High-end booze business suffering from recession-spooked tipplers

VANCOUVER, B.C. - The holiday cheer may be flowing in its usual copious quantities this Christmas and New Year, but the booze industry is bracing for a recession-sized hangover for some of the pricier prestige items like icewine and Champagne.

The slump may be felt most in sales to restaurants rushing to adapt menus and wine lists to more frugal times.

"We're like the canary in the coal mines," says Robert Simpson, general manager of Liberty Wine Merchants, a six-store Vancouver chain.

"If you have a large stock portfolio, you've been hit. Those are the kind of people that drink Champagne. We're not selling a lot of Champagne at the moment."

Ditto for vintage wines, apparently.

"I already know that at the big wine auctions prices are coming down by 20 and 30 per cent, 50 per cent in some cases, and a lot of lots are going now unsold," says Simpson.

"What I'm hearing out of California is some of these cult wines, which sell for $600 or $700 a bottle on release, they're quietly offering them out at half-price, and cult wines at $150 are being offered at $75."

What a change from even six months ago.

"You couldn't buy them because they were in such short supply," says Simpson. "Now they're going back to clients that they wouldn't sell wine to and saying we'll not only sell to you, but we'll sell to you at half the price it was."

The picture is mixed at government liquor stores.

"Our sales projections are pretty much on plan," says Chris Leighton, a spokesman for the Liquor Control Board of Ontario.

However, Champagne sales are down 6.6 per cent for 2008 and icewine dropped 8.2 per cent, continuing a years-long decline, he says.

Jodan Hayes, a product consultant at the B.C. Liquor Distribution Branch's specialty store in Vancouver, says the economic gloom hasn't hit her customers yet.

"I don't really think that they're shopping down-market," says Hayes as customers trundle booze-laden shopping carts around the displays. "I haven't seen any shortage of sales, at least at this store."

If anything, Hayes expects to do a brisk business in Champagne among the cognoscenti looking forward to uncorking the 1995 and '96 vintages that are just becoming drinkable.

"I think that the collectors are always going to collect," she says.

"Even with the downturn economy, I mean, for somebody who has seven houses and they lose one, does this mean that they're not going to purchase Dom (Perignon)? I don't think so."

But a holiday buyer may elect to skip the Champagne for toasting and "may go and do a Napa bubble instead and just save the extra $20 or so."

Over at Vancouver Wine Vault, owner Rick Underwood is not seeing any fall-off in business yet from his well-heeled clientele who stash their wine collections in his climate-controlled warehouse.

"In fact, we're up; we've increased our flow in," says Underwood. "A lot of guys would be liquidating their (stock) portfolios and buying hard assets like gold or wine."

He's expecting an influx of clients laying down cases of just-released 2005 Bordeaux, which is getting rave reviews and asking prices of $1,100 or more for the rarest bottlings.

"It's a guaranteed blue-chip, investment-grade wine," says Underwood.