Mike Politz was raised in the drinks business. In elementary school he stood on milk cartons to dust bottles in his family’s wine store. It was a good way to pick up some extra cash and twenty-five cents an hour seemed like pretty good money to an eight-year-old at the time. His parents are now retired, but in their defense he notes that if ‘the seal is on a bottle of wine, you can be any age to sell it.’
His father Joe owned the legendary Joe’s Ice Cream shop around the corner and his grandfather originally ran the ice cream shop before him. One of his father’s other claims to fame was inventing bubble gum ice cream at the shop.
Politz has the distinction of being a third-generation San Franciscan in a relatively migratory town. All the decades of hard work have paid off, as D&M Liquors is about to celebrate its 50th anniversary next year. And Politz’s son Kyle might just be showing interest in taking over the family business. Politz jokes that, given his family’s history in the business, D&M could stand for ‘Dad and Mike,’ or ‘Dad and Mom.’ He notes that, ‘As much as we are a specialty store, we are also still a neighborhood liquor store.’
Despite the surprisingly small footprint of the store at 900 square feet ‘ with a warehouse of 10,000 square feet ‘ and its humble beginnings, business and profits have been solid. According to Politz, sales were up 10% as of the end of April this year, over the previous year. Sales are also significantly up since the store opened. In its second year of business ‘ almost a half century ago ‘ D&M grossed $130,000 annually and has seen those sales figures increase 40 times since then.
The Rundown
While the store is a top go-to retailer in Northern California and stocks many domestic wine and spirits brands, it has also sought to distinguish itself over the years by focusing on champagnes, sparkling wine, great value wines and a focus on brown goods in its spirits selection. It also features a small, artisanal beer selection. Bitters have also been gaining sales traction and the store probably carries the largest selection in the Bay Area, according to Politz. He adds that local bartenders even buy them from him. Long ago Politz’s family decided to focus the shop on Champagne offerings, as a way of selling something unique, and it still one of the country’s top sparkling wine and Champagne specialists. Bubbly accounts for an amazing 30% of their total sales today. These figures are impressive and unique in a city in which many retailers tend to cater to the interest ‘ of both locals and tourists ‘ in California wine. Politz adds that Champagne need not be saved for special occasions, as ‘it can be a daily beverage.’ Top-selling brands include Taittinger and Monthey in the Champagne category and Schramsberg and Roederer Estate in the California sparkling. Many of the smaller producers’ labels sell faster than the well-known names given D&M’s savvy customer base. D&M carries 1,800 SKUs of beer, wine and spirits storewide, according to Politz. That set breaks down into 1,300 SKUs of wine and Champagne, 500 SKUs of spirits and a handful of beers. Spirits’with a heavy focus on brown goods’account for 40% of total store sales. Top brands include Rittenhouse, Bulleit and High West. In terms of beer, the store focuses on microbrews over the big brands. Seventy percent of the wine selection is either from California or domestic, with the bulk of the labels coming from California. Prices vary from $8 to $3,500 a bottle. Well-priced offerings, such as the Bliss Vineyards Sauvignon Blanc from Mendocino for $9.99, stacked out in wooden bins at the front of the store are popular items.
The customer base skews to local as much as out of town (and often out of state), and much of the store’s business is conducted over the Internet. Buyers range from 25 to 85 years old, according to Politz, and run the gamut from ‘new, young blood to hard-core pros that have been collecting for 20 to 30 years.’
The Champagne Connection
The store has long offered an extensive selection of both mainstream and esoteric Champagnes. While D&M carries major labels of both Champagne and California and domestic sparkling wine, it has moved increasingly more into sales of boutique, grower Champagnes.
‘As the Champagne market evolved, we moved forward with grower and producer Champagnes,’ Politz notes referencing the trendy and distinctive small production Champagnes that are continuing to gain popularity in the U.S. market.
The store’s deep selection includes many brands in top recent vintages and goes back to some of the best years of the 1980s. D&M also stocks more than 30 blanc de blancs and 30 blanc de noirs, priced from $30 to $100. Sparkling wines from all over the world ‘ including Lambrusco, prosecco and cava ‘ are also part of the lineup as is a solid selection of California sparkling wine.
Large-format bottles are also an important part of the sales picture. Their impressive size and elegance has long made them a favorite of sophisticated wine buyers and those in the industry. Some of D&M’s largest bottles hit the 15-liter mark and require two people to lift and pour them. These bottles are often featured at customers’ weddings and anniversaries and can also substitute for a guestbook when signed. These hard-to-find, large formats always make a statement, notes Politz. He adds the store can barely stock enough of them from their Champagne producers.
A Focus on Upscale Whiskies
Wine drinkers have long been known to be Scotch and Bourbon fans and D&M strives to cater to all of its customers’ interests. Brown goods can also have a special appeal for locals in some of San Francisco’s more fog-bound months.
The store carries more than 200 brands of Scotch, priced from $35 to $5,000. Last year D&M sold a 60-year-old Macallan, in a Lalique decanter, for $19,000. Politz’s staff is still trying to source another one, as of yet without success. Top-selling brands include Glenrothes, Ardbeg and Bowmore.
Bourbons and Ryes ‘ priced from $20 to $160 ‘ are also a key focus on the shelves and the store offers more than 100 selections of these domestically produced spirits. Gin is also a hot category and 40 different gins, from classic London Dry to smaller, esoteric brands are stocked. Local spirit labels, such as the vodkas and other spirits from hometown producers like St. George Spirits/Hangar One Vodka, are also popular. Bay Area clients continue to be passionate in their support of local products, notes Politz.
The Distinction
Part of what sets D&M apart from the competition is the staff’s dedication to customer service and wine knowledge. Despite the relative youth of the four-person staff, (not including Politz and his wife Karen), the salespeople are incredibly focused and knowledgeable. They are not hesitant to make suggestions, offer pairing ideas or share the names of some their local favorite wines under $20. Politz also works closely with them on new purchases and fine-tuning the friendly, low-key service.
The small sales staff at D&M is constantly tasting new arrivals and vintages on a weekly basis. They are also encouraged to attend local tastings to ramp up their wine and spirits background. The store has no shelf talkers, so interaction with the staff is the only source of information. The store also invites producers and other educators in to do comparative staff tastings. Politz believes that his customers choose to go to smaller stores because they want an education and new insight familiar and lesser-known wines. He added that he and his staff blind taste every product that comes in the door. He added that his four years experience as a checker at Safeway also gave him some key insights on customer service. Part of D&M’s constant strategy to stay competitive, according to Politz, is ‘thinking out of the box.’ In a wine-savvy, major metro area where wines are available at major supermarket chains and powerhouse beverage alcohol stores like BevMo! it is essential for a small store to stay agile in its buying and merchandising strategies. Local competitors include the three-location K&L ‘ only two of which are in the Bay Area ‘ the Jug Shop, BevMo! and several high-power, out-of-state operators. That short list, according to Politz, includes Binny’s Beverage Depot in Chicago, Park Avenue Liquors in New York City and Hi-Time Wine Cellars in Los Angeles. He adds that, because of their limited selection and different focus, supermarkets and small liquor stores aren’t part of the competitive picture.
Social media has been a small, but ever more important, part of D&M’s marketing efforts. The store is present on Facebook and Twitter and Politz is looking into more opportunities. It rebranded and launched its website in March of this year. The new format is focused on user friendliness and making it easier for customers to navigate the site. It also offers more pictures of products and simple and straight-forward search functions. Politz shares that he has seen an uptick in business as a result. The store also sends out an e-blast once a week letting customers know about specials and new releases.
A focus on specialty products, like Champagne and fashionable spirits, as well as a passion for the retail business, have keep D&M solid for the past five decades. Hopefully the family tradition will continue for another fifty years.
D&M’s Unique Wine Club Focus
Uniquely focused wine clubs are also part of D&M’s sales focus. The store offers a targeted selection of seven clubs, offering wine, Champagne and spirits in various categories. The bulk of these promote Récoltant Manipulant (RM or grower/producer) Champagnes. Politz notes that the RM trend is building steam as ‘people are moving away from sweeter cuvées.’ He added that these smaller producers also often offer better value and quality than some of the better-known Champagne houses as they don’t invest in advertising.
Almost all of the store’s wine club selections fall in the trendy and cutting-edge category. More than 400 customers are part of the national ‘Champagne Society Club’ and they receive one to three bottles every other month for a maximum of $120. These cycle through at least 150 different brands of Champagne, from the well-known houses to small, esoteric producers.
Other clubs focus on Armagnac, Cognac and Calvados. The ‘Single Malt Connoisseurs’ Club’ provides members with one high-end, boutique Scotch a month. In July the shipment included a Clynelish 18 Year Old, 1993. There’s also a design your own wine club, where members share information about their tastes and preferences and D&M creates special shipments for them.
Business Beyond the Bay Area
Despite a solid local customer base, D&M’s business is not exclusively local. ‘We ship all over the country,’ according to Politz. D&M also has a national and international, business clientele. The store has approximately 15,000 people on its mailing list. Half of the store’s business is done out of state, hence Politz’s focus on key New York, Chicago and Los Angles stores being major competitors.
Internet sales are 10% of total business and the store ships to all states where it is legal. Politz believes his specialty focus on Champagne and notable spirits drives much of the out-of-state business. He adds that customers with a passion for these products know where to look for them and reach out to D&M for their orders. Often, the end cost of purchasing and shipping them can even be less than purchasing them locally. He adds that word-of-mouth also helps him build his out-of-state business, and that if he cannot fulfill an order, he often refers business to other local retailers ‘ like K&L ‘ and that they often reciprocate.
