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Winebits 332: Powdered alcohol update, wine vs. beer, and corkage fees

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Winebits 332: Powdered alcohol update, wine vs. beer, and corkage feesNot so fast, Palcohol: Last week’s post extolling the virtues of powered alcohol was a bit ahead of its time. Turns out the federal government didn’t approve the product after all. A spokesman told The Associated Press that the approvals were issued in error, but didn’t elaborate; you can draw your own conclusions from that, though my liquor attorney, in last week’s post, hinted that the whole thing sounded kind of goofy. Regardless, this means we’ll have to wait for our powderita, as horrible as the wait may be.

The end of beer as we know it? This graphic, courtesy of Lew Perdue at Wine Industry Insight, speaks volumes about the ageing of the U.S. beer-drinking population. Between 2002 and 2013, beer’s market share, as measured by drink volume, has dropped from 60 percent of the total to 51.1 percent. Spirits’ shared moved from 27 to 33.7 percent and wine’s from 13 to 15.2 percent. Why call it ageing? Because many analysts think beer’s decline is not from beer drinkers switching to spirits or wine, but because they’re dying and younger consumers are drinking something else. This has shown up in slumping sales for the biggest national brands like Coors, Budweiser, and Miller.

I’m shocked that gambling is going on here: The wine cyber-ether was abuzz last week with the news that the very chi-chi French Laundry restaurant in Napa Valley charged a $150 corkage fee. The outrage was so viral that I’m surprised it didn’t show up on the blog even without my writing about it. Which I’m doing not because owner Thomas Keller cares what I write he probably collects criticism for his Pinterest site), but because no one should be surprised. This is the same restaurant that charges $70 for a half bottle of a Paso Robles white blend, which is almost four times the retail price for the half bottle. The other thing that’s not surprising? That his customers pay these prices. As one reader emailed me: “Are these people crazy?” Nope. Just rich.

Soda drinkers to restaurants: Drop dead (and why this matters to wine drinkers)

Too many restaurants have long alienated wine drinkers with lazy wine lists and greedy markups. Now, it looks like they have even alienated people who don’t drink wine.

NPD Group, one of the two or three best restaurant consultancies in the world, has found that consumers are forgoing costly soft drinks for free water. The reason? Diners are tired of paying overinflated prices for Coke, Pepsi, and the like — a trend that started before the recession, and only accelerated as they looked for ways to save money when eating out.

“Leaving off the beverage is the easy thing to do,” says Warren Solochek, NPD’s vice president of client services, and consumers are doing it with a passion. NPD reports that restaurant traffic has declined one percent over the past five years, but total beverage sales have dropped six percent.

Consumers, apparently, have three reasons for switching to water:

• The recession. Water is free, which can knock $10 off the bill for a family of four. “Consumers are working very hard to manage their spending,” says Solochek.

• Improved sensibilties. One glass of a soft drink in a restaurant costs as much as a six-pack at the grocery store, and consumers are noticing this more than ever. In this, says Solochek, there is evidence that our spending habits are genuinely changing, and that the post-recession consumer will be more practical in what he or she buys.

• Health perceptions. Soft drinks are mostly empty calories. Water isn’t.

What’s truly fascinating about this development is that it’s strictly about soft drinks. Restaurant wine sales have also declined, but Solochek says that’s because wine drinkers aren’t eating out as much. Instead, he says, we’re buying a bottle of wine and eating at home, where we don’t have to suffer those 3-for-1 markups. That soft drinkers are joining us in our disgust does not bode well for the restaurant business, which has traditionally used high prices for beverages, hard and soft, to boost profits. Those soft drink markups can be as high as 10-to-1.

And, to its credit, the restaurant business is aware of what’s going on. Solochek says owners and operators understand they need to be more innovative in how they approach beverage service, whether it’s for alcohol or soft drinks. This is one reason why many restaurants are pushing craft beer and signature cocktails; restaurant beer sales more or less held their own during the recession, thanks to the popularity of microbrews.

I’ve seen some of this change in Dallas, where a variety of restaurants are cutting wine prices and re-doing wine lists. Stephan Pyles, owned by the celebrity chef of the same name, has made over its list, focusing on more local, more interesting and less expensive wine. That this is happening at a restaurant where price resistance should not be a problem speaks volumes about what’s going in elsewhere in the restaurant business.

Does this mean the days of the 3-to-1 markup are over? Let’s not go that far quite yet. But it looks there will be changes, and we’re seeing some of them now. When groups as different as restaurant wine and soft drink consumers have something in common, we’re certainly not in Kansas anymore.

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