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GRAPE DEMAND

Merchants Make Wine Stores Less Intimidating For Nonconnoisseurs

By Maura K. Ammenheuser

Americans are coming to enjoy wine more and more, and shopping center landlords are growing more interested in providing it to them. The category is no longer limited to mom-and-pop stores in grocery-anchored community centers. Some wine merchants are becoming chains, growing in upscale suburban and metropolitan areas, and they are leasing space in lifestyle centers and occasionally in malls.

Some of these chains are big-box versions of traditional wine shops, stocking the most popular, mass-produced brands and often hard liquor as well. Others contain wine bars so that consumers can sample the goods before buying. Some also offer a menu of light fare to complement the merchandise. Landlords are finding that the combination of retail, wine-sampling and food encourages affluent customers to linger over a glass after shopping or before heading to a center’s restaurants or movies.

Unlike in Europe, where wine has been a staple with meals for centuries, wine has not been a universally accepted part of American culture. But U.S. wine sales grew from $10.9 billion (466 million gallons) in 1991 to $26 billion (703 million gallons) in 2005, according to the Wine Institute, an association of 887 California wineries.

The institute attributes this growth partly to an aging U.S. population — more people are old enough to have sufficient discretionary income to spend on wine. Wine experts say media reports in recent years of the health benefits of moderate wine consumption have also contributed. And as Americans increasingly embrace sophisticated and novel foods, they are similarly honing their palate for wine, sources say.

“The emphasis on wine is so clear,” said Kenneth Himmel, president and CEO of New York City-based Related Urban Development. Related placed West Palm Beach Winery in the retail portion of its CityPlace mixed-use center, West Palm Beach, Fla., and the firm says it will add wine bars to other projects. “America has learned to embrace wine,” Himmel said. “It’s a more important part of the restaurant experience today.”

Vineyards have become savvier distributors, says Joseph P. Tagliola, president of retail at Aventura, Fla.-based Turnberry Associates. Turnberry has a Grape wine shop at its Destin (Fla.) Commons lifestyle center and plans to place another in its coming Town Center, in Las Vegas. Wineries sell through more channels now: airport shops, grocers, subscription services, warehouse clubs. This has made it easier for shoppers to buy wine and has in turn broadened the public taste for it, says Tagliola.

The Atlanta-based Grape and the Fort Lauderdale, Fla.-based WineStyles are two of the chains uncorking their wares in shopping centers. Both offer free tastings and use their own wine-classification systems. WineStyles, launched in 2004, has roughly 100 stores now and plans to expand to about 140 by June. The stores measure between 1,200 square feet and 1,800 square feet. All but one are franchised, and most are in shopping centers. Companywide revenues reached $16 million last year; COO Bob Florio says he aims to double that this year.

WineStyles carries 150 wines, most of which are priced under $25. Florio says many U.S. consumers feel intimidated trying to choose a bottle of wine, mystified and overwhelmed as they are by the traditional classifications according to region and type of grape. The chain tries to alleviate this by sorting its wines into eight friendlier-sounding categories: crisp, silky, rich, bubbly, fruity, mellow, bold and nectar.

Similarly, the Grape uses 10 numbered categories, with descriptions referring to flavor and intensity. In the No. 1 category, for instance, are the “light-body white wines”; the No. 5 wines are “medium-body” reds; and No. 8 is for the sparkling wines. Grape’s customers can sample or buy by the glass, bottle or case. The Grape carries 120 wines and serves small-plate gourmet food. As of mid-February the chain had 20 units, up from nine a year earlier. CEO Jack Mazur says he expects to have about 30 franchises and company-owned stores open by year-end. Sales range from about $500 to $1,000 per square foot, he says.

Mazur points out that one can test-drive cars and try on clothes before buying. “At most wine stores, you can’t do that.” This, he says, inspired the creation of the concept.

The Grape’s first store opened in northwest Atlanta in 2000, followed by its second, in that city’s Phipps Plaza. The Grape is planning a new format — an 1,800-square-foot kiosk for The Galleria Tysons II, in McLean, Va. — plus an in-line store there. That is the first mall where the Grape has a completely internal space, says Mazur.

Beyond the Southeast and the planned store in Las Vegas’ Town Center lifestyle project, the Grape is seeking sites in Boston, Chicago and Los Angeles.

West Palm Beach Winery is among the more niche-oriented names. The three-year-old concept, which occupies 1,000 square feet in CityPlace, offers free samplings but carries only Florida wines, for instance, and most of them are made from fruits other than grapes. Mango Mama is its top seller, says owner Michael Weinberg. At present there is only the CityPlace store, but Weinberg says leasing agents from other centers have approached him.

Shopping center developers are certainly cultivating their own love of vino. “There’s a taste of — no pun intended — of classiness into the project,” Tagliola said.

At CityPlace, the food and entertainment components serve as an anchor, says Related Urban Development’s Himmel, so having a winery there is a natural fit. And the center caters to many vacationers, who are prime buyers of wine. The firm intends to open a 1,500-square-foot wine shop and tasting room in New York City’s Time Warner Center next month, to be operated by renowned sommelier Andrew Bradbury. Related will also install wine shops, some of them to be run by Bradbury, in future projects, Himmel says.

Like any tenant, a wine shop will pose certain challenges for a developer. The biggest is location. Most wine sellers require easy access to the parking lot (imagine customers carrying a case of wine through a mall to their cars).

Wine merchants may be restricted by the clauses in other tenants’ leases — specialty grocers, bars or restaurants may hold leases that exclude other tenants from selling wine. Then there is the mishmash of state, county and local laws governing wine sales. These vary widely even among cities with regard to liquor licenses, food service requirements, operating hours, interstate shipments and the like. Wine merchants say it is difficult, though not impossible, to negotiate this regulatory hodgepodge when attempting to expand into another state or region. National expansion is most certainly difficult. “A national retail presence can be implemented as long as there is enough capital to support the growth,” according to Weinberg.

The Grape will avoid Pennsylvania, Utah and a few other states because of these difficulties, says Mazur, though he asserts that he does not otherwise feel especially constricted. “If I can make it in Georgia, [I] can make it anywhere,” he quipped. Though Bible Belt mores have historically discouraged alcohol consumption, local culture seems to be no obstacle to wine sales, even in the Southeast. The Grape, for example, has thrived throughout the Southeast and is only now looking to expand outward, says Mazur.

And there’s plenty of room for wine chains to grow. “We are so far from saturation that I’m not worried about it,” said Mitchell Pressman, owner of Chesapeake Wine Company, a wine bar and shop in a historic building in a redeveloped street front in Baltimore. Even today, only about a third of Americans drink wine, including those imbibing just one glass per year, says Pressman. He figures more will get into the spirit, though. After all, “wine is fun.”