Wineglass Is Half Full for Vintners

The glass is half full these days for winemakers who sell directly to stores, but it’s more than half empty for pricier vintners who cater to restaurants.

In the last few tension-fraught weeks, U.S. retailers have been selling more wine, whereas bottles have largely remained corked at luxury hotels and eateries.

That schism is typical for a weak economy, but the Sept. 11 attacks on the World Trade Center and Pentagon exacerbated the situation with more people opting to drink at home, said John Faucher, an analyst at J.P. Morgan.

“Generally, what happens is we do see alcoholic beverage consumption increase during periods of economic hardship,” he said. “People may change where they drink. We may see more people buying to take home and less drinking on premises.”

Before Sept. 11, wine sales in retail stores were up 2.5% to 4% on a weekly basis compared with a year earlier, according to ACNielsen Adams Partners, a market research firm.

Sales accelerated after the attacks and were up 6.2% in the week ended Sept. 15 and 8% for the week ended Sept. 22.

Conversely, many of the nation’s major restaurant chains have reported that sales dropped in the post-Sept. 11 weeks, as consumers dined out less.

For example, the casual dining chain Cheesecake Factory Inc., based in Calabasas, reported that average weekly sales were up about 2% before the attacks but were down 3% to 4% in the two weeks afterward.

Likewise, Buca Inc., an operator of Italian restaurants, including the chain Buca di Beppo, said comparable store sales were down 3.8% in the third quarter, after a “dramatic sales decline” that began Sept. 11.

Wine industry consultant Eileen Fredrikson of Gomberg Fredrikson & Associates said the restaurant industry has been hit lately by a one-two punch of a slowing economy, compounded by the recent drop in tourism.

“That has a tremendous effect on brands that are sold primarily in the restaurant channel as opposed to the broad mass market,” she said. “That applies to a large number of small wineries because they don’t have the wine to service the large chain stores.”

Earlier this month, winemaker Robert Mondavi Inc. said the slowing U.S. economy would crimp its sales and earnings for fiscal 2002. The drop in restaurant sales probably was a key factor in the company’s forecast, Faucher said.

About 25% of Mondavi’s sales come from hotels, restaurants and other tourism channels.

“Mondavi was planning on getting a large percentage of their earnings this quarter from their high-end Cabernet--very much an on-premises item,” Faucher said.

In another sign of the weak demand for premium wines, a Napa Valley auction of the inventory of defunct wine seller Wine.com this month attracted far fewer bidders than expected. The event had been billed as the biggest bargain going for upscale hotel and restaurant buyers.

Faucher added that even before the attacks, Mondavi was dealing with other issues that were putting pressure on earnings. In one of those, the company said it was turning over control of its Golden Vine Winery attraction and restaurant at Disney’s California Adventure theme park in Anaheim to the park’s parent, Walt Disney Co.

“Part of it is internal,” Faucher said. “Mondavi had a lot of problems before. The attacks exacerbated them a little bit, but there were specific issues [such as] inventory, a reliance on high-end Cabernet in the third calendar quarter and the Disney venture.”