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Tag Archives: restaurant wine

Winebits 390: Restaurant wine, retailing, consolidation

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Restaurant wineLess and less: The share of wine that consumers buy in restaurants, compared to what they buy in stores, has fallen by some 10 percent since the start of the recession, according to figures compiled by Beverage Information Group. In 2014, restaurants accounted for 42.2 percent of all wine sales as measured in dollars, down from 47 percent in 2008. By itself, this isn’t doesn’t necessarily mean that restaurant wine is becoming increasingly irrelevant, given that the recession was so long and so powerful. But given the recovery in the retail side of the wine business, it’s another indication that consumers, fed up with the poor quality and high prices on so many restaurant wine lists, aren’t buying wine anymore. It also speaks to what might be a significant change in consumer dining habits, that they’re eating at home more often and buying wine when they do.

Honesty is the best policy: Shocking news, but a British on-line retailer says too many of his competitors artificially inflate their prices so they can offer lower “angel” discounts on wines that consumers can’t buy anywhere else, leaving the consumer with overpriced, lower quality wine. It would be better, says the managing director of WineTrust, to price honestly, the way his company does it. This is a not a problem unique to Britain, as anyone who has ever tried to understand U.S. grocery store pricing knows, but it is interesting that a retailer is calling out other companies for the practice. I can’t imagine that ever happening in the U.S., where price confusion is a key part of retailing.

Getting even bigger: This is how crazy consolidation in the wine business is becoming. A buyout specialist is apparently thinking about taking over Diageo, the British  wine, beer, and spirits company, in a deal worth more than $70 billion. To put that number in perspective, 170 countries have a smaller gross domestic product. Diageo, though wine is the smallest part of its business, is still among the top dozen or so biggest U.S. producers, with brands that include Rosenblum, Sterling, and Dom Perignon. There’s substantial doubt whether a deal gets done, not least because it’s so expensive. But that anyone is even considering it points to the mania for consolidation in the world today.

 

Restaurant wine prices: A better way

winetrends

Restaurant wine pricesWhat better way to follow up this month’s very popular post about escalating restaurant wine prices than with a story about restaurants that charge reasonable prices and sell more wine — and make more money — in the process? That was the theme of my piece in the current issue of the Beverage Media trade magazine, where one restaurateur told me: “We want our customers to be able to have dinner for two with a glass of wine each for $35 a person.”

Revolutionary thinking in a world where glass of wine costs $10 and bottles are marked up four times their wholesale price, no?

The highlights of the article, as well as a few of my thoughts:

• The debate centers around volume vs. margin; that is, does the restaurant want to sell a lot of wine, or is its business model focused on the amount it makes per bottle? This margin approach, which has been the model most restaurants use, has given us the $10 glass. Not surprisingly, those who use it still see no reason to change.

• Yet an increasing number of restaurants see a better way. “There is sort of this infrequently spoken gripe from consumers: ‘Why are we paying these kinds of markups?’… [T]hey are going to be cynical about your wine program.” says Stan Frankenthaler, chief officer of food, beverage and strategic supply for CraftWorks, which operates about 200 restaurants under 11 brands, including Old Chicago and Rock Bottom. That someone at a chain said this speaks to the failure of the margin model, since chains have some of the worst and most marked-up wine lists.

• A better approach: Pricing tiers, like 4 times wholesale, 2½ times, and 2 times, based on quality and availability. If the wine is difficult to find, for instance, or offers exceptional value, we’re more likely to pay 4 times markup — and especially if we have legitimate, less expensive choices instead of grocery store wine masquerading as something else.

• This story includes advice from my pal Diane Teitelbaum, who died shortly after I interviewed her. “You can sell a $100 bottle once a day, or you can sell $20 bottles of wine all day and all night,” she told me. No wonder everyone misses her so much.

 

 

The most popular restaurant wines

winetrends

restaurant winesOr, to phrase it more accurately, why the most popular restaurant wines aren’t wines that most of us drink. Which is not surprising, given the way too many restaurants treat wine drinkers.

The tipoff, of course, is price: Only one of the top 10 wines in the annual Wine & Spirits poll retails for less than $20, so by the time you add restaurant markup, we’ve passed that all-important $20 threshold. That’s the price that 95 percent of Americans who buy wine won’t cross. The average price for the top wines are ridiculous: $103.50 a bottle, up more than 20 percent from last year, and almost $13 a glass. That means one bottle is almost enough double the price of dinner for two at a nice restaurant, and who wants to do that?

Is it any wonder, then, that restaurant wine sales have not returned to pre-recession levels, and that one restaurant executive has criticized what he called restaurant complacency, adding “We see early warning signs for wine in the restaurant business. We may say, ‘wine is best with food,’ but that isn’t what our customers are telling us.”

Which is what the Wine Curmudgeon has been saying for years; that someone in the restaurant business agrees with me is welcome news. But does it matter, or is that complacency too much to overcome? I’d argue for complacency, based on the poll results. Eight of the 10 best-selling wines are the same as they were 10 years ago, which is hardly different or unique. And, to add insult to injury, the best-selling sparkling is Veuve Clicquot, about as hip and with it as I am.

Also depressing: Sommeliers, both here and elsewhere, keep insisting that they’re trying to make restaurant wine lists more interesting, but that doesn’t come across in the survey. Gruet, the sparkling wine from New Mexico but which is now made with California grapes, hasn’t been interesting for years. But it’s the third best-selling bubbly by the glass, as if the cava and Prosecco revolutions had never happened.

In this, restaurant wine is the trendsetter in just one thing: That wine is becoming increasingly splintered, with the focus on selling to the elite and leaving the rest of us to fend for ourselves.

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