Wine business thriving despite tanking P.R. economy

With an investment of nearly $1 million, recently opened The House wine shop is standing by to open a second outlet.

The island economy is in the tank, some 200 Puerto Ricans get on a plane each day to seek opportunities elsewhere, and today the cash-strapped government expects to default on $470 million in payments to creditors.

However, wine, a growing presence on the tables of many Puerto Ricans, is thriving.

Last November, La Boutique du Vin, in business for more than three decades, inaugurated its first expansion: a stylish outlet in Old San Juan’s Plaza de Armas featuring a wine bar aimed at locals and tourists.

With an investment of nearly $1 million, recently opened The House wine shop is standing by to open a second outlet and major distribution company Ballester Hermanos Inc. is considering whether to relocate its Cataño-based retail wine shop, La Enoteca, or open another outlet at a prime location in touristy Condado.

As with so many things in Puerto Rico nowadays, these corporate plans are on hold due to uncertainty over the island’s debt crisis.

There is no uncertainty, however, over wine’s appeal.

Whether the buyer is an aficionado who appreciates wine with their meal or a cultured oenophile willing to drop top dollars for the most expensive bottle in town, “wine in Puerto Rico is experiencing a faster growth than more traditionally consumed alcoholic beverages such as rum or beer,” according to a marketing study released in January 2014 by the Spanish Embassy’s Economic and Commercial office in San Juan.

Among its findings: Spanish wine is the island’s top seller followed by vintages from Latin America and California; red trumps white wine; and the value of wine imported into Puerto Rico in 2012 was $40 million, up from the previous four years. (While the dollar value of wine imports rose between 2009 and 2012, the amount of imported wine fell slightly between 2011 and 2012 after four years of annual increases.) The study noted that some 52 companies are involved in the business of importing and distributing wine with seven distributors controlling the bulk of the market.

Sellers about town point to wine knowledge and awareness of wine’s touted health benefits as contributing factors to its growing popularity. But there is more to it.

“Wine is a drink you share, it’s not just about drinking,” said José Ramirez de Arellano, manager of La Enoteca.

And there’s no denying its mood-enhancing virtues.

A glass of wine, said Laura Canales, manager of La Boutique du Vin in Hato Rey, “helps free you from stress.”

In spite of the state of the economy, “people will continue to drink, regardless,” an alcohol industry analyst for Standard & Poor’s told CNNMoney some years back.

For wine stores in San Juan this spells out stable or growing sales.

Both La Boutique du Vin and El Hórreo (one of two retail wine shops run by distributor V.Suarez & Co. in San Juan and Ponce) reported stable sales though consumers have changed their buying patterns.

La Boutique Du Vin in Old San Juan.

Buying more, spending less
In a trend seen over the past two or three years, consumers are opting to buy several bottles but spending less on each one, according to Canales.

La Boutique, with annual sales of between $2 million and $3 million, carries more than 1,000 labels, of which some 200 are exclusive to the store. Champagne is a big seller.

Arnaldo Carrasquillo, wine manager and certified sommelier at El Hórreo, said consumers are choosing to buy fewer but more varied wines in contrast to 10 years ago when buyers would typically pick up a case of the same wine.

“Consumers are looking for good, high quality wine,” said Carrasquillo, while acknowledging that even the monied customer looks for a break these days. It’s not unusual for a buyer to request a discount if purchasing several bottles of really expensive wine, like French labels fetching $1,000 and up, he said.

With an inventory of some 2,000 labels, El Hórreo is amply stocked to provide “the gamut of offerings” that, according to Carrasquillo, “is the key to getting the consumer to come back.”

The store, which opened in the 70s, takes its name from a storage structure used by Spanish farmers. Yearly store sales run between $3.3 million and $4 million.

Wine shops earn additional revenue from catering and the sale of wine baskets, gourmet products and wine accessories but also from specialized services.

El Hórreo, for example, provides consulting on how best to maintain a personal wine cellar. In most cases this is a dedicated room or closet in a family home but there are exceptions like the client who built an underground cave under his home in Morovis to store his prize cache of 300 wines.

La Boutique has a membership program for $95 a year that earns its 900 members valuable discounts on purchases of bottles or wine boxes.

Wine tastings, classes and conferences are also money-making activities and have played a big part in turning Puerto Rican consumers into more sophisticated wine connoisseurs, helping to popularize wine even more.

Lately, more young people between the ages of 21 and 35 are turning to wine, according to La Enoteca’s Ramirez.

With little more than one year in operation, the owners of the Supermax supermarket chain launched The House. The store’s inventory of 3,000 labels (about 10 percent is hard licor and some 400 labels are craft beers) is neatly arrayed inside a 6,000-square-foot space on the second floor of the chain’s store at De Diego and Wilson St.

According to company president José M. Revuelta, sales are 40 percent ahead of last year, thanks to the store’s broad wine selection, excellent prices coupled with frequent promotions, and the outlet’s optimum location at the entrance to Condado.

“The average purchase is between $50 and $60,” said Revuelta.

Things have gone so well that The House is ready to open a second store as soon “as we have a little more certainty” regarding such concerns as the government’s debt-payment plan, the proposed fiscal control board and how to jumpstart the stalled economy.

As for La Enoteca, Ramirez said a decision on a potential store relocation or the opening of a second outlet in Condado will probably come at the end of summer or the end of the year.