The retail and restaurant disconnect

If you frequent fine restaurants and bottle-shops, as I do, you can’t fail to have noticed a breathtaking disconnect between the wines they stock.

There’s a widening gap between the wines available in retail stores and those served by top-end restaurants. It sometimes seems as though retailers and restaurants inhabit two separate worlds. The problem for the drinker is that when you discover a wine you like in a restaurant, and later try to buy a bottle from the retail trade, you can find it impossible.

There are reasons for this disconnect. Following my article in the Sydney Morning Herald Good Food section on restaurant wine lists on August 19, which attracted the ire of some sommeliers, there was much useful feedback. Sommeliers emphasised that restaurants avoid any wine with a significant retail presence because diners are aware of the retail price and will not buy it at the restaurant’s much higher price. But the situation is more dire than I thought. Indeed, one prominent sommelier told me that retail was poison to any wine, and that the starting point for sommeliers was the question: ‘Is this wine available in retail?’ If the answer is ‘yes’, it doesn’t get to first base.

Many other people emailed me with tales of how they felt ripped off in restaurants where they bought an obscure, often imported, wine only to later find out the wine’s retail price was a fraction of the restaurant’s price. The inference is that clever restaurants seek out obscure wines on which they can place a massive mark-up, without the customer being aware they’re charging way over the odds.

Readers told me many tales of how restaurant staff had tried to talk diners out of ordering a certain wine, suggesting another obscure and over-priced bottle was a better wine – even to the extreme of bagging the wine chosen by the diner. If true, this is inexcusable.

But, getting back to the retail/restaurant disconnect. How did this situation come about? Sommeliers often claim that mass discounting by the big chain retailers is the problem. Discount prices are widely advertised and most wine-interested diners are aware of the price of well-known wines. They will not order them in a restaurant: worse, they may form the impression that a restaurant that sells such wines is overpricing everything, which may not be the truth.

An example: Wynns Black Label Cabernet Sauvignon (tastings) is nominally $45 at retail with full mark-up, but in reality it retails for more like $29.95. The normal cost price (without deals) would be about $30. The fact that most of the volume of such wines is sold on discount has many ramifications, one being that independent retailers don’t tend to bother with it, if they cannot buy the wine at a reasonably low cost. Imagine a mum-and-dad retailer trying to sell Wynns cabernet for $45 when Colesworth sells it for $29.95! Customers would stay away in droves.

The same wine (without a deal) would be priced in a high-end restaurant at a minimum of $90 – or 200% on cost. The customer makes a mental contrast of $29.95 with $90 and what do you know, decides to take a punt on the Sicilian nero d’avola he/she has never heard of. (And they may hate it, or make the discovery of their life!)

In my August 19 column I instanced companies like Penfolds (tastings), Wynns (tastings), Wolf Blass (tastings) and Lindemans (tastings). In hindsight, they weren’t good examples. Too obvious – and anyway, most top-end restaurants don’t even have an account with Treasury – or Hardys or Pernod Ricard. Indeed, they say they’re never visited by reps from these companies. As a better example, I should have used any number of high-quality middle-sized wineries, such as Henschke (tastings), Tahbilk (tastings), Yalumba (tastings) or Leeuwin Estate (tastings). Even Cullen (tastings) and Moss Wood (tastings) tell me they have increasing difficulty getting into restaurants. If these famous wineries are finding it tough, imagine what hope the less-famous have.

But discounting is hardly new. It’s been with us a very long time. It’s not only discounting that’s at the root of the problem. It is also the fact that absurdly high mark-ups have become entrenched in restaurants. We are now so used to them, we don’t question them. High-end restaurants mark up wines 200 to 300% on cost. In other words, they price them at three to four times the cost price they are paying for them. And that’s on known wines, where we can make a comparison. Who knows how much mark-up they put on unknown wines (although one person wrote me recently to say he’d been aggressively sold a bottle of ‘over $70’ Italian red in a top Melbourne restaurant and found out later that it retails for the equivalent of $10 in the UK).

Why do they charge so much for wine? The old argument of having to pay for glassware, fridges, storage and staff knowledge doesn’t wash. They have all those overheads and more on the food, too. Some say the restaurant business is so competitive they cannot charge what they need to for food, so they have to make their profit on drinks (and let’s not get started on mineral water!).

I don’t believe that, either. Just look at the legions of inexpensive unlicensed restaurants selling terrific food (usually Asian) for modest prices, and not even charging corkage much of the time. If these places can exist without extortionately priced wine, why not the temples of gastronomy? Yes, they tend to be in lower-rental locations, and they employ a minimum of staff – but they can’t all be relying on underpaid, illegal labour.

This is a debate that I hope continues. 

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