Washington vintners hold tight on pricing -- for now

Posted: Thursday, May 02, 2002

YAKIMA, Wash. -- California vintners have been discounting some of their wines as demand drops and foreign competition increases, but Washington wineries aren't ready yet to follow the leader.

''At least for now, we're kind of holding tight with our pricing,'' said Glenn Yaffa, vice president for sales for Stimson Lane Vineyards and Estates, the state's largest wine company with wineries such as Chateau Ste. Michelle, Columbia Crest and Snoqualmie.

But, he added, ''obviously, we don't sell wine in a vacuum.''

While Washington has made its reputation on premium wines -- no jugs or boxes -- wine reviewers also often rate the state's labels as good values.

''We don't have the $200 a bottle, get on the wait list, give up your first-born child wines,'' said Steve Burns, director of the Washington Wine Commission in Seattle. ''We've always been on average less expensive than California.''

On the other hand, he said, ''we're not the cheapest wines, nor do we want to be the cheapest wines.''

California is the nation's No. 1 wine state, and Washington is No. 2. But the production gulf between the two is bigger than the state of Oregon -- about 450 million gallons in California vs. 11 million gallons in Washington.

So California's influence is always felt, along with other domestic and foreign economic variables.

''There is a lot of wine available in the market right now, and competition is high,'' said Gigi Zenk, a spokeswoman for the Washington Liquor Control Board. ''We're seeing similar trends to that of California.''

Since Sept. 11, wine sales in restaurants and hotels have been down, both Zenk and Burns said.

''This combined with the soft economy has produced wine sales that are a little flat or declining slightly -- resulting in lowering prices of wine,'' Zenk said.

At Hogue Cellars, no price changes have been made, said Wade Wolfe, general manager for the Prosser winery, which was purchased last year by Canada's Vincor International.

''We're trying to maintain our pricing as normal,'' he said. ''We do understand it's going to get more competitive because there are a lot more wines out there.''

Canandaigua Wine Co. in Canandaigua, N.Y., which last year purchased the Northwest's Corus Brands wineries, including Columbia, Covey Run and Paul Thomas, said prices are remaining stable for those labels. And demand has increased somewhat because of increased national distribution, said Lisa Farrell, a company spokeswoman.

''When we acquired Corus Brands in 2001, one of our goals was gaining national distribution for the Washington wine portfolio,'' she said.

Burns said the wine commission doesn't track market data because it costs too much, but it routinely gathers anecdotal evidence from wineries and other sources around the state.

''I do know that people at the top end of the scale are not having any trouble selling their wines,'' Burns said.

For the less expensive varieties, rather than lowering prices, wineries are marketing harder, he said.

In California, wines that sell between $3 and $6 a bottle have been hardest hit by competition and diminished demand.

In Washington, restaurant sales have fallen since Sept. 11, but grocery store sales and tasting room sales are up.

''There was a huge increase in tasting room sales after Sept. 11 -- between 30 and 40 percent,'' Burns said. ''People are staying home, and they're rewarding themselves in smaller ways, by taking a weekend trip to wine country.''

Overall, the wine industry continues to grow, but at much more modest rates than in recent years, and a recent Wine Market Report suggests that Australia and Washington are claiming some California market share.

Columbia Crest chardonnay was the fastest-growing chardonnay in U.S. supermarket sales -- up 190 percent -- in 2001 from the year before, according to the Wine Market Report.

Stimson Lane also saw increases in sales of its Chateau Ste. Michelle chardonnay and Columbia Crest cabernet sauvignon and merlot.

''Noteworthy was the fact that Stimson achieved its growth without widespread discounting, which was needed by many brands to keep volumes from slipping further in 2001,'' the Wine Market Report said.

Burns contends that's because Washington has never been at either end of the pricing extremes for its quality wines.

''Ultimately, it's what's in the bottle,'' he said.


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