As the down economy caused overall wine growth to slow to .9 percent in 2008, compared with a more vibrant 3.2 percent in 2007, according to Cheers parent The Beverage Information Group, restaurateurs nationwide have gotten busy rethinking pricing strategies. New strategies include building more value-focused lists and striving to move wine at all price points. As a result, most operators have put greater focus on domestic wines—and the good news is that the results have been positive.
Operators across the country reveal that although the “sweet spot” for what customers are willing to spend on a bottle of wine has changed, people still are buying wine.
“We’re having no trouble moving inventory, but the inventory we’re moving is different than it was a few years ago,” says Jonathan Fox, president and CEO of Chicago-based restaurant management consulting firm, 3Sixty Dining Intelligence, and owner of upscale pizza restaurant LaMadia and burger and pizza concept, The Lucky Monk, both also in the Chicago area. “People are drinking the same amount or maybe a little more than they were two years ago. But because they’re more conservative in spending, they’re trading down to less expensive and often domestic wines,” says Fox.
There are a variety of reasons Fox and others continue to be able to source domestic wines at a reasonable price. Some producers have changed their production and marketing strategies. Instead of focusing on more expensive wines designated as single vineyard, they often are expanding into more affordable second labels. Many producers also are using broader regional designations that let them source from multiple growers in a variety of regions, which can also lead to more affordable offerings.
Another reason that domestic wines are doing well is that the weakness of the American dollar has driven the price of European imports up, making domestic wines more attractive in comparison, says sommelier Andrew Stover, who manages the wine programs at Oya restaurant and lounge and Sei Sushi, both contemporary Asian restaurants in Washington, D.C. Stover points out that although there is still a plethora of attractively priced Spanish, French and Italian wine coming from obscure regions, well-chosen domestics continue to compete well with these imports in terms of flavor.
Not the Usual Suspects
Lesser-known and less established domestic regions can be goldmines for well-priced wines. Established producers who have owned their land for some time also often have the leeway to offer some price reductions. What’s more, says Fox, in some of the regions within California that were developed later—Santa Barbara, the Central Coast and Santa Lucia Highlands—real estate is a bit less expensive but great wine still is able to be produced. “I can buy a Chardonnay out of Napa, or I can buy it from the lesser-known Santa Lucia Highlands and get equal quality but at a lower price point,” says Fox.
Domestic wines fit well with the “buy local” and sustainably philosophy many Americans support. ”For us, local wines are selling better than most imports. People want something that they can say they know,” says Theo Rutherford, restaurant manager and wine director at Cafe Dupont and Bar Dupont, a French-influenced restaurant and bar at the 327-room Dupont Hotel in Washington, D.C. “Our best-selling local wine is Jade Mountain Vineyard Mourvèdre from Sonoma, California for $40 a bottle. We’re also doing a holiday special with the Thibaut Janisson sparkling wine from Charlottesville, Virgina for $10 a glass.”
“Sawtooth Syrah from Idaho really competes well against a Rhône Valley Syrah or a Syrah blend,” adds Stover. “We sell it for $10 a glass at Oya, whereas if we did a comparable French wine it would be $15. We also sell Okanagan Estate Pinot Noir from British Columbia for $12 a glass, whereas a comparable French pinot noir would be more than $15.”
“People are very curious about wines from other states,” says Stover, noting that his guests are finding that great wine can be produced in their backyard. Banking on this interest, Stover menus wines from Arizona, Southern California, Southern Oregon, Washington, Long Island, the Finger Lakes, Maryland, Virginia, Rhode Island and more. For example, Oya menus Dos Cabezas Sangiovese from Arizona for $12. At Sei, Stover sells an $8 glass of riesling from Left Foot Charley, a small winery in Northern Michigan. And from Ohio, Oya features a $11 glass of a viognier blend from Kinkead Ridge Winery in the Ohio River Valley.
Offering lesser-known wines by the glass also are a great way to get consumers to try new wines and for operators to reap distributor discounts. “Agree to a three-case purchase and the discounts can lead to more than 50 percent,” says Mark Buzan, beverage director for Pacific’s Edge at the Highlands Inn, a 148-room resort in Carmel, Calif., part of the Chicago-based Hyatt hotel chain. “This allows me to feature blue chip wines such as a Pride Mountain Merlot for $17 a glass and a MacPhail Pinot Noir for $15 a glass. Those are wines that I usually can’t offer by the glass. The clientele is gobbling it up!”
Familiar domestic brands shouldn’t be overlooked, however. Richard Brackett, general manager at Lydia Shire’s newest Italian-influenced restaurant, Scampo, at the 298-room Liberty Hotel in Boston, says “We’ve seen a lot more people going for ‘comfort zone’ wines that have recognizable names and good value.” He sells a lot of 2006 Groth Cabernet at $80, and is also doing well with Beaulieu Vineyard 2005 Georges de LaTour.
Buzan agrees that his guests are looking to spend money on proven varietals and labels that have been “cornerstones” of the marketplace. “Iconic labels such as Beringer, Beaulieu Vineyards, Silver Oak Cellars, Cakebread Cellars, Merry Edwards, Joseph Phelps and other similar labels are moving now even at the top end,” he says. On average, the “comfort zone” on a bottle is between $80 and $115. “Guests are more willing to spend their hard-earned dollars on labels that are time-proven and that give a sense of familiarity.”
Looking ahead to economic recovery, operators expect interest in domestic wines to continue to grow—especially as the wine-drinking demographic broadens as the younger, more adventurous Millennial Generation comes of age. Almost all the operators interviewed for this story said younger guests are buying more wine and asking more questions. “We’ve noticed younger guests being more inquisitive about our wine offerings, primarily domestics. About 80 percent of our tables have wine involved in some way with the meal, and younger guests are proving to be among them,” says John Sherman, beverage director for restaurant management company, The One Group.
“[The younger] generation has a very open-minded approach to wine and, without hesitation, will expand their horizons,” predicts Chantelle Pabros, sommelier at L20, part of the multi-concept Lettuce Entertain You Group. “And they are certainly more inclined to try something new—especially when it’s domestic.”
Fox agrees. “One of our most aggressive growth segments is with the younger demographic.”“I can sell an Idaho syrah to a 25-year-old girl much more easily than I can to her Dad because her dad doesn’t believe Idaho can produce wine,” sums up Stover of Oya and Sei Sushi. “The younger generation has fewer preconceived notions. They’re open and less worried about where it’s from than how it tastes. And they’re shaping what’s going to drive wine sales in the future.”