Posted on | May 1, 2012
Written by | Jeff Siegel
The Blue Duck Tavern in the Washington, DC, Park Hyatt hotel attracts a lot of international visitors, given its location. So what happens when they see 18 Virginia wines on the restaurant’s list?
“They’re really not sure,” says German Broggi, the hotel’s beverage director. “When European travelers see a Bordeaux blend, they think it comes from Bordeaux, not from Virginia. It’s a lack of awareness. Or if they do know about Virginia wine, they doubt the quality. But when they taste it, it’s a big surprise. They’re impressed with the wine.
”And why not? Regional wine—that is, wine made in the 47 states that aren’t California, Washington and Oregon—is hot. It’s among the top 10 restaurant menu trends for the second consecutive year, according to a National Restaurant Association survey. Wine is made in all 50 states, and the number of regional wineries in the United States increased 44% between 2005 and 2010, from 1,550 to 2,765, reports the Wine America trade group. Four states—Texas, North Carolina, Minnesota, and Virginia—saw mostly triple-digit growth over that period.
“This isn’t your father’s regional wine anymore,” says Washington Post wine columnist Dave McIntyre, the co-founder of DrinkLocalWine, a group whose goal is to spread the word about regional wine. “Local wine is not only better made than ever before, but it’s easier to find and consumers are more of aware of it than they were 20 years ago. If local food, why not local wine?”
In this, regional wine can help retailers and restaurateurs add to the bottom line and enhance their reputations. Local wine attracts a younger demographic that is more open-minded about wine, and its margins are often higher than better-known national brands. Equally as important, regional wineries are usually willing and eager to help market their wines.
Here, then, are some things retailers and restaurateurs need to know to take advantage of regional wine:
These wines can’t be any good… or can they?
Regardless of medals and awards and critical accolades, regional wine is still seen by much of the marketplace as inferior.
“Even today, when I pour wines in New York or Chicago, I don’t tell them the wine is from New York,” says Oskar Bynke, the managing partner for New York’s Hermann J. Weimer Vineyard, whose wines are sold in New York City, Chicago, Boston and DC and whose company has seen sales increase 20% a year over the past five years. “I’ll wait until after they taste it,” he notes.
Ironically, New York and other states face the same stigma that California wine fought in the 1960s and 1970s and that Oregon and Washington state wine had to overcome in the past couple of decades. There are any number of reasons for this: the parochialism of the wine business, poorly educated consumers, and even what Eddie O’Keefe III, the president of Michigan’s Chateau Grand Traverse, which produces 100,000 cases a year, calls local bias. “I’ve seen it multiple times in my life,” he says. “If it’s from around here, it can’t be as good as something from 1,000 miles away. I’ve had to battle that my whole life.”
Regional wine quality has improved for three reasons. First, its wineries are better capitalized and managed than ever before, and can afford to make improvements that the mom and pop operations of the 1980s and 1990s could only dream of. Second, regional winemakers are better educated and more adept at working with their specific terroir. They’re more likely to be professionals trained to the job, rather than the second-career winemakers who pioneered the regional business. Third, the past couple of decades of experience have taught regional wineries that grapes that make the best wine in California don’t necessarily make the best wine in Pennsylvania or North Carolina.
In its early days, regional wine suffered because California had done such a good job convincing consumers that the only wines that mattered were Cabernet Sauvignon, Chardonnay, Merlot and Pinot Noir. So regional producers had to use these traditional varietals to stay in business, even when their terroir wasn’t suited to them. That approach has changed, so that states with warmer climates grow grapes from Spain, southern France and Italy, while states with humidity, pest and disease pressures grow native and hybrid grapes. In fact, researchers have developed hybrids to address just such issues.
Understanding the distribution equation
The biggest problem facing regional wine, after the perception of quality, is distribution. Despite progress over the past several years, many obstacles remain. There are 51 laws for 50 states (can’t forget the District of Columbia); what works in one state may not work in another. Compounding the problem is that some states—like Indiana, home to Oliver Winery, whose case sales top 250,000 annually—have producers that make enough wine for mass distribution, while others, like Colorado, are a collection of small wineries that sell mostly through their tasting rooms.
That means that retailers and restaurateurs in each state must check their state’s rules, says Andrew Stover, who runs Vino 50, a two-year-old wholesaler that handles 11 regional wines in the DC metro area, and is one of the country’s foremost authorities on regional wine distribution. Texas, for example, allows self-distribution, in which wineries are allowed to sell directly to on- and off-premise accounts. Oklahoma, on the other hand, is much more restrictive; wineries that want to sell outside of the tasting room must have a distributor.
Pints of difference
What makes a restaurant wine list or a retailer’s shelf unique? Having something that its competitors don’t. And regional wine does exactly that.
“A smart retailer or restaurateur understands what’s going on in their region, and acts on it,” says Michigan’s O’Keefe. “They’ll know that there is a demand for regional wine, and they’ll want to go after that market.”
Stover agrees, pointing to the success that a DC-area retailer, Cleveland Park Wines and Spirts, has had with regional wines. The store can’t match much of the competition in number of SKUs and pricing, but can offer wine that customers can’t get anywhere else. “Retailers can sell these wines,” he says. “The key is to get the person on the floor excited about it, and you can do that if you’ve made a commitment to finding something that is unique.”
Making pricing work
Another mark against regional wine is that it isn’t price competitive. That might have been true a decade ago, but the growth in regional wine has opened up pricing at all levels. There are quality wines at most price points, and savvy retailers and restaurateurs take advantage of that.
“We definitely have to be competitive,” says the Finger Lukes-basedBynke. “We have to be competitive with the wines that compete with us, the German and Austrian Rieslings.”
In Dallas, for example, sommelier Hunter Hammett of the Fairmont Hotel’s Pyramid Room has added a Vermentino from Texas’ Duchman Family Winery to his by the glass program. He sells the wine for $8 a glass; it retails for about $14 a bottle. That price point, say those who sell and distribute regional wine, is a hand-sell, but it allows customers to try something different without intimidating them.
How many retailers and restaurants have the luxury of vendors who market their product extensively, at no cost to the store or restaurant? That’s what happens regularly with regional wine.
Since the cornerstone of regional wine sales is the tasting room, regional wineries strive to bring consumers to them to sell wine. That means the best regional wineries promote their products enthusiastically outside of their immediate market area—upstate New York in Manhattan, for example, and Texas’ Hill Country in Dallas and Houston.
The biggest secret of the regional wine business is that its consumers are younger, more open to trying new things, and not tethered to traditional wine notions, says Doug Caskey, the executive director of the Colorado Wine Industry Board. Gray-haired Baby Boomers may still look for scores and Parker ratings to help them select wine, but Gen Xers and especially Millennials have a less structured approach.
“Their view of wine is less top down and more bottom up,” says Caskey. “They ask their friends. They use social media more. They’ll try something they’ve never heard of before because it’s local or because it’s different. They don’t want to drink the same thing their parents are drinking.”
Being part of the local movement
It’s difficult to over-emphasize how important the idea of eating local is becoming, especially among consumers who are the demographic for regional wine. It can be seen in the growth of community-supported agriculture (local farms that sell local products to consumers), which has more than tripled in the past decade, according to the Rodale Institute.
The relationship between local wine and local food has been spotty, but does seem to be improving as more chefs who feature local food add local wine to their lists. One convert was Jensen Cummings, the executive chef at Denver’s Row 14, who recently added Colorado wines to his list after a blind tasting. He was surprised, he said, at the quality of the wines and realized that he was being remiss in not having local wine at a restaurant that features local food.
“Is local making a difference? Absolutely,” says Bynke. “We’re getting more requests for our wine because we are local. It’s part of the farm to table approach.”