Tag Archives: wine prices

winerant

Update: Wine prices in 2015

wine pricesAt the beginning of the year, I wrote: “[T]he producer strategy for wine prices in 2015: Stealth increases ? introducing new brands as well as new varietals and blends within existing brands to get us to trade up to a $15 bottle from $10, or to an $18 bottle from $15.”

The new brands bit was correct, but I missed on the stealth thing. Price increases this year, thanks to producers, distributors, and retailers eager to raise prices, have been anything but stealthy. They’ve been, plain and simple, price hikes like we haven’t seen in a decade. How about two Dallas-area grocery stores charging $16 and $18 for two French wines that cost $10 a year ago? Or a new Italian brand, priced at $12, that isn’t any better than the $8 Italian wine cluttering grocery store shelves? Or, and the saddest, a long-time Wine Curmudgeon California favorite that raised prices a little but also used much cheaper grapes to squeeze as much margin out of its product as possible?

Everyone I have talked to in the wine business has said the same thing: Get used to it.

? Forget the stronger dollar, which should make European wines cheaper. Producers are keeping the difference, and neither distributor or retailer is passing on any savings.

? Forget the past three record California harvests, which means none of this is about a phony grape shortage. In fact (and, as Steve McIntosh predicted in January), all those cheaper grapes are being used to cut costs, so that wine quality is suffering. I’ve tasted more crappy $12 and $15 wine this summer, bitter and unripe, than I have in years, and they’ve apparently been made with grapes usually used to make much cheaper wine.

? Forget the idea that consumers won’t spend money on something they don’t know. I tasted a $16 Spanish white, made with verdejo from the Rueda region, that tasted like pinot grigio, and I was the only one who thought it might not sell. I don’t know if arrogance is the right word, but I’m talking to a lot of producers who assume consumers will pay what they’re told to pay because the wine is so special. Special, of course, not having all that much to do with quality but with marketing.

Yes, producers can charge as much as they want for their wine. But there’s a difference between short-term gain and long-term profits, which is how the best businesses are run. When you run your business for short-term gain, you shouldn’t be surprised that wine sales have been flat for several years, or that consumers are more willing to try something besides wine, or that more than one expert is bemoaning wine’s future.

Just don’t say the Wine Curmudgeon didn’t warn you.

wine news

Winebits 404: Restaurant wine, distributors, direct shipping

restaurant wine ? One person’s inexpensive: One more example of how restaurants are out of touch with their customers when it comes to restaurant wine prices. This new Dallas restaurant is boasting about its reasonably-priced list, because, said a restaurant official, “We have a low mark up on our wines, so we ?re priced fantastic.” That would be a wine list with most wines supposedly costing less than $100 (no website for the restaurant yet, so I couldn’t check). What would the official have said if there had been really expensive wines on the list? Is it any wonder, unless there’s a special reason to go, that the Wine Curmudgeon has all but abandoned Dallas’ restaurants? Besides, it’s more fun eating at home.

? Bigger and bigger: It’s not just wine companies that are getting bigger, but distributors as well. Wine Industry Insight reports that the 10 biggest distributors in the country control more than two-thirds of the wholesale business, which makes the group more or less as dominant as Big Wine. Why does that matter to consumers? Because, thanks to three-tier, every wine sold to a retailer or a restaurant in the U.S. has to pass through a distributor, which tacks on as much as 25 percent to the cost of the bottle for their effort. Fewer and bigger distributors means less competition, which means that percentage won’t get any smaller any time soon.

? Best practices: Want to know how to help your wine survive shipment, whether it comes directly from the winery or from an online or local retailer? This list, from Entrepreneur magazine, hits the highlights nicely, emphasizing how little wine likes heat, vibrations, and being left on a delivery truck all day. One overlooked point: Give the wine, particularly the pricier bottles, a chance to recover from the trip. The bottles need to rest after being bumped across the country, and letting them sit in a cool, dark room for a week or so isn’t a bad idea.

winereview

Expensive wine 76: Chateau Pontet-Canet 2003

Chateau Pontet-CanetHow silly are Bordeaux wine prices? The Big Guy, who bought the Chateau Pontet-Canet 2003 (13%) almost 10 years ago, should have kept it in case he needed to top up his grandchildren’s college fund. The wine has doubled in value since he paid $60 for it at a Dallas wine shop.

Wine as investment is an alien concept to the Big Guy and I. We buy wine to drink, which is why any review of the Chateau Pontet-Canet has to take into account its ridiculous run-up in price. What’s the point of a $120 wine, even from a producer as reputable as Pontet-Canet — a fifth-growth estate in the 1855 Bordeaux classification that’s often compared to second growths — that doesn’t make you shiver? Because, as well made as it was, and as well as it has aged, and as much as we enjoyed it, it was worth $120 only if the person buying it wanted to flip it like a piece of real estate.

Which you can’t tell from its scores — proving, sadly, that the idea of the Emperor’s New Clothes is never far from wine and that scores can be as corrupt as a Third World dictator. That’s because the only way to keep the market going is to keep throwing lots of points at the wine, which seems to have happened here. I found lots of mid-90s, with nary a discouraging word.

If you get a chance to try it, the Chateau Pontet-Canet has more fruit in the front (blackberry and raspberry) than you’d expect, and which explains Robert Parker’s fondness for it. The tannins were very soft, and the acidity was muted, almost an afterthought. If you sniff really hard, you can smell graphite, which makes the pointmeisters go crazy. The finish is long, but not extraordinarily so, and the impression is of a quality wine that would be a steal at $40 or $50. But memorable, as one reviewer described? Hardly, unless you’re marveling at the demand for a $120 wine that was made 12 years ago.

Again, this is not to criticize its quality, but to note how little the Bordeaux market has to do with reality. You could buy four terrific bottles of Chablis for the same price; three bottles of a Ridge zinfandel, maybe the best value in the U.S.; or two bottles of Pio Cesare Barbaresco, one of the best wines I’ve ever tasted.

If and when the French understand this, they’ll understand why 90 percent of the world is priced out of Bordeaux. Until then, I’ll somehow live without it.

wine news

Winebits 393: Meiomi sale, wine retailers, restaurant wine

Meiomi sale ? Winery consolidation continues: The wine cyber-ether was full of pontificating and prognosticating last week after Constellation Brands, third on the U.S. Big Wine list, bought pinot noir maker Meiomi Wines for $351 million. Most of the commentators were baffled by the sale price, which seemed like a lot of money for the winery, especially since it didn’t include any vineyard land. Still, it wasn’t that surprising, given that Constellation paid $160 million for Mark West, the $10 pinot noir, in 2012, in a deal that also didn’t include vineyards. Meiomi is on track to sell three-quarters of a million cases in 2015, making it the $20 version of Mark West (marked down to $17.99), and as such seems like a perfect fit for the strategy that most Big Wine companies are following. They’ll sell you an entry level product, and then they’ll sell you the next wine when you trade up, and they’ll make sure you will be able to buy both wines in a grocery store. In this, it’s no different than E&J Gallo buying J and The Wine Group buying Benziger — business as usual for Big Wine in the 21st century.

? Retailers and grocers: This otherwise run-of-the-mill post about a Florida liquor chain adding a couple of stores explained the expansion thusly: “[I]n a bid to keep the ever-expanding grocery store channel at bay.” Which means the owners behind Florida’s ABC Fine Wine & Spirits understand what’s going on, even if most wine writers don’t. Interestingly the chain is up to 140 stores, which is still 60 less than it had 15 years ago, and speaks to the power supermarkets have today in selling wine. One national wine retailer told me that grocers thrive on competition, which explains much of their success, and aren’t scared of it the way so many regional and local liquor chains are.

? Restaurant price gouging: One would not expect the New York Post, home to the legendary Page Six gossip extravaganza and headlines like “Four sex scandals rock one hanky-panky high school” to commiserate with anyone who buys restaurant wine. But reviewer Steve Cuozzo, in a story headlined “Restaurants overprice wine because they know you have no idea the pain” spared no punches. Restaurant prices “… can drive you to drink ? anything but wine, that is.” He does an excellent job of explaining the contradictions and discrepancies in restaurant prices, and you can almost hear a bit of sympathy. Almost, of course, because the piece ends with a restaurant charging $100 for a very ordinary $25 retail Bordeaux.

rests

Restaurant wine prices in Europe

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.

winetrends

First Wine Curmudgeon wine prices survey

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.

 

winetrends

Restaurant wine prices: A better way

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, 2 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.