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Rancho Santa Margarita is a master-planned community tucked against the Santa Ana Mountains in Orange County. It boasts luxury tract homes in gated developments, excellent schools, and a family-friendly atmosphere. And as of November 2 of last year, it is the home of Amazing Grapes Wine Store, a new shop run by two old soldiers of San Diego wine sales, Terry Hudson and David Derby.

Derby went from the sales floor to the manager's office at San Diego's WineSellar, then moved over to the Wine Lover in Hillcrest to reacquaint himself with the wine-drinking public. Last fall, he pulled up stakes and left America's Finest City; now, he can walk to work. General manager Hudson, a fellow WineSellar veteran who spent the past few years at the Wine Bank, was not so easily moved. He advised the shop's investors about the business, gave them a tour of successful wine shops, and said "hell, no" when they asked him to run the place. Then he saw their business plan. It analyzed how many people were in Rancho Santa Margarita, how much money they made, and how far they had to drive to get to the nearest wine shop. It also included a GM-level salary that Hudson couldn't refuse. He takes the train to work from San Diego.

The group had to settle on a spot "a little off the beaten path," says Hudson, but since nearly all the shopping occurs in one central region, the location hasn't been lethal. Further, "Our advertising has been so successful. All the people out here read their little community newspapers -- Trabuco Canyon, Ladera Ranch, Coto de Caza, Rancho Santa Margarita. We put full-page ads in all of them. One day, every person who walked in the door said, 'Oh, I saw your ad.' The response has far exceeded our expectations."

And when they do walk in the door, they buy. "This neighborhood has tremendous spending power," says Hudson. "Our number-one-selling wine in six weeks is Caymus Special Select Cabernet at $130 a bottle." Also popular: "Joseph Phelps's Insignia for $100. I've got all this $9.99 stuff in front" -- a wide array of wines I know and love -- "and people walk right back to the Cabernet. They don't drink any white wine, and they don't drink any cheap wine."

That doesn't mean they don't know what the cheap stuff costs. "We're not going to sell a lot of Yellow Tail," says Hudson of the inexpensive ($5) Aussie label stacked up front. "But I wanted things that people see at Costco, Vons, and Trader Joe's, and I wanted people to see that we're the same price or less. When people come in and say, 'Oh, I paid two dollars more at Costco for La Crema,' that's good."

Of course, when you're in Orange County, you're not just competing with Costco. Costco you might be able to sidestep by focusing on high-quality, small-production wineries, outfits too small to attract a warehouse chain's notice. But you'd still have to face the Wine Club, Hi-Times Wine Cellars, and Wine Exchange, three giants of SoCal discount retail wine. When I first met David Derby ten years ago at the WineSellar and Brasserie, we chatted about maybe taking a road trip up to Hi-Times. The WineSellar, though smaller than it is today, still had a lot to offer. But Hi-Times was built on a different scale. Huge inventory meant huge buying power, which meant many rare and wonderful bottles. At the same time, huge sales volume allowed for smaller profit margins, which allowed for lower prices. Same thing at Wine Exchange and the Wine Club.

We never did make the trip, but now that Derby and Hudson are doing business in the Big Three's neighborhood, they're having to match the discounters price for price. "It's incredible," marvels Hudson. "People will drive 20 minutes to save a buck. We have to be as cheap or cheaper. You have to compete with guys who are making 99 cents a bottle on Veuve Clicquot." The days of 30 percent profit margins are no more in O.C. Amazing Grapes can't compete sizewise, but it does have proximity on its side and a small, experienced staff with deep knowledge and at least a few connections.

Hudson got a few plums out of the distributors at the outset, just because he was placing such big orders -- he had a store to fill. "I got some allocations on things that will look good in the store: a little bit of Opus One, quite a bit of Caymus Special Select, some David Arthur, which is nice. The folks at Duckhorn are good friends of mine, and they gave me a lot of wine. Our investors sent in some Kistler Chardonnay from their collections. One of the salesmen found two vintages of Justin Isosceles [a meritage blend] in a restaurant that was just hanging around" and managed to get it into the shop. "The Isosceles had been sold out for about four months, so it was cool for people to see something they hadn't seen in a long time."

The just-sold-out Isosceles got people's attention. The '99 Turley Old Vines Zinfandel -- lovingly cellared past its initial too-big-to-taste stage -- got them excited. Derby bartered for a smattering of the wine from a friend's collection, put a few bottles on the floor, and put the rest in the tasting bar. Full stop. The tasting bar?

Amazing Grapes sells tastes from a perfectly acceptable lineup of wines at its bar: Justin Cabernet, Abadia Retuerta Rivola, Matanzas Creek Merlot. But they also sell tastes from a top-tier lineup of wines usually reserved for those willing to pony up the full-bottle price -- and even then, they tend to be difficult to find. Just now, the lineup includes Duckhorn Merlot, Patz & Hall Pisoni Vineyard Pinot Noir, Joseph Phelps Insignia, two vintages of Dominus, Antinori Tignanello, and that aged, semi-cult Turley Zinfandel.

The all-star tasting bar is something Derby has mentioned to me in years past, and it's gratifying to see the realization of a salesman's dream. "It's been a blockbuster. The lower tier is for people who want a glass of wine -- 'What's your Cab?' They have a glass of Justin for $5, and that's great. But some people want to taste wines before they buy them. They say, 'I can't afford to shell out $100 to decide if I like the '01 Dominus. But I can shell out $15 for a glass and try it.' And the thing is, it works. People try it, and then they go over and pick up two or three bottles. And some people find that they prefer the '00 Dominus to the '01. They're happy to save money on the less expensive vintage, and they can tell their friends, 'I've tried both, and I think that at this juncture the '00 tastes better. '" (Derby's handiwork can also be seen in the relatively broad selection of half-bottles -- a couple of single-vineyard Rosenblum Zinfandels, Hartley Ostini Pinot Noir, Provenance Merlot, etc. A bachelor, he has long championed the half-bottle as an ideal companion for a solo dinner.)

The tasting bar has also led the Californicentric locals to glance across the Atlantic. Folks will take a seat at the bar and stay there through the stuff they know, then eye the one European selection Derby keeps in every lineup. "If they taste it and they decide they like it, they almost always buy it. I've had Chateauneuf-du-Pape there, I've had Rioja. Hopefully, we're going to ease people into a broader spectrum of tastes." But for now, the bar and the shop are heavily domestic. Notes Derby, "'Give people what they want' still works after all these years."

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