Zacharia ignored the naysayers and relied on people in the business whom he trusted. Ab Simon, the longtime head of importer Chateaux & Estates, and wine writer and importer Frank Schoonmaker said buy -- and Zacharia bought.
As for Parker, well, he was the new kid on the block. A former Maryland banking lawyer, Parker had his own newsletter, The Wine Advocate. His advice on the '82s was brash and emphatic: Buy all you can; they're going to be gold.
With the Reagan dollar having turned the exchange rate upside down ($1 brought an unheard of 10 French francs), the '82 futures were dirt cheap in 1983-84. And in the end, Parker and Zacharia were proved right. The famous Chateau Gruaud-Larose, for example, that cost $110 a case in 1984 today sells for $250 -- a bottle.
Zacharia sold 1,500 to 2,000 cases of '82 futures, but what was important, he says, was that the vintage "brought Bordeaux into the middle-class American marketplace." For $49.99, Americans could buy a case of well-made, more or less ready-to-drink Bordeaux. "Those wines," adds Zacharia, "were delicious -- and they made friends, lots and lots of friends."
By the early 1990s, Zachys had become one of the two leading American players in the Bordeaux futures market, along with Sherry-Lehmann. Today, Bordeaux futures can account for as much as 20% of Zachys' business. When Bob Parker, by then the most powerful man in the wine world, decided that 2000 was the greatest vintage in the whole long history of Bordeaux, the roof shot off. Sales at Zachys topped 16,000 cases. The unprecedented demand led, in turn, to immense logistical problems. When the bottles began to arrive, crews had to be brought in nights and weekends to store case after wooden case in Zachys' White Plains warehouse. It got so bad, says Jeff, "that we had to call up customers, begging them, 'Come pick up your cases of wine. Please."
Sometime around 1995, the Zacharias began to take a serious look at the Internet. Don claims the only issue was when the company would go online and how much it would cost. Jeff and Andrew tell the story a bit differently. His father, Jeff says, "didn't understand the Internet. We had to convince him this was the way of the future."
"Don is a real technophobe," says Andrew. "He went for years without even having a computer on his desk."
Of course, Jeff Zacharia concedes, there were valid reasons to wait: "We wanted other people to make the initial mistakes -- and we'd learn from them." In 1996, the Zacharias registered zachys.com, but it wasn't until 1998 that they finally hired an outside firm to build a site. The project didn't go well. In the days before many people had high-speed Internet access, the site was too slow and cumbersome. Within three or four months, the whole thing had to be redone by Zachys' first full-time IT chief, Rich Anstett.
Zachys has seen remarkable growth in its Web-based business -- "25% to 35% a year early on and 10% to15% even now," says Jeff. He reckons that sales are now 25% show room, 25% Internet, and 50% phone calls. Customers, he adds, "still like talking to a person. They'll call and say, 'I was at your Internet site and saw something, and now I'd like to talk to you about it."
In a small cluttered room with some 20 telephone lines, a dozen or so employees handle an average of 2,000 calls, plus 200 e-mails, a day. Everywhere in the room there are reminders: "Do not leave the phone bank unattended" reads one. Another advises: "Always answer the oldest e-mails first."
Much of the business that arrives by phone and e-mail is, inevitably, interstate. And that is the great not-so-secret secret of the retail wine world today: It is illegal to ship wines across state lines in 24 of the 50 states. But, as McMurray says, "every big retailer in America does it." On the one hand, the advent of interstate Internet sales has become the wine world's California Gold Rush. You cut out the middleman -- the distributor -- and his profits become your profits. On the other hand, the liquor laws of some states are draconian. In Florida, for example, it can be a felony to transport wine across state lines.
The Zacharias can tell you all about those Florida laws. In 1995, the state ran a sting operation against Zachys. The store sent a shipment of wine to Florida and found itself accused of a felony. Eventually the federal courts threw out the charges on jurisdictional grounds, but not before Zachys had spent plenty -- "more than one dollar but less than a hundred thousand," is all Don Zacharia will say -- defending itself. It was, says McMurray, a reminder to every wine merchant in America that the long arm of some state could easily find them.
No wonder then that the Zachys case and others like it helped set off the Great American Wine Wars. Countless challenges to the Prohibition-era wine laws have been filed in federal courts from Texas to New York. The issue is complicated, but it boils down to this: Does the commerce clause of the U.S. Constitution trump the many discriminatory state laws that followed the repeal of Prohibition in 1933?
While the plaintiffs in these cases are typically angry consumers aggrieved by the inflated prices of wine sold legally in their states -- Pennsylvania, with its state-wine-store monopoly, being a frequent target -- the financial backers of the challenges are often large retail wine merchants (among them, Zachys and Sherry-Lehmann). They, after all, have the most to gain from a change in the laws.
