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Creating a point of view: focused on merchandising a unique inventory of wines, Ferry Plaza Wine Merchant & Wine Bar, in San Francisco, is much more than just a boutique wine shop.


The daily grind of the restaurant business can make any sommelier wonder wistfully about the more predictable routine of the retail wine business. Sure, the hours and responsibilities are just as tough for shop owners, but if nothing else, there's the opportunity to enjoy an actual home life.

Not that partners Peter Granoff, Debbie Zachareas and Bo Thompson, three well-established San Francisco area-based veterans of the restaurant and wine business, have left service entirely behind. Their thriving five-year-old retail establishment, Ferry Plaza Wine Merchant & Wine Bar, located in San Francisco's thriving Ferry Building food mall, includes a wine bar that fills with customers most times of day, drawn from the horde of regular ferry commuters who pour through the building, day-tripping tourists, devoted twice weekly farmer's market shoppers, or just the average San Francisco financial district lunchtime dawdler.

But the backbone of the business, that which earns Ferry Plaza Wine Merchants (FPWM) a loyal and steadily spending clientele, is the handpicked wine inventory inside the bustling, 2,800 square foot shop.

"We look for wines that don't have a lot of exposure, which is a point of differentiation from a business standpoint," said Granoff, who is responsible for overall operations. Few wines that are sold in any big box stores or supermarkets make it onto FPWNI shelves--eliminating many major and heavily promoted brands. "It's not because they aren't necessarily doing a good job of making wine; it's because as a business we have to differentiate ourselves in order to win customer loyalty."

All In-House Merchandising

To sell these wines--and while FPWM carries spirits, the vast bulk of its business is wine--the trio doesn't rely on nationally known wine reviewers, either, said Granoff. "Probably most noticeable is our merchandising--no scores, and no third party reviews, ever. We do all our own in-house merchandising content, and that's a very conscious decision we made since day one."


It's a method Granoff employed in his dotcom days (see sidebar), and it puzzles him that more retailers don't work at providing more personal recommendations. "It's very rare nowadays in the wine business. There are lots of places you can buy wines in the country, but there are very few wine merchants. There's a difference. A merchant is a businessperson that has genuine product expertise, filtering the universe of potential offerings for and on behalf of his or her customers," he said, while giant retailers and many on-line wine sellers pride themselves on stocking everything.

Limiting selection is more common in the restaurant world, where small production or allocated wines often become the centerpiece of a wine program. "It's not to the degree that people wouldn't know any of the brands or we'd be making them uncomfortable," explained Zachareas, who focuses on customer service, merchandising, and other front-of-the-house activities. "We're trying to find a balance, but clearly we aren't going to carry a lot of brands you can find anywhere else."

Products farmed with environmental responsibility in mind, whether organic, biodynamic or sustainable, are an important, though not dominant, part of the mix.

"The focus is to work with a lot of small production, owner-operated wineries, which is part of the philosophy of the Ferry building," said Zachareas.

Granoff says the store's approach works with both customers as well as small suppliers, who now beat a path to their door. But that doesn't mean the trio has built a boutique shop where prices will take the breath away. "The wines we select must have a really solid value proposition at whatever price point. We love things that are below the radar--we often discover wines years before the press does and that's our job," he noted.

A consumer-friendly approach, but it took some smart merchandising to make customers more aware of the values.

Inexpensive Wine Section

After hearing "about seven times in a week" that the prices in FPWM were too high, one day last year Zachareas' asked her staff to pull from the shelves all wines that sold for $10 and under. Those 21 various bottles then went into floor bins in front of the store next to the cash register. Within days, stocks had dwindled.

"We have great everyday, inexpensive wines, wines we have worked our tails off to find that over-deliver even for under $10," said Zachareas, "Because that's about the budget for a lot of people, and you shouldn't have to go to a discount store to get a wine that's discounted."


The low-priced wine section has grown, she said, though the price point is now $12 and under, primarily due to the euro-dollar imbalance. And the bargain mentality isn't limited to everyday wine.

"Every wine we sell, we look up prices online to make sure ours are within a tiny percentage of the lowest price available," she said.

Some of the shop's best bargains come from a limited selection--between four and six labels at any one time--of their own label wines, allowing FPWM to take advantage of bargains they find from around the world.

The partners have developed a committed, customer-service oriented staff, said Zachareas, many of whom are drawn from the restaurant business, since all must rotate into working the wine bar. Pay is augmented by tips and commissions, with a profit sharing scheme to come shortly to help retain the best.

"We have a really great staff that are merchants and salespeople who can have a conversation about wines that engages the customer. We don't want our people to feel like they have to hustle for sales, because it's really about making sure the customer is served and not harassing people to sell them," she said.

With a 20-seat wine bar, a small back office on-site, special events and wine club pick-ups, room is at a premium at FPWM. So stocking and shelf space must meet simple needs: champagne and sparkling wines are in bins on the floor, New World white varietals on one side of the store leading to mostly Spanish and Italian whites, roses and more champagnes, and a back wall devoted to Austria, Germany, France and half-bottles.

The back wall racks then take on domestic reds, leading to another wall of New World red wines, then Burgundy, the Rhone, Bordeaux and other French wines. The arrangement ends with Italy, Spain, Portugal and other European producers. Most of the wines stocked on the floor are $20 and under. Other rolling bins framing the wine bar are filled with wine priced $20 and up.

In order to retain some of the steady flow of customers passing through the Ferry building, FPWM has established a very successful monthly wine club, focusing on "exposing new producers, terrific values, and fantastic new styles and blends to our customers," according to wine club information.

"What's interesting about the wine club is that over 50% of the members don't have the wine shipped to them; they pick it up at the store," said Granoff. When wine club wines are made available for pick up, FPWM features a selection of cheeses from SF's much-loved Cowgirl Creamery paired with the wines. They also cross-merchandise the wine club with the Cowgirl Creamery cheese club.

Customers are also encouraged to subscribe to the store's newsletter or attend one of its frequent lectures, often done by Zachareas or Granoff.


Oxbow in Napa

At the trio's new store, the Oxbow Wine Merchant in the newly opened Oxbow Public Market in downtown Napa, they're tweaking the same basic retail model.

Oxbow, founded by Steve Carlin, project manager of the Ferry Building Marketplace, invited the trio to try their idea further north.

"The Oxbow is very much an evolution of the store in the Ferry Building," said Granoff. Downtown Napa is considered a promising retail area, but offers nothing like the traffic of downtown San Francisco, and the partners expect business to build slowly and require more local promotion, marketing and perhaps even advertising. Space was cheaper, and developer Carlin was focusing on even smaller businesses.

"In the Ferry building, we really didn't have the option to build a kitchen," said Granoff, "but here we did, a small kitchen with more extensive food offerings at the wine bar." The space is about 1,100 square feet larger, and operationally even bigger, as the back office is off-site.

While the Ferry Market is constructed as a long narrow hall with the shops nestled snugly under the office floors above, the Oxbow building is more of an industrial-style metal barn with full floor to ceiling windows overlooking a river. The wine bar is the centerpiece of the entire space and divides the room, with the shop on one side, the seating area, market and kitchen on the other.

The team is also operating as the cheese merchant for the Market. "We knew we needed to add another dimension to the store, and decided cheese was a natural marriage with wine. But we're not cheese mongers," said Zachareas. So they sought out help to hire staff and develop the cheese selection and build customer service from Kate Arding, a veteran of the West Coast cheese scene who helped establish Cowgirl Creamery. Now, local wineries seek help from Oxbow when deciding which cheeses to use in their winery pairings.

The cheese shop operates under the same concept as the wine inventory, with emphasis on small production and artisan items.

The wine selection isn't identical to the San Francisco store, with slightly more California wine, and the trio is being visited by producers so small they've never even presented their wares in San Francisco. Pricey, high-profile Napa producers looking for a new vendor are usually disappointed. "We need another $100 cabernet like a hole in the head," said Granoff. "If they come to us with some thing that can hit the shelves at $50, we can talk sooner." And while local icons may have a hard time hitting the shelves, ironically, the visiting winemakers and others are scooping up many of the imported bargains Oxbow stocks.

As for future expansion of the concept, Zachareas said they're willing to work again with developer Carlin if the right project comes along. Or not. Either way, the three wine vets have their hands full keeping these two stores and their various programs humming along smoothly.

Location, Location, Location

At the time it may have seemed a risky location for such a specialized wine shop, but the invitation to launch their first retail business in a once defunct terminal was the catalyst for the Ferry Plaza Wine Merchant's success.

The Ferry Building, a San Francisco landmark located at the foot of Market Street, reopened in 2003 after an extensive four-year renovation following many years of neglect. The redevelopment created approximately 65,000 square feet of Marketplace space, and an additional 175,000 square feet of offices, which generated a built-in clientele once the project got off the ground.

The Ferry Plaza Marketplace's retail philosophy centers on specialty food shops, bringing together many of the Bay Area's best and best-known agricultural and specialty purveyors under one roof, with a focus on products supplied by local farmers, artisan producers and independently owned and operated food businesses.

Well-regarded purveyors like Acme Bread Company, Peet's Coffee, Prather Ranch Meat Company, McEvoy Ranch Olive Oil and Scharffen Berger Chocolate are only a few of the 40-plus shops and restaurants operating under one sprawling roof.

Small But Spirited

While the spirits section at Ferry Plaza Wine Merchant is modest--right now, about 75 high-end SKUs--the selection is just as artisanal as the wine choices, and growing.

The department is the responsibility of Debbie Zachareas, who, in addition to her extensive restaurant beverage experience, is a judge at the Los Angeles County Fair Spirit Competition. She's recently remerchandised the section to sit right behind the cash register, and will soon start posting results from the L.A. Fair and carry the winners.

Among her current selections: Reisetbauer Blue Gin from Austria and El Tesoro and Siete Leguas Tequilas.

No Bar to Profits

Debbie Zachareas' reputation in San Francisco restaurant circles has been the consummate wine bar champion, with a track record of establishing programs at such landmark places as bacar and Eos. But at Ferry Plaza Wine Merchant and the Oxbow Wine Merchant, the wine bar isn't a destination. And that's good.

Located in the heart of the modest-sized shop, the wine bar gives shoppers a chance to relax with a glass while slightly more serious potential buyers can sample the wares before buying. The bar is set off within the store by rolling bins separating customers perched on high stools from the rest of the store. They can order from a limited menu of cheese plates and cured meats, or bring food in from any of the marketplace shops.


The menu of about 30 red, white and sparkling wines on offer singly or by flight changes week to week, and even daily, as staff is given leeway to offer tastes to potential customers.

"The wine bar business is an opportunity to create an energy in the store," said Zachareas. "If you stand in this place and imagine it as simply a retail shop, instead of a place where you can share and taste wine, you'll see what I mean. I don't think I had to argue the point more than a day before we all realized that what was better for the business than more space was the wine bar."

Limiting food service made sense as well--with space already tight in the Ferry Building, a full-sized kitchen was out of the question.

"We decided we'd actually be much better off to let everybody get whatever they want from the shops in the building and drink wine with us. The food would probably be nothing more than a break-even proposition so why waste the space?"

The wine bar at the Napa Oxbow Wine Merchant store is more extensive, including hot, bistro-style dishes and patio seating. But that doesn't mean the trio of partners want back in the restaurant business. "What we were trying to do is provide really good quality food and not worry about being the new hot restaurant one day and not hot the next."

Taste and See

Peter Granoff has spent many years of his wine career hand-selling wine, and he believes retailers have the same responsibility.

"The thing that has always baffled me about retailers who take the easy route by posting [Robert] Parker or Wine Spectator scores is that all they're doing when they take that route is reinforcing the customer's relationship with the critic. They're not doing anything to build their relationship with the customer."

So at Ferry Plaza Wine Merchant in San Francisco and Oxbow Wine Merchant in Napa, sales rely on staff recommendations, bolstered by the availability of wines at the wine bar. But there's more: Staffers also can offer customers tastes of wines not on the wine bar list. Any wine opened this way ends up on the special chalkboard.

It's a slower way to build a business than lots of mass media signage, Granoff admitted. "But people come to trust that they'll get a good bottle of wine when they come here, and if they're not happy, we're going to fix it." Relying on their own taste makes the offer a sounder business proposition than depending on the likes and dislikes of strangers.

"I like to joke when people ask us why we don't use scores, 'The day when Robert Parker will refund your money for a bottle of wine he rated highly, we'll start using his scores.'"

"What's This Wine Like?"

While the Ferry Plaza Wine Merchant and Oxbow Wine Merchant stores don't employ nationally published ratings or wine reviewer evaluations, they have their own method developed by Peter Granoff to place wines on a flavor and character spectrum.

Each wine gets a numeric ranking of one through five in four categories: sweetness, intensity, body and wood. A wine also receives a letter indicating whether the growing and production methods used to make it are organic (O), sustainable (S), biodynamic (B), or undetermined (U).

For example, an organically grown, off-dry Riesling from the Mosel Valley in Germany would get a 2 for sweetness, a 1 for intensity, a 1 for body, a 0 for wood and an O for organic. Each category is represented by an image: candies for sweetness, a lightning bolt for intensity, a reclining woman for body, a barrel for wood and a grape leaf for growing method.
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Title Annotation:Retail Innovators
Author:Robertiello, Jack
Publication:Beverage Dynamics
Date:Sep 1, 2008
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