New York’s Sherry-Lehmann Projects Revenue Growth Of 7% For Its Fiscal 2012February 10, 2012
Sherry-Lehmann, one of Manhattan’s most renowned wine shops, reports that revenues for its fiscal 2011 ended August 31 reached $45 million, up 7% from the previous fiscal year. CEO Chris Adams says calendar fourth quarter sales last year ended strongly after a weak start in October and November. He expects to achieve another 7% sales increase for fiscal 2012. Shanken News Daily recently spoke with Adams about the highly acclaimed 2009 and 2010 Bordeaux vintages, and prospects for sales of the 2009 Burgundy vintage at Sherry-Lehmann.
SND: How are your sales of Bordeaux futures, with the two great back-to-back vintages of 2009 and 2010?
Adams: 2009 was a great success for Sherry-Lehmann. Coming on the heels of three vintages that garnered less than high ratings, 2009 was viewed as an opportunity to jump back in and buy some great Bordeaux. But that was not the case with the 2010s. What happened there was the result of price increases that were outside the realm of what’s right and reasonable. A futures campaign should be a few things, but most notably it should be an opportunity for customers to secure wine at a good price. When customers felt they could do that at Sherry-Lehmann with the 2009 vintage, they bought. When they felt like they were getting an allocation that might not be there in a few years, they bought. But the 2010 vintage was a much less popular campaign because of the price increases. It’s a shame, because I felt Bordeaux could have fortified its place in this new age of pricing as the go-to region for great vintages. Even with the price hikes on the 2009s, we still had the market. But with the 2010 vintage, that market walked away. We’ll see what we get with the 2011s.
SND: You offered a wide range of prices in the 2009s, and you still do for the 2010 vintage.
Adams: That’s the nice thing about those vintages: there is depth. I think 2010 may be a bit more deep than 2009, but we were able to offer a wide range because there was success at many different price levels. Going forward, that will be critical for Bordeaux. In the less critically acclaimed vintages, they’ll really need to deliver value at all price points.
SND: Have you sold out most of your 2009s?
Adams: We’re not offering many ’09s now because the wines are beginning to come in. At Sherry-Lehmann, we don’t sell our entire allocation. If we buy 100 cases of a wine, we’re not going to sell all 100 cases en primeur. We obviously want to hold some back, for customers, for breakage and things like that. I expect that very soon I’ll be taking ’09 futures completely off sale.
SND: How are Bordeaux wines selling in the store, on the shelf and in your catalog?
Adams: The petits chateaux are doing very well. In the economic downturn of 2008 and 2009, the petits chateaux grabbed a lot of market share from the cru classé wines because people were trading down. And they’ve recognized their value. We knew that some customers would stay there, but we did have a trade-up over the last 15-18 months. People are spending more money than before. But there’s still excitement at the petit chateau level. In the mid-price level—say the $20-$40 range. And then at the very top when you get to $100, $200, $300 a bottle, it gets quieter. That’s part of what’s problematic with Bordeaux and some of the other great wine regions of the world right now. We still have a lot of economic uncertainty. Even though we have better news coming more regularly, relative to what we’ve had in the last few years about our own economic situation, globally there are still a lot of question marks. We still have high unemployment. We still have an uncertain housing market. So the market isn’t quite ready to turn the clock back just yet.
SND: How deep is your inventory of older vintages?
Adams: When I can direct-import some older vintages, I try to do so. It’s an expensive proposition though. When Diageo Chateau & Estate got out of the business a few years ago, we lost a great go-to for older vintages. Now it’s cash-intensive. But when I spot an opportunity and feel that I can deplete it, I’ll direct-import. There are some importers and distributors here in America who are getting into that business of holding some older vintages, like Joanne Bordeaux-USA and Frederick Wildman. I’m very interested in supporting them whenever I can in terms of older vintages because we have a significant inventory and are able to hold wines. But we want to have access to well-sourced, well-stored and hopefully well-priced inventories. With Diageo, if you sold 100 cases of 1995 Lynch Bages, you only had to buy 5 at a time. I can’t just write a check to Bordeaux directly for 100 cases and hold those cases. The other challenge I now face is finding domestic partners who can source a wine properly. I need the wine to come directly from Bordeaux and be stored properly. I can then sell it at a price that makes sense for them, for Sherry-Lehmann and for the end consumer. That’s a challenge.
SND: How is your Burgundy business?
Adams: We’re quite excited about the 2009s. Burgundy has grown and grown over the last few years. Globally, in the auctions and elsewhere, more and more attention is being paid to Burgundy wines. We look at the 2009s as an opportunity to take a significant position. We just started offering those wines. We’re doing a big marketing push this month with our winter mailer, which will focus on 2009 Burgundy. It’s going to be a great success. We’re very excited about Burgundy this year.
SND: Is there similar price resistance on Burgundy as there is on Bordeaux?
Adams: At the very top, there’s such a limited level of access to the wine. You’re not talking about the quantity that you see with Bordeaux. It’s really more an issue of allocation. In the broader spectrum of Burgundy, you can see that the right suppliers offer a wide variety. We don’t have to be so top-heavy there, except obviously with the few names we all know. The problems found with other wine regions won’t be as big with Burgundy.
SND: What’s the most popular price point for wine now at Sherry-Lehmann?
Adams: Our average bottle price is at about $31, which is good. It’s not up where it was a few years ago, but it certainly has come on strong in the last 18 months. It’s sort of flattened off right now. I remain cautiously optimistic about sales. We had a good January, so we’re now right where we thought we’d be. There’s a lot of heavy lifting in January because the wine racks are filled with gifts and everything else. It takes some creative marketing and pushing, but it can be a successful month.