L.A. confidential: after two decades running Northridge Hills Liquors successfully, Paul Smith changed locations and his store's name--to Woodland Hills Wine Co.--and increased his business Live-fold in about seven years.(LOS ANGELES)

Opened in 1978, Northridge Hills Liquors was a step away from the wholesale game for Paul Smith, a former Young's Market Co. salesman. But that shop suited Smith's idea that he would be the key wine and spirits retailer in an emerging area at the north end of the San Fernando Valley.

The Valley was booming about then, and a major freeway was scheduled to open. Smith figured he'd be the fastest-growing beverage retailer in the area. And for a time he was. But almost from the day he moved into the store, he could sense that things wouldn't be smooth.

"The freeway didn't go in on schedule," he says today with a wrinkled brow, "and the area didn't grow in housing the way we thought it would. Also, we had only 180 degrees of consumers. Our backs were against a wall--the hills."

When Smith first opened his 2,800-square-foot Northridge Hills location, nearly half his sales were in distilled spirits; however, patrons were increasingly asking for more and more wine, of all types and prices. In fact, the top wine shop in the Valley at the time, David Breitstein's Duke of Bourbon in Canoga Park--closer to the major north-south freeway--was doing a land-office business in fine wine.

In the 12 years he'd been working for Young's wholesale operation, Smith had become very much aware of the burgeoning market in "boutique" and prestige California wines. So, he knew early on in his retail career that this profitable segment would be a way to capture the more enthusiastic wine customer.

Indeed, by 1981, only three years after he moved into retail, Smith was traveling to the Napa Valley and Sonoma County five times a year to track down the new, exciting wineries, and buying their wares.

"Establishing Relationships"

"I also knew that we had to establish great relationships with them, so if it meant skipping a paycheck to make sure the wineries got paid, that's what we would do," said Smith. In fact, that did occur.

For the first 11 years of the Napa Valley Wine Auction, Smith attended the event, and in his second year got into a controversial bidding confrontation with his rival, Breitstein, that earned Smith headlines as well as a reputation as a maverick. (See sidebar)

Almost coincident with that episode, Smith also began to discover the greatness and potential for imported wines of ultra-high quality, and began laying the groundwork for what later became his stock in trade: having wines many other wine shops sell out of quickly.

Moreover, he also discovered another fact of life: you don't have to like a wine to sell it. "There were many wines that [Robert] Parker liked that I didn't like that we carried and sold. If it was blessed by Parker, we would carry it."

Another key strategy he employed: By the …