The Winery Landscape 1994 - 2017

In the 23 years I have owned LaVelle Vineyards, our business philosophy has not changed much. We remain a small, family owned, locally focused winery. We sell almost all of our wine direct to the consumer, and our customers are almost all in the Eugene/Springfield area. We are still the same family, the same company, and the same business we started out to be. That sounds like a pretty simple proposition, right? Well, not really. Why? Because the marketplace in which we operate, the business landscape all around us, has changed so significantly that just trying to be who we started out to be gets more difficult with every passing year.

In 1994, when I bought our winery and vineyard property, there were only four wineries in this area. Imagine the local wine tasting experience today without King Estate, Sweet Cheeks, Sarver, and Benton Lane wineries, just to mention a few. People didn't do a lot of wine touring in the country back then because there simply weren't many places to visit. Today there are several dozen wineries in and around Eugene and wine tasting has become a great way to spend a pleasant day in the country. It's a wonderful trend if you're a consumer, but if you're a small winery trying to find a way to be noticed in an increasingly crowded landscape, it is daunting. It's like an individual voice trying to be heard in a room full of people who are all talking, with new people entering the room all the time. How can we be heard?

Then there's what I like to call the "Costco Effect." There are other similar outlets, like Fred Meyer and Market of Choice, but it is about places that offer a pretty decent bottle of wine for less than it costs at a local winery. Even with our wine club discount, a bottle of Pinot Noir from LaVelle Vineyards is more expensive than a bottle another Oregon Pinot Noir at Costco. I could argue that what you buy there is generally not as good as our wine, but it's not bad and the price is very appealing. And it's convenient , too - right there in front of you anytime you're in the store. And this is not one of those situations where one might say, "if you can't beat them, join them." The wholesale distribution market is driven by low prices and high volumes and most small wineries simply do not have the option of playing in that game. So how do we compete with the Costco Effect?

Finally, there's beer. Yup, beer. Just 20 years ago, there wasn't much of a local beer industry in this area. I recall Steel Head and McMenamin's but I cannot name any others. Now there are Ninkasi, Hop Valley, Oakshire, Elkhorn, Agrarian, and many, many more. My point is that, to a certain extend, hand-crafted local beers compete with hand-crafted local wines. If you're a consumer that's pretty cool. It means there are more ways to spend your free time in this great little city of ours. If you're a winery owner, well, that noisy room just got noisier.

Our business model has always relied heavily on selling our wines direct to consumers where the volumes are lower, margins are higher, and the product (the wines, the events, the staff, etc.) must be superb. The model hasn't changed but as I've tried to show you, the landscape in which we must operate most assured has changed - and dramatically. In the beginning, the room was small and there weren't many people talking. The problem back then was that there weren't very many people listening, either. Back then we were trying to create a following in the local area for our business, our product, and our industry. Today there are lots of people listening, but the room is filled with noise and differentiating your message from the other guy's is a real challenge.

In my next blog article, I will talk more about how we intend to meet the challenges we face. I want to talk more about the changing landscape and how we are dealing with competitive pressures coming at us from many different directions. I want to talk to you about our product, our people, our events, and what I call the total wine experience. I want to talk about how social media has changed the game. I want to be sure that you, our most important customers, know how we plan to move forward in the coming months and years and how we hope to continue to earn your trust and support. I hope you will be listening.


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