The value of booze: Hamish Anderson

Hamish Anderson

29 March 2017

With drink shouldering ever-more of the on-trade’s profit burden, the issue of ‘value’ in booze is becoming increasingly complex

When I travel to Tate Modern first thing in the morning, I stop at the same coffee shop (the excellent Taylor St Baristas) to buy a flat white. Last week in their tiny site was a letter explaining why prices were about to rise by 7%.

It is a familiar story of costs rising on product (green coffee is generally bought in US dollars), labour, rent and the recent steep hike in London business rates. The letter ended with the hope that customers found the new prices fair and to still offer value.

Value is highly subjective: many would find my regular flat white poor value as it is smaller than those offered by the high street brands; to me it’s good value because I think it tastes better.

Value in wine is equally hard to quantify. It is, though, rare to hear a customer comment on what good value a bottle offers. I have been buying wine for 20 years and consumers’ notion that restaurant wine prices are by-and-large a rip-off has not changed.

An irate member at a private club I work for recently fumed at the small increase in house champagne, suggesting in future we got down to Lidl to stock the cellars. It does not help that as our prices creep up, wine on the high street seems to remain in a time warp, forever cheap.

They are not ripping me off – just solving the complex equation of how to be a profitable establishment

Clever buying can help towards creating a sense of value, even if gross profit margins remain industry standard. Selecting from the unfashionable or up-and-coming regions and grapes often means more bang for your buck, as does looking at countries where the cost of production is cheap or the exchange rate skewed in our favour.

However, your traditional drinker who does not stray far from house wine or Chablis has seen and noticed that their ‘usual’ has gone up. The trouble is that food seems to be less affected.

Food, of course, is the reason most decide to visit a particular restaurant in the first place, and it is used as way of setting the pricing tone. But I have eaten a number of meals lately where an ostensibly reasonable food bill escalated rapidly once a £6.50 craft beer and a couple of mid-priced (£8) 125ml glasses were added.

It seems particularly prevalent in the no-booking, casual environment, where house wine is often not far off the Michelin-starred establishment around the corner. I’m not suggesting these places are ripping me off; they are just solving the equation of how to be a profitable establishment by placing a heavy burden on booze.

We are unfortunately still a long way from a country such as France where the split between profit on food and drink shows wine in a more favourable light. I hope that as the financial challenges of 2017 unfold, customers’ perception of the value wine delivers is not further eroded.

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