Consumers shaken by the down economy are cutting back on the luxuries, but – so far – holding on to their bottles.
Sales of Washington-made wine and craft beer are holding up and increasing in some areas, despite the down market.
Owners of Vino Aquino, a small winery at 2607 Sixth Ave. in Tacoma, said their wines, ranging in price from just under $10 to about $25 for some dessert wines, are faring well with customers.
“We’re not seeing any growth, but we’re not seeing any decline either. We’re just holding our own,” said Richard Aquino, one of eight cousins running the family business.
Aquino said the store’s sales are up 4 percent so far this year.
Vino Aquino’s wine is sold out of the store only and not through distributors, which shields it from a dip in alcohol sales at many restaurants.
To save money, the family plans to move its store to a new location at Sixth Avenue and Stevens Street in April, which will cut rent expenses in half.
FACE-TO-FACE SALES
Other local wineries say a blend of restaurant and face-to-face sales has been keeping their wines above the red line.
For Matthews Estate winery in Woodinville, a 15 percent increase in wine-tasting traffic cushions the blow of an overall decrease in sales, especially in wines sold at restaurants.
“The tasting room visits are kind of the in thing to do,” said Jim Rubstello, part owner of the winery, noting the foot traffic on a sunny February day.
About a mile down the road from Matthews Estate, Narinder and Pramilla Euthra cozied up to the tasting bar at Brian Carter Cellars, where they are wine club members.
The Euthras say wine will be their last luxury to go.
“Where the wine is concerned, we are not (cutting back) but in other parts,” Pramilla Euthra said.
Narinder Euthra said they have cut from their budget expensive hobbies, eating out and traveling.
Deb Stillwell, the tasting room attendant at the cellar, echoed the sentiments of her patrons.
“I think people who are saying, ‘I can’t travel to Italy right now’ are saying ‘Damn it, I’m going to have an Italian grape!’” she said while pouring them another glass.
But the Euthras, originally from Europe, say they prefer the local flavor.
“We brag about our Washington wine,” Pramilla Euthra said.
LOCAL SELLS
They aren’t the only ones funneling their wine dollars toward the local economy, according to the Washington Wine Commission.
Ryan Pennington, spokesman for the commission, said wine drinkers in this economy are trading their pricey imports for local brands.
The number of Washington wineries has nearly quadrupled in the past 10 years, topping 600 in March.
Following such rapid growth, wine economist Mike Veseth, who is also an economics professor at the University of Puget Sound in Tacoma, says the recession could take the industry back down to size and leave only the best brands standing.
For many winemakers, their small shops are full-time hobbies that have never returned their investments.
“I do think that many of those 600 wineries aren’t really built on a profit-making model,” Veseth said. “Their survival will depend on their other income.”
Morgan Lee, assistant winemaker at Covington Cellars in Woodinville, says it’s economically unwise to start a winery, though he loves working for one.
“It’s a ridiculous business model. To make a small fortune in the industry, you have to have a large fortune to begin with,” he said over the phone while lugging cases around the shop.
Lee said the overhead costs to launch a winery can total at least $10,000 to produce two barrels – a cost winery owners must swallow for about two years until the product is ready to sell. Starting a vineyard alongside a winery can take up to five years before bottles hit the shelves, he said.
“So you’re just hemorrhaging money before you can sell a single thing,” he said. “You have to have money to start with – or a good loan.”
Phillip Coates started Coates Winery, the only grape-to-bottle maker in Tacoma, out of a basement near his wife’s chiropractic shop.
Though the startup is an investment instead of a profit machine so far for the former Russell Investment Group employee, Coates said he is confident his product will survive the recession.
“At the beginning of this, they said alcohol and health care would do well. My wife and I seem to have stumbled into both,” he said with a chuckle that hung in the chilled cellar air.
His sole release, a peppery 2003 cabernet sauvignon called Pont 21, is available at the Rosewood Café at 3323 N. 26th St. for $27, or for less out of his shop.
TRADING DOWN
Veseth said wines selling in the $30 to $50 range will be affected most by the “trading-down effect” as consumers opt for a cheaper wine of comparable quality.
“Those who were comfortable spending that much, now hesitate,” he said.
Eric Awes, wine steward for QFC in Gig Harbor, said he started to see a slight decline in sales about six months ago.
His customers have reacted differently to the poor economy, and their wine choices are showing it.
“It’s not as freewheeler spending as it used to be,” he said while tasting the latest selection at J. Bookwalter Winery in Woodinville.
Frequent wine drinkers tell Awes they are still enjoying a daily glass, but switching to a lower-priced wine, while fewer buyers overall are willing to swallow the cost of a $200 bottle.
As a retailer, Awes said he’s trying to keep his prices economically relevant by featuring lower-priced wines in the window.
He said occasionally customers splurge on pricier wines to pair with dinner at home instead of eating out.
RESTAURANTS AND BEER
Restaurants are noticing this trend in their alcohol sales as well.
Smitt Rojanasthien, a server at Palisade restaurant in Seattle, said guests are drinking differently, though traffic hasn’t been down as much as expected.
Paul Gatza, director of the Brewers’ Association out of Boulder, Colo., said people are still going out, but trying to drink more cheaply.
“The number of butts in seats isn’t down, but tickets are way down,” Gatza said.
Palisade is catering its high-end menu to be more budget-friendly by offering deals, such as 20 bottles for less than $30, and collectively stocking cheaper wines, Rojanasthien said.
“People are still drinking wine,” he said while sampling the selection at Novelty Hill-Januik with co-workers from the restaurant, “They’re drinking lower, looking more toward value-driven wines.”
Gatza said many restaurant-goers are finding beer to be the less expensive option when dining out.
“In restaurants, people are not buying that $25 bottle of wine. On draft, they can get one of the finest beers in the world for 10 bucks or less,” Gatza said.
Discount beer sales have grown despite the deepening recession, while sales of high-end import beers fell for the first time in 17 years, according to the association.
But the real bright spot, Gatza says, is the local craft brews.
Mac & Jack’s Brewery in Redmond is among the national craft breed that grew nearly 6 percent by volume and 10 percent in sales last year. Restaurants offer the beer for $6 a glass.
The local brewery ranked No. 36 in sales among the nation’s top craft beer makers, despite its four beers being available only on tap in restaurants and in the Mack & Jack’s store.
Jack Schropp, part owner of the brewery, said more people have stopped by the store to fill up kegs or growlers for at-home meals, though restaurants sales are sagging.
Gatza said the brewery is an example of how the local brand sometimes benefits in a down market.
“When economies are tough, it seems like consumers trend toward smaller, local products, so that really should help the smaller microbreweries,” he said.
Mac & Jack’s 2008 sales were up 2 percent compared with 8 percent growth in 2007, but Gatza said any degree of increase is impressive in an economy of cutting back.
“We consider beer to be recession-resilient, not recession-proof,” he said.
Wine merchants, makers and retailers say they feel the same as they monitor steady sales during the sloping economy and hope they continue.
Whitney Coleman: 253-597-8546
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