The Grape Cluster

Colorado wineries were gaining traction in restaurants—until COVID crushed their momentum.

Leafy green grape vines against a background of rocky Western Slope mesas and blue sky.
Colorado wine already had a distribution problem; COVID only made it worse.

In 2017, Jayme Henderson and Steve Steese quit their sommelier jobs at Shanahan’s steakhouse in Denver and relocated to their newly purchased vineyard in the West Elks American Viticulture Area (AVA) near Hotchkiss. The couple was acting on a long-held dream of creating their own boutique wine label, which they named the Storm Cellar. Their goal was not only to master the ins and outs of managing a high-altitude vineyard and produce incredible white wines, but also to get those varietals into the glasses of people in Denver restaurants and tasting rooms. 

That may sound like standard practice, but many Colorado wineries don’t look to restaurant sales as a viable business strategy. This is true even at well-established wineries like 24-year-old BookCliff Vineyards, where restaurants make up less than 20 percent of revenue. Given Henderson and Steese’s combined years in the hospitality business, they felt the experience of having local food with local wine was a poignant way of connecting to potential customers. “The moment a person enjoys food from a chef paired with wine is powerful,” Henderson says. “That’s what inspires them to seek out that wine at a liquor store.” It’s the very same principle on which liquor distributors rely: On-premise sales translate to off-premise purchases. Still, the couple knew they were in for an uphill battle: “There’s this disconnect between Colorado wine and restaurants, and tackling that was something different about our model,” Henderson continues. “We knew it wasn’t something we might see on our bottom line immediately.” 

Colorado’s wineries, the majority of which are located in two major AVAs (the Grand Valley and the West Elks) on the Western Slope, have always faced barriers in connecting with Front Range restaurants and consumers. There’s the literal barrier of the mountains, of course, but also the more cerebral, thornier barrier of perception. Despite the fact that Colorado wines have made huge gains in quality over the past decades, folks are still quick to dismiss them as inferior. “I’ll be the first to admit that 20, 30 years ago, we had a long way to go,” says Doug Caskey, executive director of the Colorado Wine Industry Development Board. “But now, I don’t think we need to justify trying Colorado wine. We have 90-point wines from Wine Enthusiast, Wine Spectator, and Robert Parker.”

“Chefs, in particular, are willing to go out of their way to find unique vegetables and greens and create wonderful menus using local ingredients. They are less willing to go out of their way for wine.”

Doug Caskey, Colorado Wine Industry Development Board

Initiatives like the Governor’s Cup Winemaking Competition have been working to create more media and consumer awareness of Colorado wines. But the long-held, dismissive attitude is still on display in many Front Range restaurants. “Chefs, in particular, are willing to go out of their way to find unique vegetables and greens and create wonderful menus using local ingredients. They are less willing to go out of their way for wine,” Caskey says. Part of the problem is that many Colorado wines are not carried by distributors, which can function as a one-stop shop for those building out their beverage programs. “[Beverage] wholesalers have a lot of strength and are great resources for chefs and somms, and in turn that has kind of hurt the interest in local wine,” Caskey concludes.

It also comes down to marketing, and the fact that there are just not enough patrons asking for Colorado wines. Duey Kratzer, owner of Mondo Vino liquor store, says that while he does carry a few Colorado wines, the shop doesn’t get a lot of requests for them. Another issue is that Colorado’s wineries aren’t primed to compete with other wine regions in terms of cost, especially when restaurant markups are factored in. “We’re micro size compared to most wineries in California,” says John Garlich, owner of BookCliff Vineyards.

While Henderson and Steese were eager to leverage their Denver connections and get the Storm Cellar rieslings and chardonnays into Denver dining rooms via self-distribution, the pandemic put a pause on those plans. “[In 2019], we seriously focused on having a restaurant presence,” Henderson says. “[In 2020] that really diminished. Restaurants are just trying to go through their inventories right now, so we don’t push.” 

They did, however, experience a bright spot in 2020: increased direct-to-consumer sales. Summer brought good tidings for the Storm Cellar, BookCliff Vineyards, and many other Western Slope wineries as tourists flocked to the vineyards in what seemed like record numbers. Despite being closed for the months of May and June, the Storm Cellar was still able to exceed its summer sales projections. Henderson and Steese added socially distanced outdoor tasting tables paired with charcuterie boards from local chef Brandt Bishop of Bishop Quality Goods. They also created a touchless delivery program to get their wines to locals living in the Paonia and Hotchkiss area, in addition to implementing a CSA-style wine club marketed to Front Range residents. 

For Colorado wine to finally break through the last barrier of public perception, it will require restaurant buy-in.

The Storm Cellar’s pivot did not come without challenges. The couple was only able to retain one additional employee over the summer, meaning the two of them had to balance running the tasting room with managing vines and making deliveries—in addition to the extra hours required to overhaul their business model. “It kept us out of the vineyards more than we wanted to be…we were pretty much working sunup to sundown,” Henderson says. Additionally, despite the early success of the wine club, the couple still found it tough to offset the combined hit of losing sales from the South Pearl Street Farmers Market and their burgeoning restaurant revenue. “We were beginning to get traction with selling to restaurants pre-COVID,” Henderson says. (The Storm Cellar had just secured by-the-glass placements at Denver trendsetters Mercantile Dining & Provision and Q House.)

Unfortunately, this year will likely be particularly tough for local winemakers. Garlich says due to October cold snaps in both 2020 and 2019, growers will be looking at the worst yields since he started growing grapes in Palisade 24 years ago. 

And even when restaurants do bounce back, wineries like the Storm Cellar and BookCliff will probably continue the time-consuming, slow-moving effort of self-distribution. “We’ve self-distributed for more than 20 years,” Garlich says. “We’ve heard horror stories of wineries that have a strong portfolio of clients, and then that collapses when they hand it over to a distributor because [the distributor] just has so many SKUs to keep track of and sell.” There have been talks of Colorado wine co-op distribution models, but Garlich thinks the results could be a bit awkward in practice due to the fact that so many wineries grow similar grapes.

For Colorado wine to finally break through the last barrier of public perception, it will require restaurant buy-in. And while competing for representation on wine lists will continue to be an uphill battle, Henderson and Steese of the Storm Cellar see that as the industry’s future.

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