A story from The Memphis News 
On newsstands throughout the city
What You See Not Necessarily What You Get With Wine Prices
By FREDRIC KOEPPEL | Special to The Memphis News
COMPARISON: Veuve Clicquot Yellow Label Brut Champagne is a good gauge for wine prices. -- PHOTO BY BOB BAYNE
So, you’re dining at Chez Philippe, the opulent flagship restaurant in The Peabody, and in a celebratory mood – you weren’t indicted after all! – you order a bottle of Veuve Clicquot Yellow Label Non-Vintage Brut Champagne, one of the most familiar and highly marketed French Champagnes in the world.
That bottle will set you back $125, but as jubilant as you’re feeling at the moment, it’s worth every penny, right?
Would it dampen your fervor to know that if you were celebrating at Felicia Suzanne’s, a four-block walk away at Main Street and Monroe Avenue, the same bottle would cost $88?
All is not fair in love, war and restaurant wine lists, and the fact that $37 separates the highest and lowest prices of the same bottle of champagne at local fine dining establishments means consumers probably have no idea what goes into the prices on wine lists.
Because it is so recognizable and because it’s found on the wine lists of many local establishments, Veuve Clicquot Yellow Label offers a handy guide to how wine gets listed.
The prices mentioned above at Felicia Suzanne’s ($88) and Chez Philippe ($125) represent the low and high spread in a roster of 14 restaurants. (See list.)
“The price of the wine to the wholesaler comes from the supplier,” said Mike Whitfield, director of off-premise sales (retail stores) for United Liquors.
“The wholesaler figures in transportation and other costs and the price needed to survive as a business, and that sets the wholesale cost to the restaurant or retail store.”
Once the product gets to the restaurant wine list, “it’s whatever the market can bear,” Whitfield said. “That’s where you get into these wildly fluctuating prices.”
He emphasized the factor of the tax on on-premise (restaurants and bars) alcoholic beverages in Tennessee. Every bottle or glass of wine (or cocktail) sold in a restaurant or bar in Memphis should include 15 percent state usage tax and 9.25 percent city sales tax.
“Either that,” said Bond Tubbs, an agent in the Memphis office of the Tennessee Alcoholic Beverage Commission, “or the restaurant has to put a disclaimer at the bottom of the wine list.”
Oscar Vego, on-premise sales manager for Star Distributors, the local wholesaler for Veuve Clicquot, declined to state a specific wholesale price for a case of Veuve Clicquot Yellow Label.
“There would be different deals,” he said, “depending on if a restaurant bought one or two or three cases. There’s always a deal level. “
COMPARISON
Veuve Clicquot Yellow Label Brut Champagne in some Memphis restaurants:
Felicia Suzanne’s.....$88
Grill 83.....$90
Blue Fish.....$93
Grove Grill.....$95
Currents.....$98
Flight.....$99
Restaurant Iris.....$100
Spindini.....$100
Erling Jensen.....$105
Interim.....$112
Majestic.....$113
Circa.....$114
Jarrett’s.....$115
Chez Philippe.....$125
A deal level?
“Sure,” said Whitfield. “The wholesale price is set but can be adjustable. If a restaurant buys, say, three cases of wine instead of one, the wholesaler might throw in a few bottles for free. That doesn’t change the wholesale rate, but it makes the deal attractive.
"Or if a restaurant agrees to use a wine for by-the-glass sales, the wholesaler can give the restaurant maybe a $30 depletion allowance. That takes down the price per box.”
Whitfield explained a depletion allowance as “when a supplier gives the wholesaler a dollar amount per case or bottle to get a certain action done."
"Like if you get a wine by-the-glass or you get a monthly feature on a wine list, they will support your effort with dollars and it gets passed on to the restaurant," Whitfield said.
"Some suppliers do this regularly and others never do it, so it’s very random in the business.”
On the other hand, said Whitfield, “Allocation is against the law. The wholesaler cannot mandate buying other wines in order to get the wine you really want for your wine list.”
How do restaurants, then, once all considerations are accounted for, establish pricing for their wine lists?
“Many factors are involved,” said Jeremy Nash, manager at Chez Philippe. “Storage, labor, taxes and so forth, but as most restaurants go, our mark-up is about three times retail. Veuve Clicquot Yellow Label, to use that example, the wholesale cost to us is $46, so at $125, it’s not quite three times retail.” (Actually, in Memphis the median retail price for the Champagne is about $60, so $125 is barely higher than two times retail.)
Nash said fulfilling the expectation of dining at the award-winning restaurant doesn’t factor into Chez Philippe’s wine prices.
“Yes, we have some great Bordeaux and Burgundy wines,” he said. “But the average price spent on a bottle of wine here is $60 to $80. People come here knowing what they’re going to spend, and they’re not worried about it.”
Felicia Willett, owner of Felicia Suzanne’s, said, “When I came to Memphis” – the restaurant opened in 2002 – “I didn’t know the market, and I think our wine list was priced too high. I know that wine lists are easy targets. Wholesalers make all these deals, and it’s hard to know what to do.
“I just wanted to have a list that was 100 percent, not 200 or 300 percent. I mean over wholesale. If a wine costs me $20, I want to put it on the list for $40.”