really important wine growing region. We are making great wines,” said Kristina Kelley, Washington State Wine Commission executive director.

Washington’s wine world gathered for WineVit at the Three Rivers Convention Center in Kennewick, Wash., this week.

A state of the industry talk Feb. 6 at the annual event, held by the Washington Winegrowers Association, drew a standing room only crowd.

Price point

Adam Schulz, owner of Incredible Bulk Wine Co., said Washington has a 20 million-gallon oversupply of bulk wine, representing an excess of 20%.

It would take the removal of 10,000 of the state’s 55,000 acres of wine grapes in production to return the market to balance, he estimated.

The main problem is a national drop in wine consumption, Schulz said.

Demand for “value tier” wines priced at $12 and under has disappeared, and the timing coincided with a massive 2022 grape crop, Schulz said.

“The problem is, so much of the volume in our state is under $15 per bottle,” he added.

However, wines priced $15-$30 are seeing sales growth, experts said.

“We can outcompete everyone in the world at that price range,” said Erik McLaughlin, CEO of Metis, a mergers and acquisitions firm specializing in the adult beverage and hospitality industries.

Washington needs to boost its average bottle price from $11.20 to $17.50 — the mark in neighboring Oregon, he said.

Washington wine sales reached $543 million in 2023, accounting for 4% of the U.S. market on 3% of volume.

Oregon had $309 million in sales, capturing 2.3% of value on just 1.1% of volume.

Challenges

Liz Thach, president of the Wine Market Council, said in a prepared video that global wine consumption has been declining — the same as beer and spirits. For wine, that’s primarily due to weak China sales but also inflation, moderation and health concerns.

Compared to previous decades, however, U.S. wine consumption appears strong.

The industry needs to retain its older, core audience while recognizing the needs of young and multicultural consumers and using sustainability programs to connect, Thach said.

Wineries should produce at least one sweet wine as a gateway, she said.

While Thach called the anti–alcohol trend “scary” she said wineries should consider making a non-alcoholic wine.

Taking share

McLaughlin said Washington needs to acknowledge the declining market and increase demand for its products to take a larger share.

That state’s industry features numerous boutique wineries, but looking at averages has masked the success of those businesses, McLaughlin said.

Staying small and focusing on direct-to-consumer sales has proved a sound strategy for wineries individually. Collectively, however, it’s resulted in few wineries competing nationally.

Washington needs more medium-sized wineries to build its brand, McLaughlin said.

Kelley said the state must ensure distributors operating in this shrinking climate stay aware of Washington wines.

“We need to get more of our wine out,” she said, adding that was true even at the state level.

Oversupply issues

Some wine makers holding on to product will run out of tank space — and some facilities didn’t produce last season, Schulz said.

The 2023 grape harvest was light but high quality, Schulz said.

A large crop seems likely this year, but extreme cold for some areas in January caused vine damage that may be insurmountable, he added. Oversupply may benefit a few businesses.

Schulz said a cooperative for grape oversupply may be helpful and spur development of ready to drink cocktails, distillations and even cosmetics to diversify.