Spin the bottle

Spin the bottle – wine prices at restaurants often vary

John Winthrop Haeger

Why did the same 1993 cabernet cost $135 at Bistro 45 and $93 at Patina? Welcome to the baffling world of restaurant wine prices

EVERYBODY, IT SEEMS, loves to hate restaurant wine prices. It’s true that prices have never been higher. In Wine & Spirits magazine’s 1998 annual restaurant poll, the average price of a bottle of wine served in restaurants nationwide was $43.59, up nearly 25 percent since 1995. The average bottle of cabernet sauvignon came to a tidy $56. The single most popular brand on wine lists, California’s Sonoma-Cutrer, sold at an average price per bottle of nearly $37–primarily its Russian River Ranches chardonnay–followed by the megalithic Kendall-Jackson, whose various offerings, especially the Vintner’s Blend sauvignon blanc and chardonnay, averaged $31.50.

But why, the hapless diner asks, does the 1997 California chardonnay from Au Bon Climat, available for $16 from Santa Ana’s Wine Club store, cost $30 at Bistango and $38 at Spago Beverly Hills? Why was 1993 Diamond Creek Gravelly Meadow cabernet on the list at Bistro 45 in Pasadena for $135, but just $93 at Patina, while 1996 Sparrow Lane Beatty Ranch zinfandel, on the Patina list at $40, sells at Bistro 45 for just $30? For that matter, why did the 1995 vintage of Pasquero Elia’s single-vineyard Barbaresco Sori Paitin inexplicably sell for virtually the same price at Campanile, Valentino and Spago Beverly Hills but for $20 less at the Wine Cask in Santa Barbara?

The answer is that wine-list pricing is something of a black art, melding (sometimes) unvarnished greed on the part of proprietors with the equally urgent task of satisfying the complex desires and status yearnings of their customers. Sommeliers, for example, say that the least expensive bottles on the list are nigh impossible to sell, even if they are strongly recommended. Conversely, sticker shock seems to have disappeared at the high end. Many restaurateurs report virtually no resistance to vintage champagne priced upward of $500 a bottle. “Expensive wine can’t be expensive enough,” observes Art Petry, a veteran restaurateur and owner of Pacific Coast Wine Marketing, a major distributor. “Southern Californians like trophies–they like the idea of a big cabernet at a big price.” Adds Steven Kolpan, who teaches hospitality management at the Culinary Institute of America: “Wine prices track the Dow Jones, and wine prices and the Dow are both at record highs.”

Most diners assume that the price of the wine they order in restaurants has been outrageously inflated, and they’re sometimes correct. Valentino’s typical markup is two times cost; Campanile quotes 2.35. Patina’s sommelier, Chris Meeske, says he has no set markup. “I don’t want to run a museum here,” he says. “I want prices to create an incentive to buy.” Still, all establishments admit they take liberties with older vintages no longer available in the retail marketplace that have appreciated substantially in value. Markups on such wines can reach 1,000 percent. Valentino owner Piero Selvaggio insists that the opportunity to take hefty markups on older wines, and on some current releases that are in high demand and short supply, is what enables him to maintain a markup of only 100 percent on the majority of his huge list. But the high prices on older and allocated wines hardly discourage buyers. Meeske and Selvaggio tell stories of collectors who have sought to buy bottles at the restaurant’s list price for their home cellars. Both refused to sell.

“There is no rule of thumb on wine markups,” says Kolpan. “Some people charge what the traffic will bear; some buy wines only in a certain price range they know their customers will pay; some have voluminous lists that cover all bases. Partially it’s a matter of greed.” In some locations, it can also be the underlying cost of real estate. “In Beverly Hills,” says Kolpan, “you are not dining, you are renting table space.”

In the trade, it’s generally accepted that “on-premises” (restaurant) sales build brands. Wine retailers may sell twice as much wine measured in dollars as restaurants and five times as much by volume, but restaurants offer producers and importers advantages disproportionate to their market share. “Restaurant wine lists are better than advertising–they are a third-party endorsement,” says Forrest Tancer, partner and winemaker at Sonoma’s Iron Horse Vineyards. Cathy Corison, whose eponymous label of Napa Valley cabernet now ranks among the very best, says unambiguously that “restaurants built my reputation.” Bruce Neyers, national sales director for Kermit Lynch, a St. Helena-based importer of benchmark French wines, puts it this way: “Through restaurants, I have a better chance of reaching the people who, in the long run, I want and need to support me.”

The relationship of producers and restaurants is still a case of love-hate, however. Selling wine to restaurants is notoriously inefficient. A lion’s share of higher-priced wineries’ large marketing budgets–30 percent of sales revenue is not unusual–goes to selling restaurants, according to Vic Motto, a wine-business consultant based in the Napa Valley. “It’s much more efficient to sell to retailers,” explains Bob Janis, director of sales for the venerable Clos Du Val winery. Restaurants, says Janis, “will put a wine on their list with only three bottles in stock, order a mixed case of wines on Monday and another on Wednesday, and often have no space for storage and no desire to hold inventory.”

Restaurants also have to be hand-sold, one by one. Even when there is common investment in a group of restaurants, each location usually buys its own wine. Little wonder that distributors, who are the pipeline through which most wine, beer and liquor flows to restaurants, try when they can to “own” restaurant wine lists, locking out competitors. Unknown to most diners, hundreds of Southern California restaurants, including establishments that rank high in Zagat surveys and charge top prices, have ceded responsibility for their wine lists to distributors. In this scenario, the distributor’s account representative becomes the restaurant’s de facto wine director, choosing wines from the distributor’s list, controlling inventory and even custom-printing the list itself. “A combination of laziness and insecurity,” sniffs Patina’s Meeske.

Along with bottles, nearly all restaurants now serve wine by the glass. Several Southern California establishments have truly wonderful by-the-glass programs. Imagine Littorai Vineyards’ very limited release of dry pinot noir rose–almost unobtainable anywhere by the bottle–served by the glass at Bistro 45 for $9. Or the delicious, award-winning Traminer produced by Pojer e Sandri in Italy’s Trentino region, by the glass at Campanile for $9. At Spago Beverly Hills, wine buyer Michael Bonaccorsi chooses wines by the glass specifically to accompany the nightly eightcourse tasting menu. And where else in L.A. can you find single-vineyard (“le Mont sec”) dry Vouvray from that appellation’s best producer, Gaston Huet, for $8.50, or the almost cultish Domaine des Blagueurs syrah made by Randall Graham at Bonny Doon Vineyards offered as house red?

The overwhelming majority of by-the-glass lists, however, are worse than uninspired. At its most cynical, wine by the glass is simply the restaurant’s replacement for the mixed-drink bar business, which has been in decline for two decades. (The mixed-drink bar was a genuine cash cow. In a typical gin and tonic, the cost of goods sold is less than 50 cents while the tab is $6.) “Lots of these wines are undrinkable and a blatant rip-off,” Meeske says. Most restaurants don’t think they can sell wines by the glass for more than $9 (the national average price jumped last year from $6.90 to $7.87). In order for them to make an acceptable profit, the restaurants gravitate toward wines that cost them less than $7.20 per bottle. Wines that sell wholesale for $7.20 generally retail for about $8.50. Scanning your local wine shop for wines in that range will give you a good idea of what you’re likely to get by the glass.

Virtually all restaurants in California permit diners to bring their own wine rather than order from the restaurant’s list. Restaurants generally charge between $8 and $20 per bottle for this privilege, known as “corkage.” (Spago Beverly Hills waives one corkage for each bottle purchased from the restaurant’s list.)

Corkage is rare in the rest of the country. Few restaurants in New York City permit corkage at all, and some that do charge usurious fees. Industry insiders say widespread corkage here may reflect the influence of wine producers in the state’s winemaking valleys, who like to bring their own bottles to restaurants for business entertaining. Manfred Krankl, founding partner in Campanile and a respected winemaker himself, says the practice may cost the restaurant a few dollars of revenue, but it’s a small price to pay for a happy customer. Patina’s Meeske says, “We practice corkage because a lot of our customers are collectors. We encourage them to bring their wines to dinner. We would much rather have them here with their own wines than not here at all.” Valentino’s Selvaggio agrees: “The people who value our wine list are also the people who have their own cellars. But I admit we’re very annoyed when someone brings in a bottle of $5.95 wine from the liquor store.”

Valentino is one of perhaps a dozen restaurants in Southern California–Patina, Spago Beverly Hills and Campanile are among them–that possess what the trade calls a serious “wine program.” A wine program is more than a list. It’s the restaurant’s investment in careful procurement and proper storage, fine glassware and staff education. It is one or more full-time wine professionals, sometimes a Master Sommelier or Master of Wine, who has proven his or her expertise through peer examination. It is tastings of new wines for the wait staff before the evening service begins, briefings on featured wines and staff incentives. It’s a van rented at restaurant expense to take the staff on a familiarization tour of California wineries. It is a stock of hundreds, sometimes thousands, of lead crystal glasses designed in Austria by Georg Riedel to show the olfactory properties of each varietal to best advantage. (“We buy Riedel glasses whenever they are on special,” confesses Selvaggio. “We lose a lot to breakage.”)

Good wine programs are also about educating the customer. Sommeliers often feel mission-driven to introduce diners to new wines, to induce experimentation with untried pairings of wine and food or to share a discovery from Austria with a dedicated Francophile. “We have Santa Margherita pinot grigio on our list,” says Selvaggio, citing a popular brand, “and we’ll serve it if the guest insists, but we usually try to suggest something more interesting.” In Santa Barbara, Wine Cask owner Doug Margerum says tables put the wine selection in his hands 50 percent of the time. “Adventurous and knowledgeable diners ask for help,” he reports. “Less-informed clients confine themselves to something safe like Jordan cabernet.” When Campanile’s Krankl worked the floor, he relentlessly encouraged diners to try a pinot blanc or viognier in place of the ubiquitous chardonnay. “Even if the customer didn’t like the alternative wine, I still did him a favor,” Krankl insists. “The chardonnay would have been consumed with no thought whatsoever.” Spago’s Bonaccorsi, whom one distributor calls “the best wine buyer in the world,” may also be the most aggressive educator. In an effort to cajole customers into experimentation, Bonaccorsi has even put Austrian gruner veltliner on the list as “Austrian chardonnay.”

Valentino has one of LA.’s best wine programs. Collectors and aficionados are drawn like ants to honey to revel in a list of more than 2,100 selections representing every major wine-producing area of the world, from Tenuta di Salviano’s newly released 1996 Orvieto Classico ($25) to an 1893 Chateau Lafite Rothschild ($19,000). Valentino’s cellar, which actually occupies most of the restaurant’s second floor, plus a few climate-controlled lockers off-site, is stuffed with some 8,000 cases, enough to keep the restaurant going nicely for about three years if Selvaggio ever exercised his oft-spoken threat “not to buy another bottle.” Valentino sells more than $2 million worth of wine annually, more than many wine stores. But it’s not the volume that counts. Every maker of fine wine in the world, and everyone associated with marketing a wine brand, would like to be on Selvaggio’s list, even if the restaurant were to sell barely a bottle a year of their wine.

So it follows that the wineries come to Valentino metaphorically if not literally on bended knee. One morning about 10 o’clock, the business of buying wine for the restaurant’s list starts to unfold, rather like a play, with the bar area as stage, characters entering stage left and exiting stage right. The director, of course, is Selvaggio, dressed in faded jeans and a yellow polo shirt. Giampaolo Dorigo–the Italian wine guru for Young’s Market Company, one of California’s largest distributors–escorts Michele Chiarlo, superstar producer of top-ranked barolo and barbera, to center stage. Dorigo consulted for Selvaggio, and Chiarlo and Selvaggio are old friends. A torrent of Italian greetings and European embraces explodes around the bar. “Never before in Piedmont four great vintages in succession,” pronounces Chiarlo, referring to the back-to-back triumphs of 1995, ’96, ’97 and ’98. “But 1996 is my favorite,” he adds, as Selvaggio makes a note.

Christi Gerlach, Los Angeles rep for Napa’s Chateau Montelena, is next, carrying an insulated tote bag of sample bottles. Another European embrace. “How long have we been buying from Montelena?” Selvaggio asks her. Before she can answer, he recounts how Jim Barrett, a former Los Angeles attorney and founder of Montelena, came to dine at Valentino in 1974, when it was just one small room and a kitchen, when Piero himself was the cook, and when the wine list consisted of Lancers, Mateus, Bolla, Blue Nun and Lambrusco. “You are not going to go very far with a wine list like this,” Selvaggio remembers Barrett admonishing him. Barrett brought Selvaggio his first bottle of premium California wine: the legendary 1973 vintage of Montelena chardonnay. Today, Gerlach wants Selvaggio’s sommelier to taste Montelena’s newly released blend of zinfandel and sangiovese. They huddle at the far end of the bar, noses buried in their huge Riedel glasses.

In the meantime, Chateau Montelena’s 1995 cabernet sauvignon is already a fixture on Valentino’s hallowed wine list. The price? $120. Or a markup of 100 percent. LA

COPYRIGHT 1999 Los Angeles Magazine, Inc.

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