Monday, April 5, 2010

Cavanaugh's Fine Wines: "Management Under New Temperament"

Local Orlando convention holds that Cavanaugh's Fine Wines, located at 1215 Edgewater Drive in Orlando, is not really a wine store.  Rather, so the story goes, it is really the personal wine cellar of Jay Smith, the store's proprietor and, in the telling, the story teller will regale you with tales of Jay ejecting customers from the store for having the temerity to attempt to buy one of his wines.  I recently sat down with Jay to get his perspective on wine retailing and his operating philosophy within that space.

The idea of a wine store began for Jay when he was visiting friends in Mexico City and they encouraged him to open a wine store.  It was not clear why they thought that "he" should do so because he had had no previous direct experience in this area.  With this directive from his "friends," Jay began looking for a location suitable for a wine retail store and found the space next to his current location.  He signed a lease for $500 a month and hired a contractor to do the relevant remodeling.  The store opened for business with a retail license in November 1998.  The retail license was upgraded to an on-premise license shortly after the opening.  With the on-premise license, Cavanaugh's began to provide food items in addition to the wines, much to the chagrin of full-service restaurants in the immediate area.  The store was in operation for three years before relocating to the current space.

When asked about the philosophy behind his wine purchases, Jay indicated that he had an appreciation for the art of making wine.  A wine should, he said, reflect the passion of the people who make it.  He sees today's wines as being commodities and lacking in soul.  He wants to sell artisan wines rather than corporations.  As he learned about the wine market, he came to the conclusion that distributors wanted to sell you what nobody else wanted and then they might give you a little of what you really want (Jay had no problem with implementing this practice in his dealing with customers -- who he called "cherry pickers" --  if they only bought the wines that they wanted.).  With the exception of Premier, he only buys from small distributors because he can have an impact on them.

He is perceived as an expensive store when, in fact, he sells expensive wines.  He carries a broad range of wines, equally weighted between French and Italians.  He is becoming more excited about the Italian wines because they are providing more esoteric drinking pleasure at lower price, have great complexity, and are excellent food wines.  All of the southern French wines are great and he tries to find find $30 and under values in this area.  He sees the California producers as rebottling and selling their juice under second labels and adding a little Syrah to mask the fact that you are drinking their high-end wine.

A number of marketplace factors have provided challenges for Cavanaugh's and have led to a re-evaluation of the way that Jay does business.  First, in the current economic climate, the "high rollers" are not buying wine anymore.  Second, competition has increased significantly.  When Cavanaugh's opened originally, the competition was Dexter's, Park Avenue Wine and Cheese, and ABC.  Since that time, the market has had to accommodate Costco, Wine Styles, Cork and Olive, and a number of independent stores.  Third, there has been a shift to lower-priced wines.  Fourth, with the dynamics of a bad economy, people are not spending as much as they used to.

For Jay, the market downturn began in May 2007 when his revenue dropped by 40%, a decline that has not been reversed to date.  With his low volume of foot traffic (Jay does not keep a customer mailing list nor does he do any type of advertising) Cavanaugh's cannot sell low-priced wines and expect to be successful.  He has implemented a number of initiatives in an attempt to revitalize revenue.  He has introduced craft beer, is opening until 10:00 pm (he used to shut the door at 6:00 pm whether you were ready or not), and is providing live music.

A lot of the problems that Jay has had with customers in the past revolved around his business model. He operated the enterprise more as a broker trading for his own account rather than as a wine retailer. He bought wines and, rather than selling them immediately, "put it in the back room and forgot about it." After a number of years, and market appreciation of the held wine, the wine would be made available for sale. Any customer who tried to buy a wine "before its time" incurred Jay's wrath.

Jay wants more foot traffic to his establishment.  All is forgiven.  He promises that his curmudgeonly ways are a thing of the past.  Dr. Jeff, he will no longer accuse you of cherry picking his wines.  To all  patrons who have been asked to leave the store, he has had a change of heart.  You are now welcome.


  1. been in his store a half a dozen times and Jay has always been cordial. Though I did find some his wines a tad overpriced but not ridiculous

  2. I would love to visit, but always thought this was a high priced wine shop. I'm a working mom that loves wine, but can't afford the "over $10" class.

  3. To anonymous, as an avid customer, i can tell you 1st hand Jay has great wines in ALL price categories. Hands down the greatest wine experiience youll havin orlando. He cares more about the wine then the money.

  4. They no longer carry the craft beer but Jay works hard to get good wine for a reasonable price. I am not going to learn all about wine, so when we are having company for dinner, I tell Jay what we are serving and he sells me the right wine. If you have ever gone to a big store and bought wine that was not good or did not go with what you were serving - you were not saving money.