Tuesday, 26 February 2013

Wine financials - you do the math!

In my last blog post, I talk about the mark-ups that restaurants place on wine.  I do not begrudge a restaurant making a profit on wine or other alcohol as it is often the difference between a restaurant succeeding or being forced to close their doors.  But the restaurant needs to fair and competitive.  Most restauranteurs tell me a typical wine list price should be about 220% - 250% the price of what you can buy the bottle for retail.  And I am comfortable with this.  But as I mentioned, I will not frequent restaurants that charge over 350% of the typical retail price per bottle.

Wine Math
Here are a few other tips on what to pay for wine and how to use wine with the right financial outcomes.

Buying very expensive wine

In general don't!  During my life, I expect that I have purchased over 5,000 bottles of wine.  I have never paid more than $1,000 per bottle.  In fact, only twice have I paid between $500 - $1,000 per bottle and that was for (1) a 1971 Penfolds Grange, and (2) a full bottle of a 1971 Chateau D'Yquem - both birth year wines for my wife's 40th birthday party.

I have spent over $200 per bottle about 40 times, including the two bottles mentioned above, another 8 or so Grange, a dozen 2005 Bordeaux's, some excellent Montrachets, and a few special bottles of Napa Valley wines.  And every other bottle of wine I have purchased has been less than $100.  Therefore, I have spent more than $100 per bottle for less than 1% of the wine I have purchased.

There are excellent bottles of wine well under $50 per bottle.  I have had some truly outstanding wines for $10 - $20 per bottle.  And most people cannot tell the difference or in fact, actually like more the cheaper wines because they are more open and ready to drink, and the taste is something they are more used to.  Be hesitant to spend over $30 - $40 per bottle unless you really know your wines.

Doing BYO (Bring Your Own)

I love BYO and you save a fortune!  I have often brought great wine for a special occasion in a restaurant and saved thousands of dollars.  Plus I can pick out exactly what wines I want from my cellar.  For some of my birthday functions I have brought between $500 - $800 worth of wine and buying the equivalent wine in the restaurant would have cost me $2,500 - $3,500.  That is a great savings!

Expect to pay up to $25 per bottle or $25 per head for corkage.  While this may add $150 to the cost of the meal, it is still far cheaper than spending $3,000 for the wine!  The corkage fee is very reasonable and includes them decanting the wine, pouring it for you, replacing and using their best glassware, and clearing and cleaning the glassware.  I usually also bring a nice bottle along to gift the sommelier or owner also to let them know I appreciate being able to BYO.

Many restaurants, including Tetsuya's allow you to do this.  Or just ask and many restaurants will be glad to provide this service for you even if it is not listed as a service.  BYO means a bill for a great night out that would be half of what it otherwise would be and most restaurants are glad to just have your food business.

Buy aged wine instead of current vintages

There is a glut of wine on the market - more people are selling than buying.  Therefore, aged (and ready to drink) wines can be had for about the same cost as current vintages.  Why spend $500 for a bottle of current vintage Grange when you can get the 1981 or the 1985 for the same price or just a little more.  You would need to cellar the 2007 Grange for at least 20 years, while you could drink the 1981 or 1985 immediately!

Cellaring a bottle of wine usually cost between $2 - $3 annually.  Therefore, if you need to cellar a bottle for ten years, it will cost you $20 - $30 per bottle in addition to what you paid for it!  There is so much aged wine available that it does not make sense to buy a current vintage when you can get an aged and ready to drink bottle for the same amount or even cheaper than the current vintage.  Someone else has paid for the storage and care and you do not have to!  Nor do you have to wait a decade or more to drink it!

If you can get a great bottle of vintage wine for less than 25% more than the current vintage, you are getting a steal.

Cooking with wine

My wife makes a great beef stroganoff.  She also makes great risotto and a few other dishes that require 100 ml of white wine.  With the beef stroganoff, we often have an aged Chadonnay like a Montrachet.  A year ago, we had the bottle open and were enjoying a glass of $150 Montrachet while cooking, and indiscriminately used 100 ml of the Montrachet as part of our beef stroganoff recipe.  It was decadent and delicious, but certainly did not materially make the beef stroganoff any better.  It also meant I had one less small glass of a great wine to drink!  It also added $20 to the cost of our tray of beef stroganoff!

When we made beef stroganoff last weekend, we drank the same bottle of wine, but I opened a bottle of 2005 Kelman Semillon to be used for cooking.  This is a nice wine which I got for free as a land-owner in their cooperative vineyard.  The bottle is worth $18 at the cellar door, and therefore only added about $2.40 to the cost of the beef stroganoff.

An open bottle of wine will only last a few days for drinking purposes, but will last several weeks if you are using it for cooking.  Therefore, we try to make several meals over a few weeks which require wine as part of the recipe and open a cheaper bottle of wine for the cooking.  And the 2005 Kelman Semillon is a very good wine for the money and I am now enjoying a glass while writing this blog!  Using an $18 bottle of wine for several meals and several glasses in between is a far better approach than using 100 ml of $150 bottle of wine for cooking!

We also keep about a dozen bottles of both white and red wine we know is no longer good for drinking but can still be used as a marinate or for cooking as need be.  The last few batches of Coq au vin we made used a 1989 Lindemans St George Cabernet Sauvignon for marinating!  While past due for drinking, it was still great as a marinate.

Hopefully this 'wine math' made sense and was useful and helps you get far better drinking mileage out of your wine buying and consumption.  Enjoy!

Steve Shipley
Twitter: @shipleyaust
My other blog (on business, tech, world issues):  Steve Shouts Out!

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