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Sherry-Lehmann’s Adams Optimistic About High-End Wine Business, Expanding Into New Territory

August 26, 2011

Sherry-Lehmann Wine & Spirits, the 77-year-old retailing powerhouse in New York City, has enjoyed steady growth in the wake of the recession and continued success of its Bordeaux business after Diageo pulled out in 2010. Led by CEO Chris Adams, who was also named chairman in November 2010, the Manhattan institution totaled $44.5 million last year, and Adams says sales were up 13% in the first half of 2011. Shanken News Daily recently spoke with Adams to discuss current retail trends and Sherry-Lehmann’s outlook for the future.

SND: What changes have you seen in sales this year?

Adams: There has been a perceptible trade-up happening for us. In 2008 and 2009, we saw customers trading down: buying sparkling wines instead of Champagne, buying petite chateau Bordeaux instead of cru classé. And the 2009 Bordeaux futures campaign in the summer of ’10 sort of marked a point at which the customers felt like they could spend more money. And then that was brought home even more so in the fall of 2010 and into the holidays when we saw great Champagne sales. So there’s reason to be optimistic. For a long time it was cautious optimism, but we’re feeling much better this year than we have for the last few.

SND: How do you feel about Bordeaux’s 2010 vintage?

Adams: I’m concerned with 2010 on two fronts. One is that there is higher international demand than there’s ever been. And then we’ve lost quite a bit on currency. Having said that, we’re seeing that there’s less wine being made available to the market, so that increases the demand for what is available. At many points it becomes for the consumer a chance at access. Price becomes not completely secondary but it’s two functions: 1) Can I even get the wine? And 2) If I am getting it, where is that price relative to the market? And our position is that we’ve been doing Bordeaux futures since the 1959 vintage so we have a track record of being able to offer these wines. We feel that America should still be an attractive market and that Sherry-Lehmann should be the place that customers go to get these wines.

SND: What other trends are you seeing in lower-tier wines or in general?

Adams: We’re seeing strength in New Zealand Sauvignon Blancs. Argentine Malbec for us is still a growth category. Our private label there is Miguel Mendoza Malbec made by Enrique Foster. And we’re still seeing a lot of people following these wines at the $15-to-$20 price point, especially in the warmer weather. We’ve had great success in the past year with the 2009 Beaujolais. There are some benchmark wines made there, and as soon as I bring a container in, I find myself ordering another a few weeks later. So it’s nice to see the focus on affordable fresh wines still there.

SND: What regions do you sell the most of?

Adams: Most of our sales are from France—Bordeaux, Burgundy, Champagne. Obviously, we follow the Rhône, Loire and Alsace as well. And then after that we sell a lot of wines from California. Even in the down economy, we were able to position our offerings from California to meet the right price points. And then of course Italy, Spain, Germany, Chile, plus South Africa is coming back a little bit.

SND: Spirits account for roughly 5% of your sales. Where are you seeing growth in that category?

Adams: We’re seeing a trade-up there as well. People are spending a little bit more on their vodkas and whiskies. When we moved into our current location (in 2007), spirits became a growth category for us but it’s leveled off. There’s still a little bit of growth, but it’s not astronomical like it was when we first moved here.

SND: How do you feel about wine being sold in grocery stores?

Adams: We don’t believe that it’s the right thing. And for me it’s a matter of, you can’t just suddenly change the rules and tell people that all the business models they’ve built for decades or years are no longer applicable. It just doesn’t seem that any proposal I’ve seen for wine in grocery stores deals effectively with the people who have existing businesses. Is it impossible? I’m not going to say that, but they haven’t shown anything (that seems fair).

SND: What are your plans for the future? Are you still considering opening new stores?

Adams: Now that the economy is getting brighter, there are a few things I’ve been thinking about. I can’t disclose too much, but yes, we’re interested in positioning this store outside of New York state the way it should be positioned. I’m taking it quite seriously. I hope that we can do something in the next 12 to 18 months. I’m optimistic that it can be fulfilled.

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