… that was the question taxing a panel of leading sommeliers and food critics at the Fine wine 2010 conference in Ribera del Duero. Nigel Huddleston heard the arguments for and against percentages and cash margin on restaurant wines.

Fine wine can be a tricky business for restaurants and top-end bars: expensive stock that doesn’t sell is bad for cash flow, but flogging it too cheap just to get it moving can dent the profit line in the long-run.

A discussion panel at a recent Fine Wine 2010 conference – hosted by the Consejo Regulador of the Ribera del Duero region – saw a split between those who thought most restaurants were doing their best to allow customers to enjoy the best wine they could while still making money, and others who felt that pricing was often getting out-of-hand.

José Carlos Capel, food critic for Spain's El Pais newspaper, said there were some 'crazy' examples of wine pricing and warped customer demand, citing a Las Vegas restaurant which couldn’t shift Ribera el Duero's Vega Sicilia for $500, but sold out when they ramped the price up to $3,000.

'Nobody likes to pay a bill that's too huge,' said Capel. 'You’ll get more turnover in a restaurant if you charge a better price and people drink more wine.

'There’s a lot of water on the table at lunchtimes. Spanish restaurants are in deep crisis.'

Canadian sommelier-consultant John Szabo decried 'the return of ludicrous and speculative Bordeaux prices'. He argued that deep discounting in wine in many markets has 'changed expectation on price', meaning consumers could often see through large restaurant mark-ups.

'We can’t get away with charging mark-ups of 300-400%,' said Szabo. 'It might mean we end up selling top wines at a price which makes most accountants shudder, but it’s better to see the sales increase.

'I’d rather two people were buying the wine than have it sitting in the cellar. You can take dollars to the bank but you can’t take percentages.'

Xavier Rousset, a master sommelier and owner of London restaurant Texture, said speculative Bordeaux prices were in danger of pricing some restaurants out of the market. Rousset said: 'We cannot buy 10 cases [of en primeur] because we can't compete. Top producers will eventually drop off the wine list. I'm just concerned we'll be left with what's left over – instead of getting the top vintages we'll only get the second vintage.'

But Rousset said there had to be commercial realism built into the prices charged by restaurants.

'If I charged the real price for food, with eight or 10 chefs in the kitchen for 50 covers, my restaurant would be empty. We have to make it up somewhere, which is in drinks.'

Gerard Basset, winner of this years world's best sommelier competition, said that though it was common practice for many restaurants to shift from GP to cash margin on higher-priced wines, this could be problematic if not everyone followed suit.

Basset, who is a director of the Terravina hotel chain in the UK, said: 'We want to achieve percentage profit on entry-level wines and then a cash margin on top wines, but some restaurants don't appear to do that. There are people who will see a top wine at a lower price and think there is something wrong. Some people might think it is too cheap and find it confusing.'

Basset added: 'Sometimes restaurants have wines they don't even want to sell because they are window-dressing, so they put the price high and sure enough they don’t sell, but they stay on the list and give it some glamour.'

There was a mixed reaction to a suggestion that bring-your-own might be the route to take for high-end restaurants in tough times – sacrificing turnover from alcohol for the sake of more bums on seats.

Ferran Centelles, sommelier at Spain's El Bulli restaurant, was, perhaps surprisingly, all for it. 'How can I say no,' he asked, 'if it's a special day for the customer and they’re excited because they have bought a special bottle. And we don’t charge corkage!'

But Rousset from Texture said he had been forced to abandon bring-your-own. 'We pulled the plugs because of bad publicity,' he said. 'We had calls from people wondering if it meant we were going out of business and desperate for customers.'

Generally, the view was that bring-your-own would remain the exception rather than the rule in most major markets, which would make the role of the sommelier as important as ever.

News item from Imbibe.com, 24-05-2010