(WSJ) - This remote swath of West Texas, dotted with bobbing oil-pump jacks and Angus steers, is never going to be confused with California’s Napa Valley or Bordeaux.

But among the rows of white-tufted cotton plants that have long been the area’s cash crop, farmers are increasingly cultivating a new product: wine grapes.

“I’m a West Texas boy who drinks beer,” said Brent Hogue, whose family is now growing Merlot and Albariño grapes alongside cotton. “With grapes we can hopefully survive in the farm.”

The Lone Star State now ranks as the nation’s fifth-largest wine producer, after California, Washington, New York and Oregon, according to Wines Vines Analytics, the research arm of trade publication Wines & Vines. Last year, Texas winemakers churned out 1.8 million cases, 36% more than in 2010.

The state’s industry generated $1.88 billion in economic activity in 2013, the most recent year available, a report by the Texas Wine and Grape Growers Association said last month.

Texas wine connoisseurs say the state has the potential to become a world-class wine region, pointing to numerous awards won by local vintages. Wine Enthusiast magazine rated the scenic Texas Hill Country region outside of Austin among its 10 best wine travel destinations world-wide in 2014, saying oenophiles could take in “the romance of the Old West” amid “a sea of cowboy hats and pickup trucks.”

But there is a problem. The extreme weather in many parts of the state isn’t always conducive to grape growing. So to fill their bottles, some Texas winemakers have been forced to import grape juice from California. By federal rules, however, a bottle can only carry a Texas appellation if 75% or more of its contents were harvested in the state. The result: bottles carrying labels emblazoned with motifs like Lone Stars and cowboy boots, but bearing an “American” instead of a “Texas” appellation.

That is why farmers in Terry County, part of the Texas panhandle, are sensing a market opportunity in wine grapes.

A long-standing drought and falling cotton prices are also enticing more of them to plant grapes. A vineyard costs more than $10,000 an acre to put in, but can generate as much revenue as 40 acres of cotton with a fraction of the water use, according to Andy Timmons, a longtime grape grower.

The semiarid region isn’t as picturesque as the Hill Country. But it is productive: experts estimate that well over half of Texas wine grapes already come from there. Its high elevation is good for wine grapes, which thrive when cooled off at night.

The area’s late spring frosts can decimate tender vine shoots, however, making grape-growing a risk. Last year, some local growers lost about 40% of their crop to frosts, and around 90% two years before, according to Ed Hellman, a viticulture professor at Texas Tech University in Lubbock, Texas, the biggest city around for miles.

Texas is far from alone in its winemaking ambitions. Every state, including Alaska, boasts at least a couple of wineries. States like Virginia and Michigan have been adding new wineries in recent years and gaining some critical acclaim. But the Lone Star State has taken to wine with characteristic swagger.

Texas Monthly will only feature Texas appellation wines in its recently launched wine club, meant to showcase “the flavor and the taste of Texas,” said the magazine’s wine critic, Jessica Dupuy.

As demand rises, vineyard owners are plowing ahead, buying fans and heaters to protect vines from frost and scouring the world for grapes such as Italian Montepulciano and Spanish Tempranillo that are more likely to do well on Texas soil than delicate Pinot Noir and Chardonnay.

“It took about 30 years to when we realized that we weren’t Bordeaux, and we sure as hell weren’t Burgundy,” said Russell Kane, a Texas wine lover and author also known as the Wine Slinger.

Kim McPherson, owner of McPherson Cellars, who makes wine at a former Coca-Cola bottling plant in downtown Lubbock, is trying hard to get his products on fine restaurant menus and store shelves across the country. But he says he can’t find enough Texas grapes to fulfill the requests he gets.

Still, local winemakers say, the industry has come a long way. Llano Estacado, another local winery, started out in the mid-1970s producing 1,300 cases. It now puts out some 170,000 cases a year and is adding an event room to host wine parties.