High-end bottles languish on shelves as shoppers opt for cheaper vintages. 'The state of the economy' is nothing to celebrate, a retailer says.
This year she can get dozens -- a sign of how the Wall Street meltdown is rippling across the alluvial fields of Napa Valley to the chalky limestone vineyards of Champagne in France.
And Champagne -- that universal symbol of largess? Sales have plunged because "the state of the economy" is nothing to celebrate, said Randy Kemner, owner of Wine Country in Signal Hill.
People are still drinking wine. They are just spending less.
He's not alone.
Sales of wine for $9 or less make up the fastest-growing segment of the wine market and 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. Last month he went on a supermarket shopping spree, buying about 50 bottles of mass-market "corporate wines of the type we usually don't sell."
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 a FishEye Merlot to $14.99 for a 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 as the holidays approach. Sales at Wine Country were off 28% in October compared with a year ago. November sales are running 16% below last year's figures, even after factoring in a bump-up around 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%, "and we have not hired for the holidays; we are all just going to work more hours," Hirst said.
Wine retailers aren't the only ones feeling the pain: Consumers are dining out less, slashing wine sales by as much as 15% in restaurants, Fredrikson said. All of this translates to lower sales for California's wineries, which sell wine with a retail value of $19 billion annually. Americans drink $30 billion worth of wine each year.
"Our sales are down about 10%, 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 compared with last year only because the winery has undergone a major renovation and more people are visiting, he said.
As retailers and dining establishments cut back, many small wineries -- which don't produce enough to have a large presence in grocery or other chain stores -- are seeing their inventories bloat. Distributors and wholesalers are cutting orders because they don't want to purchase wine that could take months to sell.
"This creates a real question with tight credit now about whether some of these wineries will have the credit lines available to wait this out," Fredrikson said.
And there are more ominous signs for smaller wineries that sell directly to consumers. Oenophile Urquiza cut back on his membership in wine clubs -- where customers sign up for discounted shipments of wine -- to just one from three.
Still, if you have the cash, the slump has created a unique opportunity to invest in First Growth Bordeaux and Burgundy Grand Cru vintages -- among the elite of the wine world -- said Steve Wallace, owner of Wally's Wine & Spirits in Westwood.
While the price of that '05 Mouton-Rothschild has fallen by half this year, the 2007 vintage sells for less, $383. Both vintages are highly rated by Bordeaux wine guru Robert Parker.
"These prices are from back in the 1980s," Wallace said. "I never thought I would see that."
Hirsch is a Times staff writer.