Restaurant-only allocation

I've heard of this, especially with high-end CA wines (Kistler, etc.). My impression is that that the distributor feels that having wines on lists at expensive restuarants is a prestige boost (and therefore will keep prices solid). I'm sure that getting a restaurant a solid allocation of Kistler might help the rep get a good seat! Dale

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in article snipped-for-privacy@mb-m15.aol.com, Dale Williams at snipped-for-privacy@aol.comdamnspam wrote on 12/23/04 2:59 PM:

A good seat is one thing, but a steady commission check is another. I've spent some time, recently, with a couple of reps for wine distributors here in California. My guess is that, competition being what it is, a distributor can help secure a stronger overall position on a restaurant's wine list by providing a high quality, difficult to get wine (like Kistler). There are a lot of wines, and a lot of reps angling for the business of each restaurant (especially the better ones), so I'm quite sure they use whatever leverage works for them.

That and the fact that certain wineries make the % split of retail vs. on premise.

They find that it is an image builder and better way to brand a product especially in early years of a brand. Example Chateau Montelena Estate Cab is on premise only in Charlotte, NC. No retail.

Some of the large, high volume wine stores also can put pressure on a distributor to give them more of a hard-to-find wine. In fact many of these wines end up at auction. A store often can make more money by perhaps holding the wine a year or two and then having it listed with a safe minimum bid at a major auction house. The store owner might have to buy the wine for their own personal use first to make this legal in some places. Just what you can get away with depends on the many state laws. Such can also happen on the international scale. At one time Leroy sent DRC wines to countries in Europe,but not the US, for which there was another arrangement. However several of the Leroy shipped DRC wines found their way to the US via some wine companies in Switzerland and elsewhere.

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Obviously, I cannot comment on the position in the US - but here in New Zealand it is a practice which is "relatively" common among high-end establishments.

Usually, the wine will be limited release, "reserve" wines, where the winery lacks the volumes for general, retail release.

Thus, the restaurant gets a wine where there is no "retail price" for comparison.

If a diner (particularly one who is not up with the practice) tries and likes the wine, they will probably purchase the "standard release" wines which *are* available at their chosen off-licence establishment.

Many NZ wineries have "tiers" - Villa Maria, for example offer their "Private Bin" range (entry level); "Cellar Selection" range (a little more expensive; better quality) and then their premier "Reserve" range - top of the line, often single vineyard wines attracting top $$$.

Easy if you know what you are looking for - but clever marketing when the majority just know "Villa Maria Chardonnay" as the latest gold medal winning phenomenon.

Good marketing - sure!!

Caveat Emptor!

Sometimes its the winery itself that instructs the distributor that they want on premise sales only. That means thee winery does not have to worry about retail sales pricing. Although most state laws do not allow it, some of these allocations find their way into a retailers hands, who will quietly contact their best customers. The restaurant also may have some "regulars" who will gladly take these gems for a price when offered.

And sometimes the distributor ties the restricted wine to a large number of cases of some other wine that the distributor wants to unload. You can have 2 cases of Montelena to go with your 20 cases of Mario Andretti, or some such.

Absolutely. A friend of mine owns a history Inn and Restaurant in Blowing Rock NC and that is exactly what he said happens. To get the good stuff on your menu you have to take lots of the low end stuff.

I would understand the method of allocation if they said to get a Mondavi Reserve Cab you have to buy 5 cases of Napa Mondavi Cab, 1 Mondavi Pinot and

But to get 2 cases of Montelena Estate Bottled you have to be 50 cases of Gallo on Sonoms is extorsion. They allocate to reward they better customers which provides them with economic advantage then. In consumer products that would be a violation of the Robinson Patman act. Guess no retailer/restaruant has taken this issue to court as a challange.

It seems many of the producers who limit the distribution of their wines to restaurants are fairly new or fine wine want-to-bes. The most expensive and sought wines of the world can be bought by the individual including Romaee-Conti, the DRC Montrachet, etc. You usually have to buy these at auction. When you find Romanee-Conti at a retail store on release rather than at a auction, it usually is a single bottle in a mixed case of DRC wines. There are a few high end dealers that can even provide such things as Romanee-Conti 1985 - at a price that can be up to twice the going price at London auctions. The wine dealers have to buy the mixed cases, or many cases of other DRC wines, to get a case of Romanee-Conti or DRC Montrachet.

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That _used_ to be quite common; nowadays that is illegal here in the USA.

Tom S

I've termed the practice of using a highly desired wine to move other wine as "bundling".

Here's how it worked when I represented DeGrazia in Maryland ans worked for the wholesaler:

First To get 5 cases of Altare normale Barolo, 3 cases of Vigna Arborina & Larigi and 2 cases of Barolo Arborina, we had to also buy 12 cases of barbera and dolcetto.

Then we passed this on to the retail accounts-- for every case of Barolo normale, riserva and super tavola wines they took they had to take a barbera or dolcetto. If that was not acceptable depending on the account we either passed on the sale or came to an alternate configuration with other products we needed to move. The same pattern applied in Tuscany with Brunello/Chianti Riservas and Super Tuscans being the draws. Now this doesn't seem so bad after you've had an Altare dolcetto or a Clerico barbera, they weren't exactly shoe-polish. Retail accounts are notorious "cherry-pickers" and can put you out of business if you deal with exporters/wineries who also practice bundling. I always priced the lesser wines at a lower markup so they moved, making up the loss at the other end. A consumer who'll pay $75 for a 95 point Abbondanza Riserva will pay $80 especially if there is only 5 cases in the whole state!

It may be illegal, but it's still done according to a restaurant owner I know.

There are lots of things that go on in the liquor business that are illegal, because state and local laws are unrealistic and mainly protect local wholesalers, small retailers and the three tiered travesty. They are a 1934 solution to a 21st century market place. When laws and regulations are outmoded and stupid, competition forces people within the system to ignore or work around restrictions. Hopefully the Supremes will deal with shipping issues and states will allow volume discounts and other practices that would make sales easier. The business of government as far as sale of alcoholic beverages is concerned should be no more or less then any business. Collecting taxes is one thing a government can do, the rest is all a means to continue monopolistic practices.

i think i agree.