Big Apple Report: Where’s Washington [Wine]?

Waldo is easier to find than Washington wine in NYC.

Lettie Teague wrote a Wall Street Journal column back in 2010 called “Stalking the Wines of Washington.” In it she complained about her difficulty finding Washington wines in the New York City area. There’s just no demand, she was told, so wine shops don’t bother with Washington wines.

The Incredible Story

That’s incredible, I thought as I read Lettie’s story, since so many Washington wines are both very good (served at White House dinners, we are told) and very good values, too. Hard to believe that smart New Yorkers aren’t interested in these wines! So I decided to do a little fieldwork on the question during my recent East Coast speaking tour to see if the situation has changed.

OK, am I the only one who thinks visiting out-of-town wine shops is a fun way to spend the day? In this case I headed for the Morrell & Co store in Rockefeller Center and the Sherry Lehmann shop a few blocks away. Two wine shops is a very small sample size, so this study isn’t statistically significant, but these are the flagships of the region’s wine fleet, so surely they reveal something. Here’s what I found.

Both stores were smaller than I expected given their fame  — I guess I didn’t factor in Manhattan retail floor space costs when I imagined what they would look like. But the number of bottles isn’t as important as the quality of the selection (that’s the key to Costco’s wine selling success).

New York State of Wine

My attempt to find Washington red wines in these stores was not very successful. I managed to locate a wine from Betz Family Winery at Morrell and a modestly priced red blend from Claar Cellars at Sherry Lehmann. And that was it for Washington reds. I might have missed a bottle or two (I blame my bifocals), but even if I did the selection was pretty limited. I didn’t check the white wines — maybe there were more over there.

There were plenty of French and Italian wines. Sherry Lehmann’s Burgundy selection made my mouth water and my credit card cry. Lots of great wines from Bordeaux, too. But where was the Washington wine section? Nowhere. No California wine territory, either. They were all grouped together as “American wines,” suggesting that Sherry Lehmann’s customers might be more interested in the fine points of French geography than domestic wine terroir.  And apparently almost completely uninterested in Washington. Why?

Supply Side Theory

I talked a bit with a friend who knows New York wine business pretty well and we came up with a couple of theories. Maybe it is a supply-side problem — distribution?

Yes, I suppose that could be the case. Distribution inefficiencies usually affect the “middle market” the most. Iconic wines (and I’d put the Betz wine in this category) get distribution and so do larger volume wines (Chateau Ste Michelle, Columbia Crest, etc), but in-between producers (like Claar Cellars) get squeezed out.

As you can see, my “small n” obversations aren’t completely consistent with a supply-side explanation, although you cannot rule it out, either. So what about demand?

Demand Side Theory

Maybe the demand just isn’t there as the shop owners told Lettie Teague. So why not? Well, here’s where a second set of observations is useful. While I was looking for Washington wines I also kept an eye out for Oregon Pinot Noir. And, while the Washington wines were all but invisible, I discovered a handful of interesting Oregon Pinots in each store.

So now the question gets more interesting. Why is Oregon part of the New York state of wine but not Washington? Here my NYC friend (who is a Washington wine fan) offered another theory: Oregon stands for something concrete in the crowded New York market, but Washington doesn’t.

When you think of Oregon wine you think of Pinot Noir because that’s its signature wine variety and demand-side market focus. But what do you think of when you think of Washington? Well, that’s the problem because Washington makes so many great wines but lacks a signature variety or style. I’ve written about this situation before and I don’t want to beat a dead horse here, but you can see how it can be a demand side problem.

Every NYC customer who asks for Oregon wine is probably thinking Pinot, but if ten customers ask for Washington wine they are unlikely to request the same wines or types of wines or grape varieties. It’s easy to see how a critical customer mass for Oregon Pinot Noir might appear but not for any particular Washington wine.

The Gravity Theory

A final theory comes from the economics literature — you might call it the “home court advantage” theory but technically it is based on the “gravity model” that is used to analyze international trade patterns. The gravity model holds that geographical proximity is a strong predictor of trade patterns — the closer countries are to one another the stronger the force of  “economic gravity” that pulls their economies together.

I see the home court advantage at work here within Washington State and it is widely observed that while the wine industry is global, wine consumption has a strong local bias. If this theory applies to the New York case, then it suggest that Europe is New York’s home court and that the pull of French gravity is especially strong. Given the many different languages that fill conversations on cosmopolitan New York City streets, this doesn’t seem like a crazy theory at all.

Convergence Zone

A quick analysis of the Morrell and Sherry-Lehmann websites reinforces my on-the-scene observations and adds more data since the warehouse selection is so much bigger than the Manhattan stores.

I found more Washington wines in the online stores, but I was still surprised by the relatively  limited selection. And I was surprised as well that Washington and Oregon had about the same number of wines on the sales lists despite Washington’s vastly greater number of wineries and total production. Burgundy (1122 wines on the Sherry-Lehmann site) has many more wines than California (612), Oregon (31) or Washington (30).

The particular wines listed on the Sherry Lehmann site suggest that the distribution theory is part of the explanation. More high volume Chateau Ste Michelle and Columbia Crest wines and some famous name icons, but a thinner middle market selection. It looks to me like all three forces are at work here, making this a particularly complex and difficult situation.

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Readers: use the comments section below to provide your own observations and theories.

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8 responses

  1. Mike, great post. I think there is a bit of everything going on, with the gravity theory a big part of it.

    My understanding with talking to people in the biz, the East Coast in general tends to drink more European wine than the West Coast, which tends to drink more domestic. You probably have numbers that could either back up or refute that line of thinking.

    I’d also like to say that even with a small in-state market share (35%), Washington wine tends to sell well at home. The top 50 or so wineries in Walla Walla sell a big chunk during Leonetti and the holiday weekends. Lake Chelan wineries sell close to 100% through their tasting rooms. Some wineries, such as Barnard Griffin, sell a ton through the state liquor stores (well, for a couple more months). My research shows that many wineries under 10,000 cases (i.e. most of the wineries in the state) sell out regionally. Fidelitas, for example, sells a ton to its wine club members and most of the rest through its two tasting rooms.

    Then there’s Leonetti. …

    I love this subject, and I hope you explore it more.

  2. Yes, it’s the gravity theory. In the middle of the country, where I live, we see fewer of the European wines that New Yorkers see (particularly Italian), and fewer of the West Coast wines that you see on the west coast. I’ll never forget the first time I went into a Bay Area grocery store and saw wine for sale that we didn’t even have in fine wine shops in Texas.

    The exception in both cases, of course, are the multi-national grocery store brands.

  3. Mike:
    Avocados cost most in California. British Columbia wine gets a huge amount of space in B.C.liquor stores.
    Where ever there is an industry, the politicians representing where it’s located don’t have to be bribed or lobbied. They want to be re-elected. Did you look at the square footage given to New York state wines? On my last visit to New York City, they ate up most of the domestic wine space.

  4. Mike it’s historical distribution patterns and/or emotional attachment which determine which state/country/region find their way onto retailers shelves. There are very interesting wines out of WA & OR but the world is full of interesting wine. Every producers natural market is the region in which they are produced–ever tried to buy a bottle of Burgundy in Bordeaux? I remember going into the best wine shop in Rome in the late 1980s’ with a wish list of the wines which Burton Anderson considered the great wines of Italy. The owner gently informed me they did not stock them as they were outrageously priced and only Italian-Americans were silly enough to waste their money on them. These were wines for people of Italian extraction showing their colors by buying and displaying the wines of their country. Good for them! The theory goes that each of us would like to think he or she had a farm and produced their own wine. Being generally unable to do so we default to the region closest to that in which we live and to which therefore we can best associate. Without a great and long established distribution chain (ask Gallo or TWG) it is extraordinarily difficult, nay, almost impossible to break the mold. Maybe we just need to send more people from the Pacific North West to live in the East, or more Burgundians to live in Bordeaux.

    • Washington putting spirits on the shelves has decimated the wine selection. Killed in the “Friendly fire” of Costo’s successful bid to distribute. People are shoving spirits across the aisles in such neat rows, good or bad wine is tossed to the wind. It feels like bagging clerks are choosing in between sweeping the floor.

  5. Great post as always, Mike.

    And especially interesting to me since I used to work at Sherry-Lehmann from 2003-2004. Being from Oregon and selling wine in New York, I was always intrigued that nobody ever came into the store asking for a WA wine, and very rarely an Oregon wine. NY wine was a small part of the mix, but cult California cab and chard were always in high demand.

    So, from my experience, it was all about the lack of demand. However, your other theories also must have significance. Another factor is that Sherry-Lehmann and Morell get more Bordeaux and Burgundy than many USA importers are allocated! They have been the top sellers of these wines for a very long time in the USA and they are known for these wines. People come into the shop because they can’t find these wines elsewhere, so the domestic selections are sometimes an afterthought.

    One other experience that I would like to mention is that after working for Sherry-Lehmann, I went to work for a wine importer and distributor in NJ called, Winebow. One of my assignments was to go to a WA wine tasting where the producers were showing their wines and looking for distribution. While there I met Charles from K Vintners, John from Bookwalter Wines, and many other iconic WA brands who did not have NY distribution in 2005. It was incredible that so many great producers were overlooked, but I’m sure they are not now, except for maybe your sample stores of Sherry-Lehmann and Morell.

    Cheers, Bryan

  6. You’ve missed a big part of the picture. Both of the shops you visited were in Midtown. Which, I have often argued, has the lowest percentage of facings devoted to Washington wines anywhere in the country. As you move out from there you progressively get more and more Washington wine until you reach numbers more in line with national averages in places like Key Gardens and Westchester. But there are three very good reasons for this.

    1. New Yorkers are predominantly europhiles.

    2. People that live and shop in Midtown have plenty of money. So much money that they don’t ever have to purchase anything that doesn’t have cachet. And Washington wines do not have cachet. Neither do Washingtonians have any appeal to the average Midtown resident. Even in their “cities” like Seattle, they choose to spread out and integrate lawns and greenspaces into the topography. They have single unit houses, ride bikes, drive fuel-efficient station wagons with ski racks on top, and they like to do stuff outdoors. And, worst of all, many residents are even self-proclaimed dorks. Techies and nerds that admit to not being fashionable. If ever there was a place that was the polar opposite of Midtown Manhattan, it would look and act an awful lot like Seattle. Serving a Washington wine at a Midtown dinner party is akin to a sin. It would require the host apologize before pouring each and every glass of wine as a form of penance.

    3. If a daytime banker/doctor/lawyer/executive and nighttime California Cab drinker and cigar smoker walks into a Midtown wine shop and asks a salesman to choose his/her nightcap, they are not going to pick out a Washington wine. Every salesman is well aware of points 1 and 2. Even though this self-proclaimed California wine-drinker has negated point 1 there is no way he/she dares defy rule number 2. Otherwise they would be an outsider. Besides, the customer is well aware that Washington wine has no cachet. And they are well aware that it is their friends and neighbors that own the newspapers and magazines and media studios that determine what is and what is not fashionable. And those same industry leaders might stop by this fictional dinner party, and many residents feel that if they are seen serving Washington wine then they are in effect implying that they know more about fashion and culture than anybody else. Which is a bold statement to make, hard to defend, and far too risky. Pinot Noir has cachet (Sideways, but still). Europe has cachet. I’m not trying to state that Midtown residents aren’t cheap…er frugal…er, monetarily savvy, because they most assuredly are. In a Midtown culture, a $10 Merlot from Friuli is acceptable, but a $75 Meritage from Washington is a risk.

    Now, while Washington may grow many things well, they excel particularly in Merlot and Riesling. Both of which also excel in New York State. So if a resident and a sales clerk are both going to put their neck on the line, why wouldn’t they do it for the home team? For people they see in person every year? I’ve sold wine in NYC for ten years now and a Washington state winemaker is a rare siting indeed. Not to mention, New York state produces more wine by volume than Washington. How large is the New York wine section in a downtown Seattle wine shop? Let me guess, a big ‘ol goose egg.

    • Thanks to everyone who has commented on this post so far. I think that the combined responses give a really useful and interesting more complete picture of the sorts of factors that influence wine buying/selling patters in New York (and by extension in other places). Thanks!

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