April 15, 2004
Olympia
– A new wine strategy proposed for Washington State Liquor Stores would
create a more customer-friendly environment for wine shopping and
strengthen the state’s effort to boost the burgeoning Washington wine
industry. A
Wine Strategy report presented April 13, 2004, to the Washington State
Liquor Control Board calls for a six-phased effort to strengthen the
merchandising of wine in state stores. Washington state stores sell 8.9
percent of the wine sold annually in the state, a market share that has
not varied much in the last decade.
Among the
strategies recommended are tightening the focus of inventory to
highlight proven winners; continuing emphasis on Washington state wines;
more attractive and informative in-store displays; and developing
specialty outlets in new locations such as airports not currently being
served by other retailers.
First and
foremost, said Paul Gregutt, a Washington wine writer and market analyst
who prepared the report, the state needs to send a clear, unambiguous
message: “We are in the wine business.”
The WSLCB’s sale of wine not only contributes valuable revenue to state
coffers, it also provides a much-needed lift to the state’s $3 billion
wine industry, the report states. All but about 25 of the state’s 300
wineries produce 5,000 or fewer cases annually. State stores provide an
important distribution alternative for many of these wineries, offering
“one-stop” distribution, a vital boost to new and often struggling
businesses.
“The addition of such limited-production, fine wines to WSLCB offerings
brings in a more sophisticated, more affluent consumer….and elevates the
image of all the state stores,” Gregutt said. The number of wineries in
Washington has increased from 110 in 1997 to the current 300. More
wineries are being opened each month.
State liquor stores
regularly feature wines from 83 of the state’s wineries. This does not
count special orders. The state also supports Washington wineries by
allowing them to market in other ways. For example, state wine producers
are not required to sell their product through wholesalers at a 10
percent markup, as are national producers. This flexibility allows
these small businesses access to a market increasingly dominated by
large, national wineries.
Washington allows state wineries to sell
wine:
-
at
their production facilities with no markup
-
at up to two alternate state-approved
locations (no markup)
-
at approved farmers’ markets (no
markup)
-
through distributors (subject to the
10 percent price markup required for wine and beer)
Steve Burns, executive director of the
Washington Wine Commission, said other U.S. and Canadian control states
and jurisdictions with thriving wine industries place a similar emphasis
on promoting their local brands.
“We work with other wine and spirits monopolies in Pennsylvania, Canada
and Scandinavia. All are very involved in supporting their local
producers. It’s more than appropriate for Washington’s state stores to
feature state wines – an obvious business for the liquor board,” Burns
said.
Burns and Gregutt both indicated Washington wines were approaching the
‘tipping point,’ a point at which consumers begin to identify strongly
with a particular market segment. As the tipping point is reached,
demand increases significantly. When this occurs consumers will begin
seeing the state’s wines featured more frequently in special sections of
grocery stores and other major market venues.
David Adair,
National Sales Manager of Hyatt Vineyards, said the state’s support of
Washington wine allows vintners just starting out – those producing
1,000 or 2,000 bottles annually – an alternative that would not exist if
wine were not sold in state liquor stores.
“I’d hate to see the WSLCB get out of the wine business,” Adair said.
“State stores provide a much-needed alternative to the homogenization of
shelf sets occurring in the major grocery chains. The WSLCB is a great
friend to Washington wineries.
"Because so many of the state’s wineries
produce limited amounts, it has been difficult for them difficult to
find a spot with wholesalers, said Gregutt. “They don’t make enough
quantity; they are not at the right price point; some combination of
factors keeps them out. And there are a lot of good wines being produced
by small vintners.
”The full text of the
Wine Strategy
report and an accompanying
wine price survey are available.
For more information contact Public Information Officer Tricia Currier at (360) 664-1784 or page at (360) 290-3683.
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