Why is wine always the ‘fall-guy’?

We love food, we love wine, as a country we pride ourselves in relishing home grown produce, artisan products and high quality food. Why then, do we have such poor examples of wine at the lower end of most restaurant lists? The prices of wines globally remains relatively static, it’s external factors such as increasing duty rates, rents and to some extent reliance on a history of fat margins and high prices which give the consumer such a poor deal when they unwittingly order a glass of house wine.

What do you expect to pay for your wine when dining out? Perhaps general pricing expectations haven’t been affected by the inflating rates of duty that have seen the basic wine prices increase by at least €1.50 a bottle in the past couple of years. We are victims of a ‘take’ government, which is gathering retribution from its past mistakes by making the public pay, whether this is through increasing income tax, car tax, water tax, property tax, VAT or duties on alcohol, it is us the public who is paying off the countries debts. The duty alone on one bottle of wine is over €3, once you’ve added shipping, storage and packaging costs and of course the cost of the 75cl of wine, which by the way tends to be only about €1 for a wine which sells for €26 on a restaurant list. How does your liver feel about that?

Duty map copyright Gavin Quinney

Duty map copyright Gavin Quinney

Restaurateurs have had it tough over the past seven years, as had anyone in the food and wine industry. There’s been a spate of restaurants having to close as costs outweigh any profit and rents and rates remain unattainably high. Christian Seely Managing Director of Axa Millesimes recently cited that the reason the domaines (namely Chateau Pichon Longueville Baron amongst others) within their portfolio are so successful, is that they strive for perfection, they don’t sacrifice anything in the pursuit of perfection. Perhaps on a smaller scale we should listen to this and learn that success comes more from continued efforts to out perform than extending already greedy margins on substandard products, which serves to drive away repeat business rather than encourage more. A quote from Erik Robson, Director of Ely Restaurant Group in this weekends article by Siobhan Maguire in the Sunday Times with regards to their pragmatic wine pricing on their lists speaks volumes of sense: “We too are wine drinkers and got fed up with poor wines at silly prices when we were out and about.” How as a country, can we be proud of our produce and our food and offer alcohol labelled as wine, but which delivers a juice so far from the ideals of wine that it goes completely against the grain of this image of quality that we are trying to present as a nation?

Annette Alvarez-Peters, head buyer of Wines for Costco in the United States recently stated that in the grocery sector “wine is no different than toilet paper”. There are many different ways to take this statement, but it seems particularly close to the bone if we look at our own house wine sector and how often the wines listed are chosen on price and not their organoleptic qualities. Costco had a turnover of $103 billion last year and are looking to increase this by 6% this year. Their business model works on moderate margins and a transparent pricing structure. Their margins are capped at 14% for every wine SKU in their range. Obviously the on trade is different to this, they serve the wine, polish the glasses, chill the whites and create an ambiance to increase your enjoyment of the wine. But would the producer of the wine sit so comfortably if they knew just how hard the restaurant pushed the distributor on price, which in turn cuts the percentage which goes to the producer, who has to live too?! Figures released by the Ministry of Agriculture show average yearly revenues before owners wages of just €11,000 in the Languedoc and €25,000 in the Loire. Beaujolais producers are struggling to stay in business with a bout of short harvests behind them and increasing pressure on prices.

So what is the answer then?

Staff training is often forgotten and is very important. Consumers rely on their waiter for advice, trusting they have an intimate knowledge of the wines on the list and can point them in the direction of a good match for their meal. Nothing beats a young waiter who has obviously just found a new favourite on the list and is translating that into words for the customer. A little bit of knowledge goes a long way and encourages better spread of purchases across a list, away from the generally ordinary ‘safe bets’ of Pinot Grigio, Sauvignon Blanc and Prosecco.

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Cash margins are seeing great success in the UK. Gerard Bassett OBE MW MS, one of the most respected men in the wine trade was asked this at the recent Symposium held by the Institute of Masters of Wine in Florence. As a restaurant owner himself, he has great resonance with this question and has given it lots of thought. He cited decreasing margins with increasing prices and a cut off where cash margins kick in to encourage customers to trade up for better value. As a moderate spender on wine when out, he recently visited a restaurant where a bottle of Tignanello caught his eye, it was more expensive than he would have normally paid, but was a good £20 cheaper than it should have been, as a result he traded up, enjoying the evening more and leaving with a particularly good impression of the restaurant, which he recommended to friends.

Do we all need a nudge to remember that the customer is the bread and butter, it is not just a restaurateur’s  job to provide food and wine, but also to maximise the enjoyment and perceived quality that it gives.  Serving up obscure labels of poor quality wine and selling them at inflated prices is not the future, surely? Growth in the market will rely on thinking outside the box, being adventurous and remaining true to the path of quality to which food has recently subscribed.

2014 05 18 ST AT Restaurant mark up

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