Wednesday, June 2, 2004

A bacchanalian love affair

Valley’s appetite for wine drives big distribution business

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By GREGORY FOLEY
Express Staff Writer

As Ketchum winemaker Steve McCarthy draws a sampling of his 2002 merlot from a carefully crafted French-oak barrel, he smiles with delight.

Steve McCarthy, operator of Frenchman’s Gulch winery in Ketchum, draws a sampling of his 2002 merlot, which he is preparing to release to local sales outlets. McCarthy produces a variety of red wines from grapes picked at selected vineyards in Washington state. Express photos by Willy Cook and David N. Seelig

"Making wine was always a dream of mine since my first trip to Europe when I was 16," he says. "There were vineyards as far as the eye could see."

In 2000, McCarthy started his Frenchman’s Gulch winery in what many would consider the most unlikely of locations: a small warehouse tucked among several large wine-distribution businesses in Ketchum’s light-industrial district.

By shipping tons of merlot, cabernet sauvignon and syrah grapes from Washington state to Idaho, McCarthy has nearly doubled his wine production in the last year—peaking now at 900 cases.

The fact that McCarthy has established a working winery in the mountains of the northern Wood River Valley—with nary a vineyard in sight—is a testament to the region’s affinity for wine and the sense of culture that it can carry.

"This valley has a huge appetite for wine," said Frazer Ford, general manager of J.W. Thornton Wine Imports, a Ketchum-based wine distributor. "You’re going to be hard pressed to find too many people here who don’t drink a glass of wine now and then."

Indeed, Ford is correct. The wine industry in the Wood River Valley is thriving.

Craig Spiller, manager of Sun Valley Wine Co., said wine sales tend to follow the broader economy, with consumers today seeking more bargains. Express photos by Willy Cook and David N. Seelig

Wine bars in Ketchum and Hailey buzz with the sounds of popping corks and clinking glasses. Restaurants bolster their bottom lines with sales of chardonnays, cabernets and syrahs from around the world. Retailers, and even grocers, offer a revolving inventory of reds, whites and rosés that would match most urban wine stores.

And, in Ketchum, a city of merely 3,000 residents, no fewer than six distributors maintain a headquarters or distribution center.

J. W. Thornton, which started business in Ketchum in 1982, sells some 600 different labels, primarily from Europe and California.

Ford said the Wood River Valley—with a comparatively small population—equals Boise as the company’s strongest sales market in the state.

"It’s very competitive here," Ford said. "But all these great wineries from all over the world want to be in the market here in Sun Valley.

"The consumer ends up with an amazing amount of choices for a small town."

Ford estimated that the Wood River Valley wine market offers—and finds support for—some 4,000 specific varieties of wine.

Dodds Hayden, president and owner of the Ketchum office of Hayden Beverage Co., based in Boise, said a high per-capita consumption rate of wine in Wood River Valley ultimately drives the success of the local industry.

At the same time, Hayden said, the wealth in the region prompts sales of more high-end wines than in other parts of Idaho.

"The Sun Valley area is our second most important wine market in the state," Hayden said, "largely because of the affluence and the large numbers of tourists."

However, both Ford and Hayden said consumers in the Wood River Valley are today unquestionably seeking more value for their wine dollar.

Expensive red wines from California’s Napa Valley and the renowned central-France region of Burgundy—which can easily range above $50 per bottle—sold well in the stock-market boom years of the late 1990s, Ford said.

Today, many consumers in the region are gravitating toward mass-produced value wines that can offer enticing flavors and aromas for as little as $7 a bottle.

"Still, people here aren’t afraid to spend $100 for a bottle of wine," Ford said. "Comparatively, it is still a high-end market."

Craig Spiller, manager of Sun Valley Wine Co., a retail store and wine bar in central Ketchum, agreed that the market in recent years has shifted away from exorbitantly priced boutique wines but remains strong.

Spiller said he does not view the Wood River Valley wine market as a phenomenon—despite the fact that he successfully maintains an inventory of up to 2,000 different bottlings.

The success of Sun Valley Wine Co.—which has been in business for a decade—can be attributed in part to an approach that allows customers to treat wine as one of life’s simple pleasures, not a test of worldliness, Spiller said.

"It’s not a glamorous thing. It’s not a special thing. It’s not an out-of-the-ordinary thing," he said. "A good bottle of wine is the one you like."

Spiller said Sun Valley Wine Co. enjoys the support of thousands of tourists each year but would not be able to sustain its operations without a large contingent of "loyal, local customers."

Atkinsons’ Markets, with grocery stores in Ketchum, Hailey and Bellevue, also serves as one of the Wood River Valley’s primary wine retailers.

Tom Pyle, manager of Atkinsons’ in Ketchum, said the store usually offers approximately 900 different bottlings.

"The wine business in our Ketchum store accounts for the most sales," Pyle said.

Although growth in the Wood River Valley wine-sales market has been somewhat slow in recent years, wine sales in the state this year appear to be on a sharp upward trend.

Michael Ferguson, chief economist for the state, said tax collections from wholesale wine sales surged sharply in April. The state collected approximately $215,000 from wholesale wine taxes in April, up about 20 percent from $175,000 in April 2003.

Wine-tax revenues—which come from a 45-cents-per-gallon assessment—are up 7 percent through the first four months of 2004, Ferguson said. In that period, the state collected $2.1 million on wines worth many times that figure.

"Wine is growing at more than double the rate of beer," Ferguson said.

However, Ferguson noted, because beers with greater than 6 percent alcohol content are taxed as though they are wines, a surge in consumption of such beers—including micro-brews—could skew the figures.

Nonetheless, the tax figures suggest that Idaho wine retailers—led by those in Boise and the Wood River Valley—purchased some 400,000 gallons of wine last April.

The state does not track wine sales in specific geographic regions.

Ford of J.W. Thornton Wine Imports said Sun Valley area residents’ interest in wine is most apparent during the annual Sun Valley Center for the Arts benefit wine auction.

The event brought in $570,500 last summer, making it the 10th-most-lucrative charity wine auction in the nation in all of 2003.

McCarthy—who is planning to move his winery and tasting room next year to a new, more-modern facility in Ketchum—has seemingly honed in on a worthy location for his business.

"This is a tough business," he said. "But I believe people should have good wine available to them at good prices. Wine is for everybody."

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.