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Originally published August 28, 2009 at 12:15 AM | Page modified August 28, 2009 at 9:07 AM

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Retail Report

U.S. drinks up Washington wines' good value

National sales of Washington wines through grocery and liquor stores rose 9.1 percent to $346.7 million for the year ended July 25, almost double the 4.7 percent gain for all wines sold through those channels, according to a Nielsen report released by the Washington Wine Commission.

Seattle Times business reporters

The increasing prestige of Washington's wines is not all that's getting them through the recession.

They're also considered great values.

National sales of Washington wines through grocery and liquor stores rose 9.1 percent to $346.7 million for the year ended July 25, almost double the 4.7 percent gain for all wines sold through those channels, according to a Nielsen report released by the Washington Wine Commission.

California wine sales climbed 5.7 percent from a much larger base to $5.4 billion.

"Because of the financial crunch, people are shopping for everything with a little more scrutiny," said Washington Wine Commission spokesman Gary Werner. "It doesn't mean they're drinking lower quality. It means they're looking at what their money gets them."

The search for value brings to Washington wines some buyers who "in the past may not have been so concerned with what they were spending," Werner said.

Ste. Michelle Wine Estates in Woodinville, Washington's biggest winemaker, makes the argument for value by comparing its own average price to those for California wines rated 90 to 100 by Wine Spectator magazine.

The average price for Ste. Michelle's highly rated wines is at least $12 below California for chardonnay, pinot noir and merlot. For cabernet sauvignon, Ste. Michelle's average price is $81 lower.

Most of Ste. Michelle's portfolio — which includes Chateau Ste. Michelle and Columbia Crest — falls in the $8 to $15 range.

"That segment is very healthy," said CEO Ted Baseler.

Industrywide, there has been no sales growth this year for wines above $15, a category that grew 15 to 20 percent annually until last summer, he said. At Ste. Michelle, sales in that category are up a bit.

Meriann Roberts, marketing coordinator for Esquin Wine Merchants in Sodo, also saw a shift last summer. Like a lot of wine sellers, Esquin is selling more bottles of wine but not at the prices it used to.

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The average price has fallen 25 percent over the past year, she said.

"Consumers have moved away from brand loyalty and more than ever before are willing to try new things in a value segment," she said. "It's humbling for some wineries that relied on their status for years."

Phil Cline, who owns Naches Heights Vineyards near Yakima, makes wine that retails for up to $20 a bottle and continues to sell out, but he knows wineries that aren't. He sees the increasing availability of bulk wine as an indication of the industry's woes.

Bulk wine is sold in tanks and barrels to wineries willing to bottle and sell it. California is offering more bulk wine at lower prices, Cline said, largely because of its high property values.

"If you live on a property that costs $100,000 an acre, you have to get $80 a bottle," he said. "That's the beauty of Washington. As the economy gets back on track, Washington is in a premium position.

Every year, we make better wine than the year before ... We will be known as the superior product for the dollar."

— Melissa Allison

Tidbits

The Netherlands-based company Oil & Vinegar is seeking U.S. franchisees again, through the owner of its Bellevue store, Matt Stermer.

Stermer's store sells packaged gourmet foods and gift baskets featuring items like stuffed olives, flavored pastas and herb blends.

It opened nearly three years ago, and no new stores have opened in the U.S. since then. Stermer recently granted a franchise license to a store that will open in Spokane in November. It will be the sixth store in the United States.

Oil & Vinegar has 75 stores worldwide, mostly in Northern Europe. — MA

Bellingham-based Haggen, the grocery chain, promoted John Boyle, who joined the company in 2007, to group vice president of sales and marketing, and Becky Skaggs to vice president of marketing and strategy. Skaggs will keep her previous responsibilities in strategic projects, consumer research and public relations. Haggen CEO Dale Henley said this summer he plans to retire when his replacement is named, no later than June 30 next year. — MA

Bruegger's Bakery-Cafe of Vermont, also known as Bruegger's Bagels, is seeking franchisees for 25 bakeries in the Seattle and Tacoma areas. The chain, an affiliate of Sun Capital Partners, had 22 locations in the region in the late 1990s, when its local franchisee converted them to a bakery concept called Zi Pani. Bruegger's has 290 shops in 24 states and the District of Columbia, about 35 percent owned by franchisees. — MA

Retail Report appears Fridays. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or mallison@seattletimes.com. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or amartinez@seattletimes.com.

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About Retail Report

Retail Report is a look at the trends, issues and people who makeup the dynamic and versatile retail sector throughout the Puget Sound region. Every Friday with Melissa Allison and Amy Martinez. Send tips or comments to mallison@seattletimes.com or amartinez@seattletimes.com.

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