The back room of Tim Varan's wine shop is usually used for tasting and connoisseur classes. Two months a year, though, the business owner transforms his mini-classroom into a holiday storage and production area.

It's here, in a well-organized space just behind Varan's retail store, Tim's Wine Market, in Orlando, Fla., that he and his employees assemble hundreds of holiday gift boxes, bags and baskets for corporate clients each Christmas season.

While the orders can be specialized, many clients request a two-bottle gift box outfitted with maroon and beige basket filler and a descriptive holiday card about the wine or champagne. The cost ranges from $25 to more than $100, depending on the kind of wine or champagne.

Not bad for a holiday gift that most of Varan's corporate clients will likely send to employees, vendors or valued business associates as a token of their appreciation.

"The gift conveys a sense of class," Varan said, adding that corporate gifts account for 25 percent of his holiday business. "It shows that the company executives went out of their way to buy something nice."

As nice as the wine gifts are, it hasn't been that long since flourishing companies indulged workers and clients with bigger - and pricier - gifts that included Caribbean vacations, Movado watches and cash bonuses. Thanks to a sluggish economy and weaker stock market, more companies are favoring less flashy presents in an effort to trim the winter gift-giving budget.

Corporate gifts are still big business for Varan, but even this seasoned business owner has noticed a change. Rather than the $50 bottles of champagne companies picked out a couple of years ago, executives are scooping up the $30 bottles instead.

"It's still fine quality, but at a cheaper price," he said. If a company has a tighter budget, they can select the less-expensive wine without appearing cheap, he added.

Corporate gifts have long been used as customer rewards; and in recent decades, used more often to recognize valued employees. Besides mugs, desk calendars and canned hams, some employees received store discounts and travel gift certificates, according to The Incentive Federation, a group of incentive product manufacturers, industry suppliers and associations.

American businesses spent nearly $27 billion on gifts of merchandise and travel in 2000, according to the group's most recent report. Nearly 70 percent of the respondents used cash awards to motivate consumers, salespeople, dealers, distributors and non-sales employees, compared with 63 percent of respondents in the 1996 study.

Although that figure had been on a steady increase, there's little doubt it will level off, experts say.

This year, especially, David Goggin, president of DBG Promotions, in Winter Park, Fla., has noticed some corporate gift-giving changes.

Goggin runs a merchandising company and typically takes holiday orders from more than 400 corporate clients a year. He facilitates the gift order, makes arrangements directly with the manufacturer and ensures delivery.

Not only are corporate clients picking out less expensive gifts this year, but some are also forgoing individual presents in favor of one big food gift for employees or others to share, Goggin said. Instead of cash bonuses, other companies have decided to give small, less expensive gifts, he said.

"Whatever their financial situation, companies still want the employee to feel appreciated," he said. "They still want to give customers and vendors the impression that all is well. ... Giving a nice gift doesn't have to be expensive. Some companies are just getting creative and paying closer attention to ... budgets."

Whatever the gift - be it a bottle of wine, card, or gift basket - the motivation behind sending holiday wishes to employees, customers or suppliers has not changed. Although companies say holiday gifts are meant to be a token of their appreciation, one gift-giving expert said there could be other motives.

"It creates a relationship between the giver and the receiver," said Alan D. Schrift, author of The Logic of the Gift: Toward an Ethic of Generosity and professor of philosophy at Grinnell College in Grinnell, Iowa. "Whether the giver intends to or not, the recipient will likely feel obligated to give something back. That obligation has become one of the rules of our culture."

Sarah Hale is a reporter for The Orlando Sentinel, a Tribune Publishing newspaper.