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Restaurant wine prices in Europe

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restaurant wine prices in EuropeThe email from my friend visiting Spain not only waxed poetic about the wine, but about the prices: “Talk about cheap wine. Beautiful wine for €12, and the most expensive bottle was €24.” In other words, restaurant wine prices in Europe were U.S. retail prices — which is unheard of in the States.

This is not unusual. When my brother was in Sicily, he marveled at both the quality and the prices in restaurants, drinking Cusumano for more or less what I pay for it at a Dallas liquor store. I’ve seen the same thing when I’ve traveled to Europe; as one sommelier at a very high-end restaurant owned by a famous Spanish chef told me: “Why would we want to charge as much as you do in the States? Then people won’t order as much wine.”

How is this possible? After all, talk to most restaurateurs in the U.S., and they make it sound as if they’ll go out of business if they don’t charge $30 for a wine that cost them $8:

• Europe’s on-gong recession, and especially in southern Europe. If there is 25 percent unemployment, it doesn’t make much economic sense to overcharge for wine.

• The idea that wine is part of dinner, which is the way Europeans have always seen wine, and not something in addition to dinner, the way Americans — and especially American restaurateurs — have always seen wine.

• Better wine list sensibilities, where the restaurant sells wine to drink and not to impress high-dollar patrons or wine snobs. Or, as Jacques Pepin told me, why would anyone want to pay for Bordeaux when you can drink the local wine, usually of high quality, and spend less money?

• No three-tier system, which may be the most important reason. In Europe, there isn’t a distributor getting its cut, which can add as much as 20 percent to the cost of wine. The restaurant can order directly from the producer, who is often local, and enjoys supply chain efficiencies that we can only dream about here.

Winebits 390: Restaurant wine, retailing, consolidation

winenews

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.

 

 

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