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It Was a Very Good Month

January 06, 1994|DAN BERGER | TIMES WINE WRITER

Something unexpected happened to owners of Southern California wine shops in the second week of December: From Santa Barbara to San Diego, sales suddenly took off, with expensive reds and sparkling wines leading the way. Gift bottles sold better than in recent Christmas seasons, and some shops said they shipped wine around the country in greater volume than ever.

"All of a sudden, on Dec. 10 it got crazy," says David Breitstein, owner of the Duke of Bourbon in Canoga Park. "By the 15th, we were having days like Christmas Eve every day." Normally, he says, there is a slow buildup following Thanksgiving, but this year the rush hit almost overnight.

Store owners interviewed estimate that dollar sales of wine in December were up 15% to 30% from December of 1992, frequently reaching record levels.

Jon Fredrikson, a San Francisco wine industry analyst and president of Gomberg, Fredrikson & Associates, notes that in December 1992, wholesale shipments were strong because retailers were stocking up to avoid price increases that took place in January 1993. No similar increase is scheduled for this year. "If December retail sales are as strong as we're hearing," he says, "that could mean we'll have a strong January too. A lot of people made good profits in the stock market, and in general people are happy. Interest rates are down, there is a feeling of well-being, and people are celebrating a bit."

Some store owners attribute the spurt to an upturn in the economy, others to homeowners having refinanced mortgages to lower house payments, and still others to medical studies that show a link between moderate consumption of red wine and lower risk of heart disease.

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Others say the demise of a number of retail chains that once were a force in the wine trade has forced a consolidation of the retail market, providing the remaining stores with more buyers.

Ron Loutherback, owner of the Wine Club, says gross sales exceeded $1 million in December in each of his two stores--Santa Ana and San Francisco. (Last December, Loutherback's San Francisco store had gross sales of $639,000; the Santa Ana store, believed to be the largest-grossing wine retail store in California, had gross sales of $891,000.) This year the two stores are nearing combined sales of $15 million.

Other merchants tell similar stories. Dick Williams, wine buyer for Gelson's, says wine sales in all 12 of his outlets were up about 15% in December compared to 1992. Carl Zytowski at the Wine Cask in Santa Barbara says his sales were up 16%. John Lindsay, of Vintage Wines Limited in San Diego, estimates his sales were up 28%. And both Gary Fishman, wine buyer for Wally's on Westwood Boulevard, and Steve Zanotti of the Wine Exchange in Orange say sales at their shops were up 30%.

Some say interest in red wine rose because of the high quality of the 1990 and 1991 California Cabernet Sauvignons after what some felt were two dismal vintages, 1988 and 1989.

Says Dan Palmer, wine buyer for the Wine House in West Los Angeles: "We saw a lot of new faces this year, and they're buying a lot of Cabernet because the '90s and '91s are so good." He says Chardonnay remains the best-selling wine in the store, but, he reports, Champagne sales are "going nuts": "Last year we sold bottles, this year we're selling cases."

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"People discovered Merlot this year," says Paul Smith, owner of Northridge Hills Wine and Spirits. "They hear about red wine being good for them, and they like the taste of Merlot. And in whites, people are finding their way gradually into premium wines. The customer who bought white Zinfandel two years ago is buying $10 to $12 Chardonnays now."

Williams says sales increases at Gelson's are similar. "It's been across the board, from Dom Perignon to Carlo Rossi's 3-liter Burgundy," he says.

But as some owners have stated, a big reason for the dramatic sales at fine wine shops may be merely fewer outlets than in the past. "I think it has a lot to do with the compaction of competition," says Fishman of Wally's. "A year or two ago you had chains such as Liquor Barn, Vendome, Jurgenson's, Irvine Ranch. Most of them are gone now."

Still, he says, some of the sales that once went to the now-defunct stores didn't go to fine wine shops but to discount warehouses such as Price Club and Costco.

Store owners said expensive wines such as Dom Perignon and Roederer Cristal, selling for $70 to $90 a bottle, sold as gift items. Some stores reported land-office business in high-end gift baskets that included not only wine but foods such as caviar, smoked salmon and cheeses.

Moreover, a lot of California wine was shipped to other states. Technically, California stores can ship wine only to the 12 states with which California has a reciprocal trade agreement, but most say that did little to slow things down. "I shipped a lot of wine to the Bible Belt this year," says Smith. He said large shipments of California wines went to buyers in Georgia, Arkansas, Mississippi and Kansas. Loutherback said he received orders from "just about every state in the country."

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