The role of tourism in the local wine industry

At first glance, wine and tourism may not seem to go hand in hand. The traditional model for wine distribution is through what's called the three-tier system. Since the repeal of Prohibition in 1933, the sale of alcoholic beverages has been dominated and controlled by this model. Wineries sell their wine to a distributor and the distributor in turn resells their portfolio of products to retailers. One of the purposes of this system is to supposedly act like a safety net and protect the general population. In theory, consumers and retailers are unburdened with pressure and coersion from producers. However, in the social media age we now live in, consumers are increasingly more interested in building relationships with the producers whose products they buy. Many wineries have figured this out and are very active via social media channels. Other wineries and wine regions have also become more active in promoting enotourism and developing their direct to consumer sales channel.

Enotourism, or wine tourism, focuses on getting travelers to visit, taste and purchase wine at the source. While it may not seem like a novel idea to most wine enthusiasts, wine tourism is an important activity in the industry, yet has room to become even more important. Most people buy wine at a retail store or a restaurant and that is the extent of their relationship with a winery. A handful of consumers may actually buy wine directly from the producer via their website or mailing list. Actually visiting a winery is not something a majority of wine drinkers do regularly. Developing the wine traveler segment is key to many wineries' business models. Next week, I will be in Santa Rosa, CA to attend the second annual Wine Tourism conference to gather with 200 or so other people looking for ways to enhance the role of tourism in the wine industry. I attended last year and it was very interesting to hear about how wineries in California, New York and Oregon are approaching the tourism market.

In Colorado, tourism is an important sales channel for many of the wineries, but it can also be a double-edged sword. Of the 100+ wineries in the Centennial State, only a dozen or so are sold through a distributor. All of the Colorado wineries are also licensed wholesalers and can sell their products directly to retailers, but many choose to not do so because of the exceptional hard work it takes for family-owned wineries to be successful. A majority of the state's wineries sell most of their wine out of their tasting rooms. This can be a successful model, especially when a small winery is located in a highly-visited wine region, like Napa Valley. Unfortunately (or fortunately depending on how you look at it), Colorado is not necessarily considered a destination wine region filled with bumper-to-bumper traffic with cars and buses filling tasting room parking lots.

In Colorado, most tasting room traffic is limited to the RV crowd of people simply passing through and perhaps looking for wines with a touch of sweetness. That's not to say consumers don't specifically travel to wineries here to seek out "premium" wine, just that the current tourist base is somewhat limited. The same crowd also visits Napa Valley. But Napa also attracts the type of consumer that is not afraid to spend thousands of dollars on a case or two of wine. I have rarely heard a Colorado winery tell me about an instance such as that happening in their winery. A three or six-bottle purchase is often a big deal. Some wineries are thankfully growing their (or just starting) wine clubs, but most still rely on just the drop-in traffic to sell most of their wine. Fortunately, the somewhat limited tourism foundation that currently exists implies that the potential for tourism growth is great. It will be interesting to see how much, if at all, Trip Advisor's Top Ten ranking of Palisade, CO as a wine destination will increase visitor traffic. Wineries need to to everything they can to drive traffic if they are focusing their sales channels on their tasting room. This brings me back to the first paragraph.

While many wineries in Colorado have decided that tourism is their priority, they cannot forget about the traditional model. Only a handful of Colorado wines can be found on retail shelves, and almost all of these producers utilize a distributor. Even fewer local wines can be found on restaurant wine lists. The blame for this does not solely reside on the wineries and some wineries have excelled in this regard. A few have even put all of their energy into the retail tier and have forgone the tasting room/tourist route altogether. However, the wineries who have been less successful (and the local industry as a whole) are going to have work hard to convince retailers and restaurants that they have been wrong to relegate Colorado wine to the bottom shelf at the back of the store or to exclude them from the list altogether. Most people still are introduced to new wines via restaurants and retailers. To reach those new customers (and there are lots of them) local wineries are going to have to start putting more energy (and expense) into developing these sales channels in addition to their own tasting rooms. What role do you think tourism should play in emerging wine regions like Colorado?

O Bottle, From Where Art Thou?

Have you ever wondered how the bottle of wine sitting on your table made its journey from the idyllic chateau (or perhaps a garage or industrial factory) to you? Assuming that you did not purchase this bottle directly from the winery, it actually had quite a little journey. In the U.S., we have what is called the three-tier distribution system for alcoholic beverages. This system was established by the 21st Amendment to the Constitution with the repeal of prohibition. These tiers were developed to provide competition and checks and balances to protect both consumers and winemakers. The tiers include producers, distributors, and retailers. If the wine originates from outside of the U.S., a fourth tier, the importer, is added. With each of the 50 states governing just how exactly this system operates within two major paradigms. The first is the competitive private method. Each of the tiers is operated by private business ventures. However, some states operate with what is called a control method. In this situation, the state maintains control of the distribution and/or retail tiers. Sounds complicated, but once the wine passes through each of these hoops, it is ready and willing for you to purchase!

Working in the wine industry, I am lucky enough to have received invitations from each of these tiers to attend tastings of wines. These tastings are events designed to promote and sell wine. It is through events like these that the best wines make their way to your home. Unfortunately, some retailers do not attend these events but rather stock their shelves with the inventory that the distributor needs to sell. So, let's follow the journey of a bottle of Maison Joseph Drouhin from the Burgundy region of France.

Maison Joseph Drouhin has been making wine, mostly Pinot Noir and Chardonnay, from a variety of locations in and around Burgundy since 1880. American importers visit all parts of the wine world meeting with winemakers and tasting their wines in order to select, what they feel, are the very best (and easiest) wines to sell to the American consumer. With the Drouhin wines, the importer is Dreyfus Ashby & Co. The importer and the producer come to terms on which wines will be sold in the U.S., the quantity, and the cost. The importer then ships the wine to the U.S. to be sold to a distributor. Dreyfus Ashby & Co. has a contract with Southern Wine and Spirits to distribute Drouhin wines in Colorado. Together, Dreyfus Ashby and Southern work to sell these wines to retailers. One way that they do this is to host a tasting event. They invite retail and restaurant clients to come to and taste the wines to determine which wines they think they can sell to their customers. While Maison Joseph Drouhin makes over 70 different bottlings, the event that I attended only offered about 20 different Drouhin wines at a variety of price points (ranging from $10 - $150 retail). Retail representatives are able to taste through the line up and evaluate the wines that they would like to represent at their store. In some cases, after a retail store purchases wines it may offer public tasting events for customers to come and try a few wines before purchasing. I highly recommend signing up to receive email announcements from your favorite stores and attend as many of these events as you can. No one likes to spend money on a wine and end up not liking it. You can avoid this by previewing the wine for free at your local wine shop!

Though I did not take thorough notes at the tasting, here a few of the wines that I found to be worth recommending (retail prices approximate):

Pinot Noir
2008 Maison Joseph Drouhin Volnay (approx. $36)
2008 Maison Joesph Drouhin Beaune Clos des Mouches Rouge (approx. $65)
2006 Domaine Drouhin Oregon Laurène (approx. $60)

Chardonnay
2008 Drouhin Vaudon Chablis Premier Cru (approx. $32)
2008 Maison Joseph Drouhin Rully (approx. $15)
2008 Maison Joseph Drouhin Beaune Clos des Mouches Blanc (approx. $80)