Oregon Public Broadcasting

Wine grapes hang nearly ready to pick at Red Mountain, Washington.

The bad economy has hit the Northwest wine industry hard.

That's especially true in the market for high-end wines.

In the last 20 years, Washington alone has added 600 new wineries.

Now, signs of stress are leaking out in one of the region's wine hubs, the Walla Walla Valley.

In part two of a series we are calling "The Crush," Correspondent Anna King went to this tight-knit, pastoral valley to see how winemakers are adapting.

Gilles Nicault makes some of the most prestigious wine in Washington State. His company flies rockstar-famous winemakers in from Napa, Italy and Australia to craft wine from Northwest grapes.

Nicault, a Frenchman, even sounds the part of a cult winemaker as he caresses the vines and checks the grapes.

Gilles Nicault, a winemaker for Long Shadows out of Walla Walla, Wash., inspects his grapes on Red Mountain. He will visit his vineyards nearly every day during harvest to pick the grapes at their peak.

Gilles Nicault: "It's like its whole life. It's like a little baby, you take the little baby from the beginning to the end and it's almost like when you love winemaking it's very similar."

Walking through acres of his "little babies" Nicault inspects the grapes' color and the vine canopy. He even pops a few into his mouth to taste the developing flavors.

Timing is key. He does everything to make sure the grapes are picked at their peak. 

But caring for all these acres of grapes is expensive. Plus there're the barrels, taxes, and crushing machines to pay for. Nicault's wine runs from about $20 to $60 a bottle. And in this economy, that wine isn't selling so fast.

The Northwest's explosion of growth in the wine industry is slowing down.

Gilles Nicault: "I haven't heard of as many wineries for sure starting up right now. It's pretty easy to see right now there are enough wineries for the moment."

As a result, things that used to run smoothly across the wine industry are starting to break down. Wineries are dumping grape contracts right before harvest. Nicault says winemakers have even become leery of trusted distributors and restaurants.

Gilles Nicault: "Getting your money back, getting paid, getting your money sometimes could be an issue nowdays too between people that can not pay you back and people that go bankrupt."

Further putting the crush on wineries, many restaurants and collectors are using wine out of their cellars instead of buying new vintages.

To combat a slowing sales register, Nicault says he's had to hit the road more and push into new markets to promote his wines. Nicault only makes upper-end wine for Long Shadows winery. But now he says that might change. He's working on a plan to take wine he used to sell off in bulk and put it into a new cheaper second label.

So-called value wines are even enjoying a boost. Sales of such labels from Washington's largest winery, Chateau Ste. Michelle, are up 17 percent from a year ago. Next year it plans to make less of its more expensive brands like Col Solare and Northstar.

The down economy has hit the Northwest's premium wine industry hard.

Across the Northwest some wineries have cases stacking deep in their backrooms. Ron Coleman is the owner and winemaker of Tamarack Cellars in Walla Walla. He says if you take the mystique away, wine is just a grocery store item.

Ron Coleman: "There's probably 80 choices in a cereal aisle, whatever. Well as a wine buyer in a major store, California alone probably produces a couple thousand Chardonnays alone. One flavor from one place in the world."
And Coleman says the Northwest has the same problem of crowding. And he predicts some wineries won't make it to next year's crush.

A brief, scenic drive from downtown Walla Walla is Rick Small's place. He's one of the most famous winemakers in the Northwest. His Woodward Canyon winery was one of the first established in Washington and his chardonnay vines are the oldest in the Walla Walla Valley. Standing amid some of his vines, a loud speaker blasts bird distress calls over our heads. It keeps hungry birds away.

Small's been around this industry a while. He's seen other downturns create times of distress in the wine industry, but this time it's different.

Rick Small: "This is philosophical. People want to buy school clothes for their kids, they are going to need to buy toilet paper, but they aren't going to have to buy $45 bottles of wine when they can buy a $15 bottle of wine or a $22  bottle of wine that's almost as good and gives them nearly as much pleasure and enjoyment at dinner.
Small says in the new economy many consumers may change their habits permanently, and that means wineries will have to adjust.

Rick Small: "I'm prepared for it to change, I'm planning on it."

Small pulls down more than $100 for some of his bottles. He recently started selling a non-vintage red wine for about $12. It sold out, so he's making more.

Online:

www.longshadows.com

www.ste-michelle.com

www.tamarackcellars.com

www.woodwardcanyon.com