Business, Finance & Economics

Keeping wine out of the red


NANTUCKET, Mass. — Not that wine drinkers around the world want to see wineries struggle in the midst of the global economic downturn. But massive decreases in disposable income mean that some high-end wines are now either going unsold or are selling at significantly lower prices, which leaves avid wine consumers of more modest financial means hopeful of uncorking a bottle.

Certain Bordeaux futures, for example, are at their lowest price since 2004. With reviews of the 2008 vintage far surpassing early agricultural reports, savvy consumers and collectors are locking in early to maximize the value of this year’s wines.

At the other end of the transaction, the experiences of one winemaker trying to grow his business shows how the global economic crisis is affecting those who make and sell wine. Alex Gambal, an American who now makes wine in Burgundy, has tackled the crisis at full speed.

By some standards Gambal’s would be considered a small winery. He produces 10 white and eight red wines for a total of 4,500 or 5,000 cases a year, which is enough wine to send him on the road to market it, but without the expense account of a major brand.

When your typical order is two or three pallets of wines, or 50 to 100 cases, and when — in Gambal’s words — you’re “selling a little bit all the time all over the place,” then you rely heavily on personal relationships to make the sales. For Gambal, personal connections are the foundation of his business, from buying the grapes, to getting to know sommeliers, to training restaurant staff, to nurturing big retail accounts as well as personal buyers or collectors. “That’s the business,” Gambal said. “It’s all relationship based. There are a lot of wines out there, and you want to give them a reason to choose yours.”

Giving buyers a reason to choose your wines takes time, but finding the right time to travel away from Burgundy in order to market the wines is difficult.

Beginning in May and continuing for six to eight weeks, Gambal’s vines and the vines of his growers grow quickly. May is the time to start making contracts with the growers, which are made every year because growers change their minds about what they want to do with the grapes: Some years they want to press the grapes themselves and try to sell the juice later. Gambal estimates that between May and the harvest in October, he spends 80 to 90 percent of his time in maintaining contracts.

In 2009, Burgundy saw a cool winter and cool spring nights, so the growth was a little slower, delaying the growth spurt by seven or eight days. Gambal used that time to participate in the Nantucket Wine Festival and to visit clients in Brussels. Earlier in the spring he visited accounts in the Cote d’Azur just at the cusp of the high season, when sommeliers and beverage directors make decisions about their wine lists.

One key to Gambal’s marketing strategy is to diversify markets, countries, and audiences. He spreads himself out because, he said, putting lots of effort and energy into one account or one market spells doom when the economy sours. Another grower Gambal knows, for example, has relied for years on the British wine market but it’s “tanked” right now, so they aren’t buying the wines. And the grower is stuck.

The purpose of the trips Gambal makes around the world is to visit, to educate, to say thank you, to gossip a little, to make sure his wines are still on the shelf and to pay dividends.

“Constantly staying in front of people is what gives the business legs,” Gambal said. “It’s gotten to the point where we don’t need to taste them on the new vintage. They’re ordering on the brand.”

At the end of the year, in alternating years, Gambal visits Asia where his largest sales are in Japan, Taiwan and, to a lesser extent, Singapore. Gambal’s Japan presence is an example of how having a good agent can help a producer. Yuko Tanamoto of Vinos Yamazaki represents Gambal there and the audience she gathers treats him like a rock star. Each person wants him to sign their bottle of wine because they’re looking for that personal connection with someone they see as a celebrity.

Agents like that earn 10 to 15 percent of the profit from the sales of wine. Even with such a large cut into the profit, even with all the expense of traveling around the world, is Gambal’s business of making and selling Burgundy wine profitable?

Yes, he said, helped by his lack of debt.

Does he think there’s any chance that the price of Burgundy will go down?

Well, no, he said — at least not for his bottles.