Friday, March 23, 2001

Fujioka Wine Merchants President Lyle Fujioka, sales employee
Danny Matsushita and operations manager Todd Sur sit at the
wine-tasting table earlier this week at Fujioka Wine Merchants
in Market City Shopping Center in Kaimuki.

Isle wine shops
picking grapes with
big retailers

Hawaii merchants say they're
competitive and offer expertise

By Lyn Danninger

Warehouse stores like Costco are cutting into sales of cheaper and moderately priced wines, according to local merchants.

Lyle Fujioka, president of Fujioka Wine Merchants in Kaimuki and Trav Duro, proprietor of the Mr. Wine retail store in Lahaina, Maui, concede the big box stores are luring away wine buyers.

"Costco has definitely impacted my more inexpensive selections," Duro said.

For example, Costco sells a bottle of Kendall-Jackson Vintners Reserve Chardonnay for $8.99. Mr. Wine has sold the same bottle recently for $9.25, but does not currently carry the wine. Fujioka sells the wine for $9.75.

Local wine merchants say part of their problem is the public perception that warehouse prices automatically mean the cheapest prices. But that's not necessarily true, says Fujioka.

"We can effectively match their prices on a day-to-day basis and we do," he said. "In fact we have a surprising number of wines that beat their prices."

But the reputation of the big boxes is that they undercut everybody.

On the mainland there have been some complaints from small retailers about Costco's corporate clout, especially since the warehouse store added a fine wine section to their offerings.

So well has the company done that David Andrew, Costco's director of wine in Issaquah, Wash., estimates it will rack up close to $500 million in wine sales alone this year.

But both Duro and Fujioka believe establishments like theirs offer something the big box retailers like Costco never will, no matter how many different categories of wine it sells: service, knowledge and proper storage conditions.

"When you're looking at wine and you sweat, that's not a good sign. We feature a temperature-controlled wine cellar for all the wines we sell above $15," Duro said. "A couple of extra dollars is a small price to pay for a bottle of well-stored wine plus the fine service that goes along with it."

The stores also hire salespeople with wine knowledge, Fujioka said.

"We put three to four people on the floor every day to help guide people through the maze of wines that are available," Fujioka said. "It's our job to be able to talk the language of food and wine and make it fun."

For Fern Desilet, owner of Kona Wine Market on the Big Island, part of the fun of choosing wine includes a wine tasting from 3 to 7 p.m. every Friday. The event is proving popular with locals and visitors alike.

"We have a good turnout both from the industry, visitors and regulars," said Desilet. "It's become a social thing."

Desilet said the tastings afford him the opportunity to learn about his customers.

"We learn from our customers. Every palate is different," he said. "It's amazing what their take is on certain wines."

The tastings expand customers' knowledge of wines by sampling different varieties from all over the world.

The customers are then likely to be more adventurous in what they are willing to purchase, he said.

"Whether it's white or blush, sparkling wines or reds, we embrace a global market," Desiret said.

That strategy is paying off as more people become comfortable with wines and with seeking advice on what to buy.

But not everyone is seeking out specialty wine stores and Costco also provides stiff competition for other chain retailers, like Safeway Inc.

"Clearly they're our number one competitor and there is no question they're doing a good job," Safeway Hawaii Regional Manager Ed Treschuk said.

Safeway's $4.88 price on a bottle of Beringer White Zinfadel is comparable to Costco's price of two bottles for $9.49.

Treschuk said Safeway does well with the wines it sells and is comfortable within its niche: the average grocery store shopper. He also believes the chain's promotional and discount prices for volume purchases beat Costco.

"Our target for wines is really the everyday consumer who comes into shop," he said. "Our volume in wine sales is in the $8.99 to $9.99 category that people buy every week."

In spite of the stiffer competition, Mr. Wine's Duro said his business has grown at the rate of about 5 percent a year for the 8 years he has been in business.

Still, he is keeping an eye on the competition, like the newly arrived Hawaii Liquor Superstore that opened on Maui last year.

"I'd be more concerned about them than I would Costco," Duro said. "Their store in Kahului is around 12,000 square feet compared to our 900 square feet."

Hawaii Liquor Superstore's director of operations, Dave Harwerth, says the company has done well since it opened in May. It carries more than 2,500 different wines as well as beer and liquor.

"People here have been asking for this kind of exposure to various labels," Harweth said.

With 40 percent of the company's gross sales in wine, Harwerth said it shows there is a growing interest and appreciation for the beverage in Hawaii.

As an added bonus, Harwerth said, the many resorts in the state give Hawaii a better-than-average allocation of hard-to-get wines.

"So the opportunity is there for consumers to get great wine they may not see in other parts of the country," he said.

Harweth, who has set up similar stores on the mainland, is unconcerned about competition from Costco or anyone else.

In fact, he is planning to set up a another store in Hawaii in the near future, but will not reveal where.

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