A winery in name only

Couple sets up shop in Houston to import, sell French wines
Tim and Phyllis Smith own a "winery"near Rice Village where they import and sell French wines. In order to operate their business, they had to obtain a winery license.

In 1973, Tim Smith bought a grand-cru Beaujolais in Paris for 80 centimes. That bottle of Morgon, for an outlay of about 20 cents, proved a life-changing experience.

"I thought I'd died and gone to heaven," he recalls wistfully.

Now 35 years later, Smith owns a winery in what was once a photographer's studio near Rice Village. Make that a "winery," since what Smith and his wife Phyllis really do with their French Country Wines is import and sell. In order to do both legally in Texas, they had to obtain a winery license.

If he's not yet a superstar in the cellar, he's got a refined taste for wines made by other people, especially those who are making it in small, reasonably priced quantities far off the beaten path, mostly in the South of France. One of Smith's Châteauneuf-du-Papes, the Domaine du Banneret, comes from a well-situated producer who isn't known even to the local tourist office, probably because he produces at most 400 cases each year.

It sells for $34, right at the top of Smith's price ladder. Fresh and harmonious in the glass, with a nice long finish, the 2004 Banneret drinks like it should cost at least twice that much.

"This wine is a perfect example of what we're trying to do," Smith said. "We wanted to expose people to the kinds of wines we like, wines you just couldn't find here. (The big importers) are looking to buy five pallets at a time. Some of our producers don't make five pallets in a year."

A retired litigator, Smith ultimately found his way into the wine trade to "keep me off the streets." His passion is finally close to profitable — despite the weak dollar, the numbing bureaucratic minefield one must traverse to become an importer-retailer and the fact that his portfolio consists of boutique producers that almost nobody in Houston had heard of.

"The label-approval process took six months," Smith said. "I never realized they'd be so nitpicky about it."

Smith acknowledges his naiveté as a fledgling wine merchant, admitting he might never have moved forward with his venture without the support of a certain Frenchman.

Francophiles Tim and Phyllis knew of Jean-Marc Espinasse only through his Web site, which featured a wine every day, and that of his wife Kristen, who's behind french-word-a-day.com. But when Smith e-mailed him, Espinasse replied within 24 hours. It seemed he had a small wine brokerage and was looking to expand in the U.S. market. They agreed to meet in Phoenix, where Kristen is from, and forged a partnership. About 60 percent of the wines Smith sells are acquired through Espinasse, including Espinasse's own Rouge-Bleu.

"As it turned out, we have very similar palates," Smith said. "But he has encouraged me to explore and find other wines. I want to keep our portfolio vibrant."

Smith's Web site is excellent, informative and easy to navigate. Through the Internet and word of mouth, augmented with well-attended biweekly tastings — there's one tonight at 6 p.m., featuring cheese from the Houston Dairy Maids — his customer base is expanding, and he's gaining restaurant placements, including Café Rabelais, Brasserie Max and Julie and, most recently, Aura.

If you're inclined to visit the shop, it's best to call first: 713-993-9500. As Smith says, "It's just me, and sometimes I've got to run errands." (Phyllis has a "day job" as director of projects for the M.D. Anderson Cancer Center.)

A more pleasant, less pretentious couple you will never find in the wine world. They know they're just the messengers; in the end, it's all about the wine they sell.

DALE ROBERTSON
Houston Chronicle

Legal row over French wine classification

The wine classification system in France can make or break a vineyard Photo: EPA

A row over the highly competitive wine classification system that can make or break a vineyard is threatening the reputation of the Saint-Emilion chateaux, producers of some of the world's most famous wines.

The disagreement, which has led to a series of law suits, concerns the rating of 'les vins de Saint Emilion' by a jury run by the French Ministry of Agriculture.

Under the system, only a handful of the 800 vineyards are classified as le classement. The successful candidates are then divided into three categories; premier grand cru classe A, premier grand cru classe B and grand cru classe.

The row originates when the league table was revised two years ago. Then the le classement featured 61 chateaux including six new ones. Two others were promoted from grand cru classe to premier grand cru classe B.

But 11 vineyards lost their place, a relegation that can have a huge impact on a wine producer's income. Seven of the 11 vineyards that lost out went to court to challenge the decision.

After two years, Bordeaux's Administrative Tribunal upheld their claim this summer and ruled that the jury had failed to taste all the wines in the same conditions.

The 2006 classement was quashed and the eight promoted vineyards were relegated and the 11 vineyards were reinstated..

"This is a great moment for us," said Philippe Genevey of Chateau La Marzelle, which regained its grand cru classe status.

Perhaps unsurprisingly the losers take a different view and are looking to appeal the decision. Xavier Pariente, the owner of Chateau Troplong-Mondot said he had spent "dozens of millions of euros" to win a place in the grand cru classe B category.

"That's almost 20 years of hard work and investment by all the personnel here wiped out at the stroke of a pen. It frightens me and revolts me," he said.

Consumers are cutting back

Restaurants take the hardest hit in terms of wine sales

The pinch of higher gasoline prices on American wallets is adding to the reluctance of consumers to go out for a drink or dinner and drinks--all of which is hurting on-premises sales.

History suggests people don't necessarily drink less during difficult economic times, but a survey done earlier this month indicates more folks are enjoying a glass of wine at home rather than dining and drinking out.

"Wine is more likely to be consumed in dining establishments, which have been more heavily affected by the downturn in the economy than bars or nightclubs," confirmed Danny Brager, vice president of client service for beverage alcohol at The Nielsen Company specializing in marketing and media information.

More than 40 percent of the bar managers, bar owners and bartenders surveyed by Nielsen and data services provider Bevinco noted a decrease in consumer traffic while 25 percent have observed a decrease in the number of drinks ordered, and 22 percent say customers are ordering less expensive drinks. Wine drinkers are choosing house varieties more often, according to 9 percent of operators.

Consumers also said they're cutting back. "During a survey we did in May, about 50 percent of consumers told us they were going out less often; and when it came to fine dining, that number went up to 66 percent," said Brager. "Considering on-premises sales usually account for half of all wine dollars spent, these declines are huge."

Restaurants have also been hit by cutbacks in business travel and entertainment budgets, added Jon Frederickson, president of wine industry analysts Gomberg Frederickson & Associates.

"With restaurateurs ordering less, distributors are being very conservative in their buying," Frederickson added. "So the shipments from wineries are soft from some regions."

Off-premises sales of wine in the U.S. remained healthy through June with increases in both the number of sales and volume. "Over the past few months, cheaper wines have started to make a comeback in terms of their sales growth while the sale of more expensive wines has slowed down," Brager noted.

The double-digit increases for $15 wines over the past few years have also disappeared. "Some consumers who were spending $15 are now thinking how they can save a couple of dollars and still get some very good wines at little bit lower price-points," Brager explained. "We see a trend towards buying wine at stores that offer deep discounts or promotions or the convenience of one-stop shopping." In fact, higher fuel prices have contributed to a 4 percent decline in shopping trips.

Although wine purchases still account for a small percentage of online shopping, these sales are increasing rapidly as people look for ways to avoid using their own cars, Brager added.

Frederickson said his firm has noticed that wine clubs are experiencing a membership decline and lower participation at events and on wine trips as people rethink how much they want to spend on wine and related outings that involve driving.

"Many wealthier individuals have seen their stock market portfolios drop about 20 percent in value over the past year, so they're less likely to spring for expensive wine," he added.

Frederickson doesn't see the higher input costs being faced by grape growers and wine producers as significantly driving up prices for consumers. "Your favorite bottle might go up 25 to 50 cents, and that might influence your decision to buy something else, but there's such an array of products at so many different price-points, and prices can vary by a dollar every week with discounts and so forth.

"Obviously if you're looking at a brand like Two Buck Chuck which costs $1.99 in California, even a 20-cent increase will put some pressure," he added. "But the people putting out that wine are enjoying some enormous sales growth because the category seems to be growing very rapidly this year as people seek bargains. During hard times, people still like their wine but some do trade down."

Higher fuel costs are having less of an impact in areas such as British Columbia where more than 80 percent of B.C. wine is sold within the province and more than 25 percent at local winery gates.

"Another 28 percent is sold through B.C.'s liquor stores but not a lot of this business is done in the most northern areas of the province," said Lisa Cameron, the British Columbia Wine Institute's communications manager. "I think the problem will be for volume exporters facing steeper transportation costs."

Brager said there's no question people are eating and drinking more at home, but they still appear to want affordable luxuries. "So I think the wine category will fare relatively well, but markets need to adjust because there will still be consumers shifting product choices to stretch their dollar."

Frederickson agreed. "Yes, higher fuel prices and the economic slump are affecting on-premises sales, but people are still drinking their wine," he said. "They might be trading down, but we might also see them springing for a $12 or $20 bottle as a luxury item that's still affordable even during hard times."

Julie Gedeon

Bad news for French wine harvest

Bins of grapes are pictured in the St Emilion region in 2000

PARIS (AFP) — French wine authorities predicted Tuesday that this year's harvest will be smaller than the previous one due to poor weather and fewer vineyards.

Production is expected to reach 43.6 million hectolitres, close to five percent less than last year's 46.54 million hectolitres, which was already considered lower than average, according to the national agricultural body Viniflhor.

Harvesting of grapes began in southern France in late August after several months of rain, wind, hail and a spring cold snap that left Viniflhor officials pessimistic.

Table wines -- the lowest quality produced -- are expected to drop by 8.5 percent compared to last year while the prestigious AOC-labeled wines will be down 6.8 percent, according to Viniflhor.

"The cold snap in late March had a direct impact on some vineyards," Viniflhor said.

"From the Bordelais region to Provence, there was frost on April 6 and 7, at a critical period when the grapes are very vulnerable," it added.

Uprooting of vineyards has also caused a dent in production.

Under an European Union plan to combat overproduction, wine producers are offered compensation in exchange for curbing their vineyard capacity.