Restaurant Wine Price Slashing

[Brad Ballinger]

Many restaurants nationwide feature half-price wine nights (or something similar) early in the week when restaurants aren't as full as their owners would like. Diners often whine that the prices should be cut all the time. There have certainly been a number of threads in this forum about consumers feeling ripped off and those in the hospitality business expalining why the markups are justified. Both sides have their valid points, and I'm not looking to reopen any old wounds.

But my eyebrows raised almost all the way to my hairline (which is getting further and further away from my eyebrows daily) when I read about what a Minneapolis restaurant is doing. The restaurant has cut prices on some bottles by more than half -- permanently. The article doesn't say if the price slashing applies to all bottles on the list, or just some. But it offers these examples: 1999 Beaulieu Tapestry was $119, is now $44. 2000 Shafer Merlot was $95, is now $36. I've never been to the restaurant so I can't comment any further.

At any rate, it's a pretty dramatic price reduction.

[wkl]

Interesting.

There is a restaurant in Philadelphia that has a policy of marking their wines up 10 or 20% of retail price.( I believe that is the correct %).

Why some places can have reasonable mark ups on wines and survive kinda flies in the face of arguments to the contrary.

[Carolyn Tillie]

Brad, I'm not sure why you are surprised. Wine-Searcher.com shows that BV currently selling between $29 and $49 a bottle retail and the Merlot between $39 and $55 a bottle.

From the sounds of it, I am guessing they purchased way too much of it long, long ago, tried to sell it off at too a high price back then, and now need to clear out their wine cellar for newer vintages, lowering it to the 'reasonable' price they have it at now...

[Brad Ballinger]

Brad, I'm not sure why you are surprised. Wine-Searcher.com shows that BV currently selling between $29 and $49 a bottle retail and the Merlot between $39 and $55 a bottle.

From the sounds of it, I am guessing they purchased way too much of it long, long ago, tried to sell it off at too a high price back then, and now need to clear out their wine cellar for newer vintages, lowering it to the 'reasonable' price they have it at now...

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The surprise is how far the prices have been cut -- more than 50%. Your point about need to move product and clear room is a valid one. Other restaurants in the area tha have had this problem have either sold back to the distributor or they've sold to a retailer. Both options result in larger losses than merely selling the wine at retail to the consumer.

[wkl]

I haven't read the article but there would be a big difference between offering these wines on special clear out prices versus adopting a policy of marking up wines some nominal % above retail.

[Carolyn Tillie]

The surprise is how far the prices have been cut -- more than 50%.  Your point about need to move product and clear room is a valid one.  Other restaurants in the area tha have had this problem have either sold back to the distributor or they've sold to a retailer.  Both options result in larger losses than merely selling the wine at retail to the consumer.

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Depending on the distributor, once a retailer/restaurant has taken possession of a product, most can't return them. I'm surprised to hear of the practice only from an accounting standpoint. These distributors get paid when a retailer purchases the wine. What distributor is going to want to take back a product and refund money when the winery certainly will not? None of the distributors we deal with would take back wine after it is sold. There would be too much question about how the wine was stored, etc... and if new vintages are available, it would be doubly more difficult to get rid of the wine unless it is an extremeley desirable one.

[GordonCooks]

But it offers these examples: 1999 Beaulieu Tapestry was $119, is now $44.  2000 Shafer Merlot was $95, is now $36.  I've never been to the restaurant so I can't comment any further.

At any rate, it's a pretty dramatic price reduction.

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That's just the annual TCA sale - all tainted bottles are discounted

[jbonne]

i've now made a table game out of spotting the (usually one or two) deals on wine lists. about half the time, they're clearly fire-sale items, and often sold out. like the bottle of Deutz NV someone put on their list for $45.

sounds like the permanent reductions are more fire-sale fun, though the new trend of $10 or $15 markups is one i wholeheartedly endorse. (it does make me wonder whether they're either brilliant enough with numbers to cover their food costs, or are soon to be bankrupt.) keep waiting for a Seattle joint to jump on that straight-markup bandwagon.

fwiw, i've set my acceptability filter on wine prices at 100 percent, or 2x retail. beyond that, my gouging rant begins.

[Mark Sommelier]

More and more common these days is the little deal called the "close-out list". Larger wine/liquor/beer distributors these days are run by accountants. Products are not allowed to sit in the warehouse for longer than 6 months. This leads to dumping wine at crazy prices just to move it. I saw a close-out list last year that started with various Chilean and Argentine wines at 25¢ a bottle! Last week I purchased several cases of Latricieres-Chambertin 2000 Vincent Girardin for $27 a bottle - a 66% discount from the price the previous month. Grand Cru red Burgundy, fer chissake! I also bought 5 cases of Domaine Bouchard Corton-Charlemagne for an amazing $28.75. I'm considering pouring it by the glass.

[Really Nice!]

It all has to do with the wine glut. I'm seeing prices slashed everywhere.

Retail:

Ristow 2000 for $34

Cinq Cepages 2000 for $48

Silver Oak Alexander Valley 2000 for $45

Granted, 2000 was a cousin to the 1998 vintage in Napa/Sonoma AVAs, but still...

Then there's the 1997 Bordeaux being reduced at 40 percent off from our local distributor. All my favorite wine merchants are having huge sales on some very good names. The '97s won't last 20 years, but they'll be great drinking in four or five.

There's a restaurant around the corner from me that had a 1/2 bottle of '94 d'Yquem for $110.

It's simple economics. When you have excess inventory with new products being produced every year, you have to get the old product into the hands of the consumer; otherwise, start building wearhouses to hold all this excess, be patient, and pay the interest for tomorrow rather than collect the cash today. Not a good business plan.

For the last four or five years the world has been over producing wine. In addition, the wine product of today is "better" than any time in history because the technology available can make a better product out of a poorer vintage. The demand for specific vintages isn't as great as it has been in the past. With your low- and mid-priced products, one year isn't that much different from another. Therefore, the overall demand for specific vintages drops.

Over the past six month's I've seen momentum in price reductions increasing at the retail level and now it's starting to move over into the restaurant market.

Yippie!

[jgould]

ummmm at that rate, we should see these "HUGE" price reductions in NYC restaurants by 2020

Edited December 2, 2004 by jgould (log)