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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.

First Wine Curmudgeon wine prices survey

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wine pricesThe biggest impression from the first Wine Curmudgeon wine prices survey? That several of my assumptions about wine prices may not be true, including that prices are not  a function of where in the country the store is located. Second, that wine is increasingly treated like other consumer packaged goods, where pricing is not about cost but about bringing customers into the store and serving as a loss leader.

The caveats first: I only got prices for 50 wines or so from the blog’s readers, so there is nothing scientific about this. I know better than to make that claim. But, as we repeat the exercise every year, we should be able to work our way to more prices and better results. And my thanks to everyone who participated.

So what generalizations can we safely get from this?

• Costco, if it doesn’t have the best wine prices in the country, is the standard by which other retailers price their products. It’s not news that many retailers in markets that compete with Costco match the warehouse chain’s prices, but it surprised me just how low other retailers will go. How about $7 for Smoking Loon, Ravenswood, and Mark West at a Denver-area retailer? That’s more or less the wholesale price.

• Independents don’t necessarily mean higher prices, especially in very competitive markets like New York City. One reader paid 20 percent less for the Los Dos garnacha blend in Manhattan than I did in Dallas.

• Grocery stores remain the great unknown. Raley’s, a chain in northern California, beat Total Wine and BevMo, two of the biggest chains in the country, on Michael David’s Earthquake zinfandel. Haggen’s, which aspires to be a big-time West Coast grocer, charged almost three times as much as Costco for Toasted Head chardonnay.

• Expect to pay more if the wine isn’t well-known or a Big Wine brand, or doesn’t have a powerful distributor behind it, regardless of who sells it. Bonny Doon’s Vin de Cigare rose was the same price, $15, in Dallas and the East Coast.

• Imports, and especially from France, may be a couple of bucks more than comparable domestic wines, even if they don’t offer a couple of bucks more of value. This is another example of how the French still see the U.S. as a captive market, and don’t understand that it isn’t 1976 anymore.

 

Restaurant wine prices: A better way

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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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