The latest detailed report on the state's wine industry underscored Southern Oregon's incremental growth both in grape harvest and wine production.

The latest detailed report on the state's wine industry underscored Southern Oregon's incremental growth both in grape harvest and wine production.

The Rogue Valley saw increases in the number of vineyards, planted acreage and harvested acreage. There were 126 vineyards in the region during 2012, an increase of six from the year before; 340 additional planted acres, pushing the count to 2,440; and some 2,176 acres harvested, up from 1,900.

"Southern Oregon has continued to show strong expansion in acreage planted and wineries established," said Michael Donovan, managing director at Irvine Vineyard in Ashland and president emeritus of the Oregon Winegrowers Association board.

"We're doing a better job of telling about our soil types and the volcanic region. That's why more people are willing to come and make the investment to sell grapes here; we're going to see that more and more in the next five years."

The Rogue Valley includes the Applegate Valley in the annual vineyard and winery census report, compiled by the Southern Oregon University Research Center for the Oregon Wine Board.

2012 proved a less-bountiful year than 2011, as Rogue Valley tonnage declined to 2.29 tons per acre from 3.56 a year earlier. Overall, tonnage declined to 4,983 from 6,771.

The Rogue Valley's 65 wineries crushed 6,451 tons and barreled 1,890,000 gallons in 2012.

"We're looking at an industry with a dichotomy," said vintner Herb Quady, who is Troon Vineyard's winemaker, operates Quady North Winery and runs Applegate Vineyard Management.

"For every Kriselle Cellars or Ledger David Cellars that comes in — only making a couple of thousand cases on five or six acres — there still needs to be larger players. You have to have the larger players to support the supply companies and vineyard management companies."

Quady is aware of another 700 acres scheduled for planting during 2014, including 100 acres in the Applegate.

"I wish we all had crystal balls, but I see a couple of different things happening," Quady said. "I see the really small-scaled wineries growing in numbers, primarily selling direct, trying to build distribution outside the area. Then there are a growing number of established wineries with growing sales outside the area."

Growth can be sustained, Quady said, provided wineries survive to maturity and scale to the point of making money.

"Everyone knows you can only sell so much wine locally," he said. "Direct sales is going to be a linear thing, depending on visitors to the area, and there should be steady growth. The growth outside the area depends on the quality you produce and how receptive the regional and national audiences are."

Pinot noir, good for 1,436 tons, and pinot gris, 870 tons, topped all Rogue Valley production in 2012. From a commodity perspective, pinot noir was the most valuable crop, averaging $2,057 per ton in 2012, followed by syrah at $1,698. In 2011, syrah topped the local chart at $2,070 per ton with pinot noir pulling in $2,030 per ton on average.

While 3,340 tons were grown on local estates, another 40 percent were purchased from other in-state sources. Wineries throughout Oregon, however, were willing to buy grapes from outside the state.

Demand from Willamette Valley wineries will continue to make pinot crops a good investment, because local grapes allow large northern wineries to produce reasonably priced pinot noir and pinot gris.

"When you buy a Kendall-Jackson chardonnay, zero of it comes from Napa Valley, but you can get it for $12 to $14," Quady said. "It's not as good as a Napa chardonnay, but regular wine drinkers can appreciate it because they can get it for a reasonable price. Those grapes come from huge portions of California, from Monterey, Santa Barbara and the Central Valley.

"That's similar to Oregon, where you can get a pinot from Southern Oregon grapes. It's different from a Willamette Valley pinot noir with a higher quality and value."

"Small wineries are going to be the norm in Southern Oregon, because we don't have a vast expanse of land to allow for 300-acre parcels of grapes to be planted and sold," Donovan said. "It'll continue to be a mix of small and medium vineyards and wineries, with a few large-producing wineries. Bridgeview (outside Cave Junction) is still among the largest wineries in the state."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, friend him on Facebook and read his blog at www.mailtribune.com/Economic Edge.

Correction: The number of gallons produced has been corrected throughout this story.