The Food (wine) Chain

by Craig Camp
Enological Darwinism and the birth of a new species
Friday, February 13, 2004

YOU'VE HEARD about the food chain. A bigger fish eats a smaller fish, which is then eaten by a bigger fish, which is then eaten by an even bigger fish and so on and so on. But there's a wine chain as well.

Lately, the harsh realities of survival-of-the-fittest have hit the wine distribution industry in United States with a vengeance. Small wine distributors/wholesalers have been swallowed up by bigger distributors, who are then gobbled up by even bigger distributors. While this industry consolidation is cutting costs and increasing profits for the distributors, it has negative consequences for consumers as the available selection drops and prices increase because of the reduced competition.

The distributor is the middle tier of the deservedly maligned American three tier system of wine distribution. Distributors are the funnel through which all wines must pass before reaching retailers and restaurants who then sell to consumers. The distributor tier has a stranglehold on what is or is not sold in their individual markets, but more often than not their names are unknown to the very consumers whose drinking choices they control. This bottleneck is very important to consumers not only because of choice, but because of cost as it adds 30 to 40% or more to the price of a bottle of wine. In addition, the distributorship lobby, W.S.W.A. (Wine and Spirits Wholesalers of America), is the prime force in fighting direct interstate shipment of wine to consumers.

One short-term gain for consumers is that as these companies merge they close-out many good wines as they eliminate unwanted items and suppliers. As mega-distributors meld multiple portfolios into one, they realize they cannot market so many items and many excellent smaller producers and importers find themselves without distributors. Money talks and the distributors keep large economically powerful suppliers and eliminate small artisan producers. If they can, they keep the super-hot garagiste and cult wines, but the less famous ones are shown the door. In the crush many excellent estates that offer great value, but are lacking a famous name or big marketing budgets, are lost. While these sales are fun to take advantage of, they also foretell problems for consumers down the road. Eventually consumers end up with fewer choices.

One of the markets hardest hit by consolidation is Chicago. Once a bastion of wide-open competition and independent family-owned distributorships, the invasion of the Godzilla-distributorships, like Southern, Glazers, and Charmer, has reduced competition to a trickle and created a huge problem for small wine producers and consumers who want to buy those wines. As in most states, according to Illinois law, restaurants and retailers are required to buy alcoholic beverages only from licensed distributors. These distributors are prohibited from selling directly to consumers.

Unfortunately, the situation is Chicago is happening in every market in the country and the results of this trend are having a direct impact on fine wine retailers, restaurants with serious wine programs, and consumers dedicated to finding wines with character.

Brian Duncan, Wine Director of the Bin 36 restaurants in Chicago, explains how it affected his restaurant, "We were warned in advance to expect problems from people we knew on the West Coast that had been through the process. With all the consolidations, customer service has really declined. It's a real mess. I have had to get very creative and go directly to the producers to get the customer service we need."

"There is an absence of accountability on the part of the consolidated distribution companies," says chef/owner Michel Kornick of MK, also in Chicago. "You can't find who to call. We received a 15% price increase on some of our wines-by-the-glass without notification. Their systems do not take into account a personal interpretation on how you do business."

Fortunately some little fish are faster swimmers and out of the ashes of consolidation a few small, passionate distributors/importers were born and some survived. These small distributors are dedicated to bringing wines from highly personal wineries to their markets. Many small but quick swimmers are popping up all across the USA and their dedication is a blessing for those who love distinctive wines. The best distributorships see their warehouse with the same eyes that sommeliers see their wine lists.

Two of those fast fish are Debra Crestoni and Scott Larsen, founders of two young fine wine distribution companies in Chicago. Both are seasoned fine wine professionals who are famous for their hardheaded commitment to wines of character even in the face of harsh economic reality. Their intensity and hard work well represent a tiny, but growing trend across the United States and offer a ray of hope to wine consumers seeking a broad and rich spectrum of wines to choose for their tables and cellars.

"There are a lot of sharks out there," notes Crestoni owner of Connoisseur Wines a new distribution company. "I know there are a lot of tough guys out there ready to crush small companies like mine." In 1999, Crestoni left another distributorship (since vaporized after being eaten by a Godzilla) where she had been a partner since 1992 and set out on her own to follow her vision.

She describes her radical vision in these words: "Our focus is not case driven. I try to appreciate the efforts of my producers, their visions, and to uphold the same standards that they have." Connoisseur Wines also takes the almost unheard-of position of holding vintages that need maturing before releasing them for sale. "We want to provide the customer with wines that are ready to drink. For instance, we have held some 1998 Burgundies and are now offering them for sale," points out Crestoni.

Crestoni entered the wine business in the mid-seventies after a career in fine art and worked at several well-known wine shops before going to work for the legendary Pete Stern at Connoisseur Wines on Chicago's North Side. This now long-closed store was devoted to exceptional small estate wines -- especially those from Burgundy. Under Stern's guidance she was immersed in a world of extraordinary wines from small, passionate, estate producers. She learned her lessons well. Crestoni named her new company in Stern's honor. Always a revolutionary, Crestoni is also planning to inaugurate the Chicago Professional Wine School in 2004 which will specialize in educating both consumers and professionals about wines that meet Crestoni's tough standards.

"I seek an understanding about what creates value in a wine and to find integrity, purity of expression and flavor at all price points," is how Crestoni sums up her goals. Crestoni has built a portfolio filled with small jewels like Araujo Estate, Bryant Family Vineyards, Harlan Estate, Martinelli Winery, Qupe, Isole e Olena Chianti Classico, Vignalta, Borgo del Tiglio, and the dynamic Burgundy selections of Rebecca Wasserman.

Chef Kornick says of Crestoni, "Debra offers a unique point of view, she's a trained sommelier so her staff education and training are at a very high level, and she knows the product well and can answer intelligently on any topic. Debra happens to be very passionate about what she is doing."

Scott Larsen, president of another start-up distributorship, the appropriately named Maverick Wines, was going to be a teacher when he was in college. Although he ended up in the wine business instead of teaching, Larsen has held on to his belief in education and that is his key, "I want education to provide a bond with the customer and to be a service that will support everything they buy from us."

Larsen entered the wine business over thirty years ago, joining his uncle Roger Copel in building Copel Wines. Copel was one of the first small fine wine distributor/importers in the Chicago market and introduced many fine estates such as Balthazar Ress from the Rheingau in Germany to Chicago consumers. From there he spent two decades divided between Heritage Wine Cellars and Direct Import Wine Company, two of the leading fine wine distributorships of that time. Only Heritage remains as an independent today and distributor consolidation both forced and gave Larsen the opportunity to found Maverick Wines in 2002.

"I had thirty-one years of relationships and I understood these types of wineries would not be happy at the consolidated houses (distributorships) once I convinced them I had the financing the rest started easily," said Larsen.

"I want wines that have a personality -- something to say. Wines that represent a place and try to be the best," is how Larsen describes his criteria in selecting wines for his portfolio. It is indeed a powerful fine wine portfolio including such luminaries as Shafer, Spottswoode, Calera, Leonetti, the exciting Italian estates of Summa Vitis (Matthew Fioretti), the French and Spanish selections of Eric Solomon, the distinctive French selections of Louis/Dressner and the remarkable German estates of the passionate Rudi Wiest. Larsen sums up his philosophy this way, "My vision is based on quality wines from the world over -- wines with personality. I believe that I have established my reputation with thirty-one years of dedication to customer service, quality and education."

Bin 36's Duncan says of Maverick, "The small distributors have a real spontaneity. Scott has been very aggressive in seeking out top producers and his results have been impressive. Companies like Maverick and Connoisseur are a breath of fresh air."

Fast fish and fine wine: a perfect match.

Connoisseur Wines
Debra Crestoni
6610 West Howard Street
Niles, IL 60714

Maverick Wines
Scott Larsen
1231 Ellis Street
Bensenville, IL 60106