The Economy and Sound Decisions

This year has been a roller coaster for our local economy, which is very dependent on tourism and wine trade. The year started off well, and our March Zinfandel Festival weekend, which coincides with the release of our spring wines, was the largest sales weekend in the ten-year history of our business. Summer foot traffic dropped with the escalating prices of gas, but at the same time we enjoyed a higher percentage of first time visitors to Paso Robles from both northern and southern California. It seems people were adventuring closer to home and staying in the state, rather than driving or flying out of state for their summer vacations. Now gas prices have plummeted again, but news of a recession is tightening wallets.

On the wine discussion boards, where wine geeks and collectors gather, attitudes toward buying triple-digit bottles of Napa cabernet have veered sharply from last winter’s aggrandized boasting over rare and Veblun-priced acquisitions, to cautious consideration of quality-to-price ratios.

What does this mean for you?

As a customer and fan of Dover Canyon, it means you can continue to drink fine wine at a reasonable price.

Our business model is designed to absorb economic shock. When income falls, luxuries like expensive wine are one of the first casualties. This causes a chain reaction—it hits retailers first, so they tighten their belts and buy less from distributors, who in turn buy less from wineries. Retailers and distributors focus on budget-conscious selections, and drop some brands altogether. Brand positioning takes a lot of time and effort, so at this point it’s too late for wineries who positioned themselves as expensive collectibles to drastically revise their pricing and presentation. In times like these, retailers remain loyal to those wines that are affordable, delicious, and reasonably priced. We’re pleased to report that our retail distribution is still strong and that we released the 2007 Cujo Zinfandel ($19) three months early in order to meet demand!

Having worked in the wine industry for some years, Dan and I have seen the cycles of the wine industry as the wheel of fortune turns. We agreed to keep our prices lower than wines of similar quality, creating a high Quality to Price Ratio (QPR). Five years ago we also implemented our tiered wine club program, which allows wine club members to select a preferred level of participation. And most importantly, we offer generous discounts on wine purchases to wine club members and loyal customers. Our wine club hovers near full capacity, with a short term waiting list.

At Dover Canyon, you will not find wines with ego-burnishing prices; voluptuous bottles and packaging (that never fit in a wine rack anyway); four-color brochures with all the usual language about passion and dedication; or even a tasting room with drywall (our tasting room is the original Dunn barn on the property and our tasting bar is one of the original workbenches).

You will find a humble, rustic tasting room staffed with some of the friendliest, most knowledgeable pourers in the region. Frequent visitors like soil scientist Dr. Tom Rice (author of Paso Robles: An American Terroir) and local growers drop by to visit, and will even sign bottles or books. You will find delicious wines, reasonable prices, and a tempting wine club.

And most important, you will find a couple who enjoy making wines in the style they like to drink, to serve with food, and enjoy with friends. Friends like you. Thank you for being loyal supporters, and for becoming our friends as well as our customers.

Comments

[Enobytes]

In today's economy, I think you are positioning yourself well with the business plan you have in place. Lower pricing, tiered wine club pricing and club member discounts are where it is at to keep and attain loyal customers!

[Mary Baker]

Thanks, Pam. Another benefit to having a reputation now for great quality and affordable value is that we are being offered high-end restaurant placements as the restaurants lists reshuffle to meet demand. Not only is that great for us, but I think there are lot of "quiet" wine consumers who will be pleasantly surprised to find more zin choices in the year to come.