High-end wine sales fallBuyers feeling financial pinch flocking to $9 and cheaper labels
In most years, store manager Diana Hirst considers herself lucky if she can snag six bottles of $265 Araujo Napa Valley cult Cabernet Sauvignon to stock in her Costa Mesa, Calif., wine shop.
This year, she can get dozens – a sign of how the Wall Street meltdown is rippling across the alluvial fields of California’s Napa Valley to the chalky limestone vineyards of Champagne in France.
Sales of high-end wine are plummeting, according to wine merchants, and once-rationed top California Cabernets are in ample supply. The coveted 2005 Chateau Mouton-Rothschild from Bordeaux is languishing on store shelves for $549, an astronomical price for less than a liter of fermented grape juice. That’s a bargain, though – the wine was being sold for double the price just a few months ago.
And Champagne – that universal symbol of largesse? Sales have plunged because of “the state of the economy,” said Randy Kemner, owner of Wine Country in Signal Hill south of downtown Los Angeles.
People are still drinking wine. They are just spending less.
“I still drink wine with my wife every night, but before, I might have bought Santa Barbara County pinot noirs for $20 to $30. Now I am paying $9.99 for a Castle Rock pinot from Mendocino County,” said Pablo Urquiza, a freelance television producer who lives in Los Angeles.
He’s not alone.
Sales of wine for $9 or less make up the fastest-growing segment of the wine market, while sales above that price are starting to trend down, said Jon Fredrikson, a Woodside, Calif., industry analyst.
Consumers are trading down to wine they consider “values,” Fredrikson said.
Kemner of Wine Country is trying to get ahead of that trend.
In October, he went on a supermarket shopping spree, purchasing about 50 bottles of mass-market “corporate wines of the type we usually don’t sell,” he said.
The wine merchant and his staff tasted the wines and selected two dozen to offer in the store as “recession busters” starting from $5.99 for FishEye Merlot to $14.99 for La Crema Chardonnay.
Armed with his sales receipts, Kemner demanded a price break from his distributors so that he could match supermarket prices and still make a profit.
Kemner hopes the less expensive selection will take off with the holidays. Sales at Wine Country were off 28 percent in October compared with a year ago.
November sales ran about 16 percent below last year’s figures, even after factoring in a bump-up from the presidential election earlier this month.
“We are working leaner, and we are still profitable, but we understand that we have to dig around for wines that overachieve,” Kemner said.
Hirst also is pushing bargain wines at her Hi-Time Wine Cellars in Costa Mesa. She’s looking for lower-priced wines from Spain, Argentina and Chile to fight off the slump in costlier selections.
“Every time the stock market takes a dive, we see a few slow days,” Hirst said.
Champagne and signature California reds such as the 2005 vintages of Robert Mondavi Reserve Cabernet Sauvignon and Joseph Phelps Bordeaux-style blend are particularly slow even though they are well-regarded wines, she said.
Hi-Time Wine has cut its inventory by about 10 percent, Hirst said.
“Our sales are down about 10 percent, and I am surprised they are only down by that amount,” said Ron Melville, owner of Melville Vineyards and Winery in the Santa Rita Hills in Santa Barbara County.
At Charles Krug, visitors to Napa Valley’s oldest winery are spending less, said Peter Mondavi Jr., whose family owns the business. Tasting room sales have held up only because the winery has undergone a major renovation and more people are visiting, he said.