What do you do if you're in the luxury wine business and "luxury" suddenly becomes a four-letter word?
That's where Judy Jordan, owner of the pioneering sparkling wine producer J Vineyards and Winery, found herself in 2008 as the economy started to swoon.
With wines positioned between $50 and $95 and a tasting room charging guests $20 to $60 to sample wines paired with caviar, Jordan's Healdsburg winery defined the luxury wine category for Sonoma County.
So when the financial markets collapsed in late 2008, aspiring to the finer things in life suddenly seemed in poor taste. It became chic to be cheap.
"Sales just plummeted," said Jordan recently from a couch in the Bubble Room, an elegant tasting salon off the winery's main tasting room. "Last year was the toughest year J has ever been through."
She was far from alone. Last year was a brutal year for many wineries, particularly the higher end producers concentrated on the North Coast, said industry analyst Jon Fredrikson said. Small to medium wineries suffered the most as powerful distributors focused on big brands, and consumers ate out less and traded down to less expensive wines.
With little sign that consumers would return to their old spending habits anytime soon, Jordan had a choice. She could stay the course, adhere to the wine industry adage to never lower prices and wait for consumers to rediscover decadence.
Or she could do what more high-end wine producers are admitting they must do to survive -- sharply lower prices.
J Vineyards has slashed wine prices by up to 30 percent, diversified into varietal wines and launched a high-volume wine that carries a California appellation and a $15 price tag.
"It's risky. I know that," Jordan said of the initiatives to broaden her wineries offerings. But not adapting to her fans' changing tastes was the bigger risk, one she wasn't willing to take.
"Our first and foremost concern is our customers, and they were not making the reach for the price," Jordan said. "They were holding back."
Conventional wisdom in the premium wine industry has held that brands should never lower their suggested retail prices. Deals and discounts are one thing, but out-and-out price reductions are verboten. Cutting prices is cutting your throat, the thinking goes, because shoppers will balk at paying higher prices later.
But the pressure on high-end wine prices is intense, and staying put on prices is a luxury few brands can afford.
"All of those business school adages about the wine business have been thrown out the window," said George Rose, J Vineyards spokesman. "The weakness of the economy has dictated that the wine industry completely shift gears."
J Vineyards may be at the forefront of a long-term price adjustment, one that benefits consumers but has sweeping implications for the North Coast's wine industry, which has the nation's highest concentration of high-end wineries.
"What J is doing is indicative of a general remodeling on the part of a lot of high-end producers," said Fredrikson, a prominent industry analyst and president of Woodside-based firm Gomberg, Fredrikson & Associates.
J is "in the leading wave" of wineries that are finding ways to adjust to the demands of their newly frugal wine lovers, Fredrikson said.
"I think people have figured out that you can't be proud when you have two years of inventory on hand," he said.