The Texas wine market, to paraphrase Winston Churchill, is a riddle wrapped in a mystery inside an enigma. It’s one of the biggest and most sophisticated markets in the United States, but still seen by many as almost frontier-like. Three of its four biggest cities, which are the market’s focus, are distinct and quite different from each other.
In addition, the state’s laws about who can sell wine, where it can be sold, and when it can be sold are a hodgepodge, varying from city to city and sometimes even within the same city.
While the state is top-heavy in the off-premise, dominated by a handful of national and regional giants, there are a number of important small retailers in Houston, Dallas, and Austin. Meanwhile, though consolidation has given the two biggest wholesalers as much as 80% of the market, a selection of smaller distributors is crucial for reaching the on-premise and those influential small retailers.
“Texas is a much more complicated state to sell wine in than most people imagine,” says Jeffrey Gregory, the operating partner for 55 Seventy, a private club in the Dallas area who has worked for the two biggest wholesalers. “There aren’t many others like it in the US, and especially in the way importers have to approach their vendor relationships.”
Houston, the Dallas-Fort Worth area, and Austin are the market’s key cities. San Antonio, though the second largest city by population, is not as important in the wine business. The first and third are wet – that is, alcohol can be sold in all of the city – while the Dallas area still has some dry and damp regions; damp meaning wine, but not spirits, can be sold at retail.
Texas is the fourth biggest import market in the US - and it’s growing.
“The one thing people don’t realize about Texas, despite all of the issues, is that it’s the fourth biggest import market in the US,” says Frank Paredes, the president of NOW Wine Imports, which brings in Portuguese wine. “And it’s growing, where several of the others aren’t.”
Generally, says Jessica Dupuy, who covers the state’s wine business for Texas Monthly magazine, Houston is the most sophisticated market; Burgundy and Champagne are its biggest players.
Dupuy is probably the only wine writer left in Texas with a significant audience. The state’s biggest newspapers have dropped their wine coverage, and though there are a handful of bloggers with write about wine, they usually don’t have the same reach in the state that their former newspaper colleagues did.
Dupuy says natural wine has some traction, especially in Austin, while Dallas is still a big, bold, steak and red wine town, where Napa hold its own with red Bordeaux. Dupuy doesn’t think Dallas is as sophisticated, in both diversity and wine understanding, as Houston and Austin; the latter, she adds, has always been a little over-hyped.
“I also think Houston tops them all in terms being an overall amazing place to dine and drink,” she says. “The bars, restaurants, and wine scene are amazing. And the service matches it.”
Names and faces—the individual relationships, in other words—don’t matter as much in Texas as elsewhere. Instead, it’s relationships with the companies that count. Turnover is constant, for one thing, and many of the biggest retailers work more closely with wholesalers than with producers. It’s in Texas that Kroger tried to get one of its wholesalers to stock its wine shelves, in much the way consumer goods product companies organise its laundry detergent shelves, but which was forbidden by the U.S. government agency that regulates alcohol. Also, most of the biggest chains allow there to be little local input about what to stock; these decisions are usually made at corporate head office.
The wholesalers in Texas
Not surprisingly, in a state this big, the two biggest wholesalers play the biggest roles. Those are Southern Glazer’s Wine & Spirits and RNDC; the former includes Glazer’s, which started in Dallas at the end of Prohibition, while the latter’s corporate headquarters is in suburban Dallas. Depending on who is doing the estimating, the two companies control as much as 80% of the Texas wholesale wine market, and are especially dominant in the key supermarket and chain restaurant categories.
“They suck a lot of oxygen out of the room,” says Gregory, noting that unless the producer is represented by the biggest importers, such as like Wildman, Terlato, Taub, or Vineyard Brands, then the biggest wholesalers probably won’t be interested.
Paredes saw this first hand when NOW entered Texas seven years ago. He says he went with a large distributor, but was disappointed at the lack of attention his account received. Fortunately, it’s legal to change distributors in Texas, so he did. But he held interviews – not unlike what he would do when hiring an employee. He met with several smaller wholesalers and tried to get a sense that one would put enough effort into selling his wines, and picked one from those interviews. So far, he says, all is good.
“If you want to go get in quality or the best local chains that are on-premise, you’ll almost certainly need to be with a smaller wholesaler.”
Smaller wholesalers are important in Texas, and particularly for a handful of key high-end retailers and the on-premise.
“If you want to go get in quality or the best local chains that are on-premise, you’ll almost certainly need to be with a smaller wholesaler,” says Houston’s Jeremy Hart, the co-owner of wine marketing company Inknowology. “There’s almost no other way to get in front of the restaurant people you’ll need to get in front of.”
Texan retailers and restaurants
Texas has big wine retailers, small wine retailers, and almost everything in between. Two national supermarket behemoths, Kroger and Albertsons, have stores in Texas. . Then there is Texas giant HEB, itself one of the biggest grocery chains in the country.
Want specialty grocers? How about Central Market, owned by HEB, plus Whole Foods, which is headquartered in Austin, Sprouts, and Trader Joe’s? And there are discounters, too, including Joe V’s, owned by HEB, Aldi and Winco. And that doesn’t include a variety of Hispanic-themed grocers, including HEB’s Mi Tienda and Fiesta.
One of the things that makes Texas so difficult and so different ... there are many big retailers.
“That’s one of the things that makes Texas so difficult and so different,” says Gregory. “I don’t know of too many other states where there are that many big retailers.”
Even the traditional package store chains are big. Spec’s, based in Houston, has stores in much of the state. Twin Liquors, from Austin, is also in Houston and Dallas via the Sigel’s chain. Total Wine has invested heavily in Texas, with multiple locations in the major markets. The biggest chains have also followed Total’s example, and private and store label brands have become increasingly important over the past decade.
Many of the traditional chains have affiliated import companies, which bring in wine especially for their stores.
It’s also crucial to know that many of the traditional chains have affiliated import companies, which bring in wine especially for their stores. That’s why, say several people interviewed for this story, that wholesalers don’t always want their clients to meet with retailers without the wholesaler around. It’s not uncommon for some of the best-known retailers, they say, to try and poach the producer.
The leading small fine wine retailers are Pogo’s in Dallas; Austin Wine Merchant, Austin Shaker, Travis Heights Wine & Spirits, and Neighborhood Vintner in Austin; Houston Wine Merchant, Montrose Wine & Cheese, and Vinology in Houston. Typically, these stores carry few supermarket or mass market brands, opting for wines that the bigger retailers don’t stock. These are the natural wine, grower Champagne, and artisan producer stores, and where small production and unusual wines — Basque Txakolina, anyone? — are more common.
The on-premise may be even more complicated, says Dupuy: “There’s a lot here, and it’s a big state.” Texas is dominated by a host of state-wide chains. The Pappas family, for example, has wine-centric steakhouses in Dallas and Houston, as well as several other formats elsewhere; MML Hospitality has almost two dozen restaurants in Austin; and Goodnight Hospitality runs a handful of locations in Houston. And this doesn’t take into account one-location restaurants like Petra the Beast in Dallas and Nancy’s Hustle in Houston.
The other thing to know about Texas
TEXSOM, still overseen by James Tidwell, one of its co-founders, holds an annual trade conference every August, a wine competition in late winter, and an education event in conjunction with the competition. It’s almost impossible to overstate how important the conference and competition are; when the former started in 2005 as the Texas Sommelier Conference, it was the first of its kind in the country. Today, it’s an international event, featuring panel discussions, wine tastings, and certification opportunities. In this, it’s one of the wine industry’s leading networking opportunities in the US.
Texas is not, in reality, a frontier market. It’s a diverse market with complications all of its own, but with plenty of wine opportunity.