Wednesday, March 18, 2009

The Pouring Trip: A micro look at wine sales

Before the Storm, Cerro Prieto Vineyard, Spring 2008

We are just back from our first pouring trip, and it was an eye opener. Following our first bottling several months ago, we were anxious to get our new, 1Ton/acre wines "out there", convinced that once someone tries them, the wines will sell themselves. Starting a new venture into the teeth of the worst recession since the 1930's, we pressed ahead, anxious, but nonetheless, optimistic. "Always room at the top", as the saying goes. We had an excellent product, and priced it fairly, taking 25% off the top just because of the financially chaotic times. People want...people demand and deserve true quality at an affordable price. That is our niche and we believe we have filled it.

We concentrated on the upper end wine market in North County area of San Diego, meshing a post-op check up at UCSD med center with some wine pouring. What we saw was a bit surprising: In the area we visited, there is still a bunch of money being spent at large, up-scale shopping centers, but we were wine-centric and found interesting tidbits of info.

First of all the wine industry is not dead, nor is it on life support. It has, however, shut down at the upper price end, even in extremely wealthy areas. The most common comment in some very nice wine shops, wine bars, and restaurants was that there is a cap on what consumers will pay. Wine bars for the 20-30 yr old crowd are selling lots of wine, but it just doesn't sell much over 20 to 30 bucks. Yes, many have the higher end wines in stock, but as several sellers mentioned:

"Over a hundred bucks, and nobody is buying".

It seems retailers have seen a $100 cap on bottles, and their really high-end Napa stuff had just been sitting on the shelf for some 9-12 months. While waiting to chat with one wine shop owner, I watched a customer fill 3 cases with Spanish and Argentine wines, all in the $7-$10 range. He was putting on a party and obviously was shopping for value, with Tempranillos, Malbecs, and the like. His comment was, "This Spanish and Argentine stuff is a great deal".

We were waiting in line to show our wares, a $39 Cerro Prieto Merlot and our signature blend,
$49 Cerro Prieto Paso Bordo(85% Cab/ 15% Syrah), when we overheard part of a conversation between two Napa reps and the store owner. Gist of the conversation was that the fellow from Napa was putting the hard sell on the owner for some pretty pricey wines(Cabs, Syrah, blends) and the owner wasn't too happy about it. My wife commented that we would be facing a tough sell. The owner had a mask-like countenance and said nary a word to the reps.

When our turn came, the owners came over to us, we had a nice conversation, and they truly seemed to enjoy our wines. We don't know if we made a sale, but we did make good contacts, and witnessed first hand that even in tony high end neighborhoods, $100 is the max that wine drinkers will pay. However, the average customer is counting his nickels, and is buying quality, much of it from the Argentine and Espana. At true wine bars, clientele seemed to be younger, and again, drank with $5 to $7 / glass, and happy hour was full...but later was nowhere near as busy.

Fine restaurants in the area were also hurting, with traffic down by 20-30% or more (their own words), and wines at dinner were mainly based on value, not brand. If folks were drinking, it was not only yummy, but it was good value. $30 to $50 bottles were sold, but more often a glass at
$7 to $12 was sold rather than a bottle over $40. Mind you, this area had a jam-packed parking lot full of BMWs, Mercedes, and Lexus' but even the well-to-do were watching their wine spending.

Less exclusive wine bars did land office happy hour business, but with wine at 4 to 5 bucks/glass.
So people out of the Napa area are buying...just not their stuff. Also, no question some eateries have closed down. One wine shop was now serving high-end wine/food dinners to try and attract back their clientele. There were lots of long faces on this trip, and a lot of folks really struggled to sell wine. High-end places were selling low cost value wines to try and capture the market.

Here at home, in the Paso Robles area, the situation mimics the pricey areas in SD: good but lower cost Spanish and Argentine wines mixed with inexpensive local wines, but high end just isn't happening. Restaurants serving food comparable to San Francisco cuisine are moving higher end wines; still, there seems to be an aversion to wines much over $100. Gourmet dinners may have an $80 or $90 bottle sitting on the table, but $40 to $70 bottles are more likely.

At the end of the day, our trip was a start, not a success. We are waiting on some retailers, but are hopeful only. This is a tough market, no matter how you slice it. Right now, the demand is for great quality at an affordable price. Sound familiar?

(The above article appeared as a guest piece yesterday in the Wine Sooth, an excellent blog by Art Przebinda.)

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