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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.

In some ways, the pressure on sparkling wine producers has been even greater than the overall industry. Sparkling wine is more associated with celebration, so it was hit harder when the nation's economic mood turned dour.

High-production costs, intense, entrenched competition from the French, and American attitudes about when to drink sparkling wine all conspire to put constraints on the high-end California sparkling wine market, Jordan said.

"How often do you go to a restaurant and order a whole bottle of Champagne or sparkling wine?" Jordan asked.

Bob Iantosca, winemaker at competitor Gloria Ferrer in Sonoma, agreed that high-end U.S. producers of sparkling wine are "painted into a relatively small box."

"Serious California sparkling wine of an ageable and complex character is difficult to do because it's really hard to get the dollars out of it that you need to cover your costs," Iantosca said.

Jordan's realization that high-end sparkling wine is a niche market is not some recent revelation. She has been making it since 1986, when she partnered with her father and mentor, Tom Jordan, a geologist who made a fortune in the oil business and founded Jordan Winery in the Alexander Valley.

She has made a limited amount of pinot noir since 1994, but decided in the early 2000s to improve and expand the still wine side of the business. She purchased additional vineyards, and now owns 257 acres in the Russian River growing region. She hired a new winemaker, George Bursick, in 2006, and the following year ended her contract production relationship with Piper Sonoma. That gave J instant access to an additional 100,000 case production capacity at her winery.

Last fall, Jordan relaunched her line of still wines in redesigned labels to better distinguish them from the bottles of bubbly so well known for their distinctive, swooshing yellow silkscreened J.

About the same time, Jordan also began aggressively cutting prices. The winery's lowest priced sparkling wine, Cuvee 20 Brut, came down from $30 to $20, where it was an instant hit.

"We found the sweet spot for our customers," Jordan said.

Ben Pearson, general manager at Santa Rosa's Bottle Barn, said he couldn't keep the wine in stock at the new price.

"It flew out of here," said Pearson, who carries the wine for $17.99.

Sales of the brand were up 120 percent in the first quarter of 2010 over the admittedly abysmal first quarter of 2009. "Shipments are extremely strong," Rose said.

The sales spurt from lower prices convinced Jordan to give the varietal wines a similar haircut, as well. The single vineyard pinot noirs that used to be $65 and $70 fell to $50. The $28 chardonnay will probably also come down a few dollars soon, Rose said.

And the winery's new pinot gris, J's first ever California appellation wine and its lowest priced offering at $15, hits stores this week. At 20,000 cases, the wine sourced from grapes in Monterey and Clarksburg as well as Russian River is Jordan's biggest bet yet in the affordable end of the market.

In an interview just a few years ago, Jordan professed no plans to increase the quantity of her still or sparkling wines, only their quality. Now her challenge is trying to do both at the same time.

"The vision hasn't changed," Jordan said. "The tricky part is how do you stay flexible in an industry that requires four to six years to create a product?"

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.