Wine Lists and Recessions

The current recession has hit the wine world in unique ways. As with all recessions, alcohol consumption has increased and this includes wine. Though the volume of wine consumed has increased, the average price paid per bottle has decreased considerably. Wine stores and wine restaurants are learning how to either survive this change or how to benefit from it (or not). Wine buyers for stores are frantically searching for the best values they can find and loading up on wines that sell for less than $30 a bottle. Restaurants are adjusting their inventory as well, looking for wines that will be on the list in the $30 to $55 range rather than the $65 and over range. Some restaurants are offering half-priced wines, reduced or waived corkage fees, and other ideas on slow nights just to keep the customers’ count close to normal. With all this experimentation, will the traditional pricing models for restaurant wines change? Should they? The questions of restaurant wine pricing is scary for me as a former restaurant owner and a current restaurant consultant, so I would rather have this be an open forum with feedback on wine list pricing from both restaurateurs and customers.

For the last decade, restaurant wine pricing has been fairly consistent, with mark-ups being lower than those found on mixed drinks and beer, but higher than those historically used in wine stores. All of this is being rethought in order to keep the volume of wine sold close to it has been in previous years. Some restaurants mark up wines as much as four times the wholesale price, but the general rule of thumb is about three times. Using three times wholesale results in a list price that is about double the retail price. This may seem excessive, but keep in mind that wine stores have much lower overhead than a restaurant, which requires many more employees, more space, a dishwasher, wine glasses (good ones are expensive and break easily), a bar, chairs, tables, more parking, a valet, a sommelier, etc. On top of this, wine stores can take advantage of buying twenty or more cases of a wine and get deep discounts for volume that a restaurant can’t take advantage of. Consider Santa Margherita Pinot Grigio. This wine is usually bought by the single case by restaurants, while there are 100+ case deals that stores often take advantage of. So the wholesale price the restaurant pays per bottle is likely the same as a discount wine store sells it for.

Now that restaurants are being very creative with their wine programs, what will be the shakeout when the recession is over? Will wine list pricing and policy revert to the pre-2009 ways? Or will new restaurant wine pricing emerge? I am not just asking in order to have an interesting dialogue with my Long Island Pulse readers, but also so I can adjust and make recommendations for my clients. Keep in mind, if consumers demand wine prices that are too low, your favorite restaurant will cease to exist. So be reasonable with your thoughts and ideas.

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