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Wine Loves “Transparency” Until it doesn’t:  An Ethical Debate

The domestic wine world loves authenticity and transparency – especially consumers.  This is a common refrain albeit more ideal than reality. 

This point has been underscored for me recently with David Darlington’s new book, An Ideal Wine: One Generation’s Pursuit of Perfection – And Profit – in California.  Darlington spends much of the book elucidating the use of technology tools in the wine business.  These tools are principally from service providers like Enologix and Vinovation. 

While many vintners are quoted (and seemingly forthright) in the book, the reality is that both companies have cloaked client lists and the respective businesses operate on the margins of the industry with precious few of their clients willing to go on record about their use of analytical and corrective wine tools. 

Transparent?  When it comes to the production side of the business, not so much.

There’s another area where wine isn’t exactly transparent, and that’s on the pricing side of the equation in between distribution and retail.

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Wine media members can secure a subscription to the Beverage Media price list magazine in their geography (used as a retail reference) and see monthly wholesale pricing, comparing that pricing to the actual prices on local store shelves, or even restaurants.

Who is gouging who?  Who offers legitimate deals?  The information is available.

I’ve always had a slight desire to re-publish wholesale pricing, comparing it against actual store pricing, shining a light on a couple of retailers in my town who are less than magnanimous in the alleged “deals” they are offering.  Yet, societal mores have precluded me from doing so.  I’d probably bear the wrath of enough people to earn a Scarlet Letter.  Or, worse, I would violate some Beverage Media terms and conditions that I wasn’t aware of.  At the least, I would break an unspoken rule in the gentlemanly sport of business – similar to the unspoken baseball rule that says you shouldn’t break up a double play AND use your cleats as a weapon whilst doing so.

Well, in the Netherlands, an online wine shop lacks the compunction that I possess and for the better.  At least I think it’s for the better.  Anything that can blunt the criminal blow that is restaurant wine pricing the world over should at least deserve an, “Atta boy.”

Sterwijnen Thuis, a Dutch wine web site, loosely translated as “Home of Star Wine,” has taken wine list selections from the top 60 Dutch restaurants, and they then sell some 350 - 400 of the same labels online for considerably less, listing the name of the restaurant where the wine is featured.  In doing so, the spread of margin in between what Sterwijnen Thuis sells the wine for versus the restaurant pricing becomes glaringly obvious.

As you might imagine, not everybody is happy about this, especially the restaurants.

The Dutch Alliance Gastronomique is conferring with restaurateurs and some are talking lawsuit.

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Sterwijnen Thuis, reflexively perhaps, indicates that they are simply making publicly available information, well, publicly available.  It’s not their fault if they can sell the same wines as a restaurant for much less money.

Ahem.

Unfortunately, in order to follow this story you’ll need to use an auto-translation tool in your browser (I use Google’s Chrome browser), and you can find the story here and here.  An English-language blurb can be found here.

I open this up to readers.  Is Sterwijnen Thuis within their right to baseline their inventory against the gloss of very reputable restaurants while showing cost savings in the process?  Is all fair in love and war?

Or, is this an egregious lack of decorum worthy of brush back pitch to the chin in the top of the inning as recompense?

Leave a comment with your thoughts.



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Posted in, Good Grape Daily: Pomace & Lees. Permalink | Comments (10) |


Comments

On 07/12, Jamer wrote:

Is this another case of good in theory, bad in practice?  Maybe…  Of course we all want wine transparency, but, is pricing a part of that?  The world is not flat!  Wine moves on reputation, vintage, relationships, scores, reviews & price (in no specific order).  Those that follow wine even casually have a sense for a good “deal” in pricing.  However, as you suggest, perhaps not.  Winemaking is a capital intensive business, and sometimes a little extra incentive to get a deal done happens.  Is the wholesaler or distributor not transparent if they don’t divulge this?  Technically yes, but, was this a onetime thing?  What if the winemaker was a good friend and they were helping each other out with the transaction?  What if the distributor had supported the winemaker through thick and thin from the beginning and this was a “thank you” gesture for the support?  The slippery slope of gray matter starts to appear!  No one wants to be gouged, but, prices do move around based on numerous extemporaneous factors such as economic downturns, currency fluctuations, and new markets creating new demand etc.  We have all enjoyed a wine windfall and grumbled a gouge along the journey, c’est la vie!

On 07/13, Jen@Cybercellar wrote:

Sometimes it doesn’t matter how “transparent” you are, you still get stuck in the red tape…and loads of it. We’ve been trying to launch our South African wines in the USA for a year now, and only now does it seem like it’s becoming a reality…well in a couple months that is.
What we should have done is sent free bottles to the officials working on our request. We’d probably be in the USA by now wink Enjoyed your Blog, will keep reading.

On 07/13, .(JavaScript must be enabled to view this email address) wrote:

I have been reading about restaurants “gouging” consumers in the wine press for years now. As somebody who got into the wine business through the restaurant business, I wholeheartedly disagree with this premise. It shows that the wine writers may know a lot about wine but precious few know much about the restaurant business. There is so much more that goes into the price a consumer pays than just the wholesale cost. 

The fact is on-premise (restaurant) and off-premise (retail store) establishments operate very different businesses. It is like comparing apples and oranges.

I would contend that if you want to judge the fairness of a restaurant’s pricing, one should judge it against it’s peers…that is to say other restaurants with similar lists and menus (and therefore overhead.) 

To the bigger question regarding transparency, it strikes me that the writer forgets that the wineries, wholesalers and retailers and restaurants are in business to make money. The wine business is not a public utility, it is a for-profit industry.  If parties feel it is best for their business to charge a lot of money…so be it.  Maybe they offer better service or selection. Or maybe they have a better location and pay higher rent for it.  Or maybe they sell less wine than their competitors because they are more expensive…the market decides.

My point is, the system is already transparent.  Consumers know how much the bottle of wine costs when they buy it…and they are the ultimate judge of whether it was good value to them or not. The profit of the establishment they bought from (or the wholesaler, or winery) is extraneous information in that equation.

On 07/14, .(JavaScript must be enabled to view this email address) wrote:

i’m going to agree with chris on this one.

yes, restaurants charge higher margins than wine shops or online retailers.  but an online retailer is not going to pour the wine, cook a meal to pair with the wine, and then wash all your dishes for you.

i expect restaurants to charge about double what you would pay in a wine shop.  i can get a decent bottle of wine for about $20 in a wine shop, and expect a decent bottle of wine in a restaurant for $40.  if i can get that, then i will accept whatever margin that establishment is charging. 

on a final note…i don’t eat at fancy restaurants very often…probably less than once a month.  last time i was at a restaurant, they had a poorly organized wine list (and not cheap), and when i asked the waiter for a recommendation, he muttered through a few catch phrases until i just picked something at random.  if i can get a good recommendation from a someone who knows what they are talking about, that is always worth an extra couple bucks to me.

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I have a restuarant, and I know wines are the most profitable products of all things in the restuarant. But that doesn’t mean we earn much, because the margin which wines save us will be spent on other things such as dicount on dishes,and cost on advertising.

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