The Urban Tasting Room: A quick primer

While the first "city sanctioned" winery opened in Los Angeles in 1833 in what is now Chinatown, (scholars are not sure if it offered a "tasting room per se). We can pinpoint that the The first urban winery and tasting room, San Antonio Winery opened in downtown LA in 1917--and is still in operation today.

San Antonio Winery, Los Angeles circa 1938

Urban Tasting room basics:

Many Urban Tasting Rooms (UTR's) serve as the primary tasting rooms for their winery;l others are satellite operations utilizing their secondary licenses known as a “Dupe 02”. (CA ABC). Depending on the market, they generally have small staffs, usually 1-4. They operate in spaces under 1000 square feet, sometimes less than 400. Their hours are limited--4- 5 days a week; many close on Tuesday-Weds. Their hours vary many don't open until noon, but most stay open until 6 PM— far later than their rural estate counterparts. Some —like in downtown Napa— have extended hours on the weekend, remaining open until 11 PM. During Napa's Bottlerock concert series, some even stay open until after midnight.

For many wineries an urban tasting room is a critical tool to sell their wine, particularly for wineries don't own land, purchase fruit and produce using custom crush. It is also ideally suited to small family owned operations that don't have the capital to invest in a formal tasting room on their property use an urban location as their consumer facing "store"

Today there are hundreds of Urban Tasting rooms across the country with the highest concentration found in California from San Diego to Healdsburg. Here are the top four cities in the state by total UTR's.

Downtown Napa: Boasting 55+ tasting rooms in 10 square blocks, Napa has the record for most Urban Tasting rooms in the world (source: Visit Napa 2022). The rapid rise of sites is due to a business and regulation friendly local government and a insatiable demand by visitors to Napa to continuous discover of new and different wines.

At left: Vermeil Cellars on First Street in downtown Napa

Santa Barbara CA: Offering 36 Urban Tasting rooms, located east of Ananpuna and between State and Milpas, Santa Barbara has one of the highest concentration of TR's of any urban core in the country.

Los Olivos CA: With 30 Tasting rooms in a 6 square block area, Los Olivos was an early pioneer in creating a market for Urban Tasting rooms. The downtown is very walkable and has a rural feeling typical of the Santa Ynez Valley.

Healdsburg CA: 25 tasting rooms dot Healdsburg's downtown in a roughly five square block area. Healdsburg led the charge in Sonoma County early on to establish the urban tasting room model.

First runner up: Paso Robles with 20 total tasting rooms on their downtown.

There are advantages and disadvantages to the model:

The first advantage is their location. Urban Tasting Rooms (UTR) are dependent on foot traffic and are located in a city center. About 50% of their traffic comes from tourists, with the balance coming from wine industry personnel, and locals. Downtown hotels-- in particular love the idea of urban tasting rooms because they offer their guest a reasonably safe way to spend the day tasting wine without taking on the risk of driving and or cost of hiring a car service/limo.

Note: Urban TR’s have the advantage of attracting more industry traffic—due to their convenience and proximity. And the trade, (fellow members of the industry) spend money. It is an accepted practice that after a complimentary tasting, Industry guests will buy wine as a thank you for the experience.

In contrast, rural wineries have the added advantage of attracting more club members and more seasoned wine tasters, since they offer production facilities, vineyards, varying levels of food service and beautiful natural settings. Hence, the payback: Club membership, conversions and ancillary sales is generally higher in a rural winery than a downtown location.

Another advantage that UTR's have helped to exploit was table service--which most Urban TR's offer. Seated customers have higher average order value (check total) because the experience is more intimate than the old "belly up to the bar" experience that hallmarked many rural tasting rooms for years.

Disadvantages: Urban tasting rooms can have lower net profit per square foot than estate rooms because they have varying rent expenses which are not ammortized over a larger estate, and overhead. Utility costs can higher overall as urban wineries cannot offset that expense with solar installations as many rural estates and can do. Water and sewage costs are higher due to hooking into the city water and sewer grid.

Not a wine club generation model: Urban Wineries can be a source for new club members but wineries should understand going in that their club conversion rates will be far below industry averages at traditional tasting rooms. A typical conversion rate in the last few years has been between 28-32% for traditional TR's. UTR's see conversion rates well below 3%.

Disadvantage. UTR's is that visitors are not always interested in hearing the brand story and or being educated in a tasting. Some use the Urban tasting room, as they would a bar; to socialize with friends and enjoy a glass of wine. In Downtown Napa it is quite common to get a rush between 4:30- 7 PM of convention goers; just after seminars and before evening events begin.

Specialized staff: The challenge ahead for urban tasting rooms –lies in the ability of the winery to retain all the specialized staff they depend on during the crisis. Layoffs have already begun, as the next recession begins to unfold. These staff are part restaurant hospitality pro, part bartender, part winery educator and part security guard. They must also have the skill to work in a solitary environment. Often, UTR's shifts have only one staff member working in a very small space, compared to a typical rural estate tasting room. A good place to mine for UTR staff is from local restaurants and hotel concierge staff.

An urban tasting room is a relatively new concept in the wine industry. It may be well-suited for those brands who desire a more traditional downtown retail facing store to augment their existing facilities or those brands who are less capitalized but still require a retail presence in their DTC mix.

Final note:

Urban tasting rooms can also operate out of hotel space as I proved when we opened the Chateau Montelena store in the Westin St. Francis hotel in 2011. It is still open today and it's a model has been copied around the country.