Wine and the Restaurant Rip-Off

Along with leaf-roll virus, mealy-bugs and over-extracted Cabernet Sauvignon, listing fees count among the most dreaded two words faced by wine producers. And it would appear that, unlike leaf-roll, the occurrence of listing fees is growing in abundance as this becomes assumed standard practice among many trading as restaurants in the hospitality industry.

For the uninitiated, a listing fee is an amount of money the restaurant deems fit to charge a winery for the winery’s privilege of seeing one or more of its offerings appearing on that specific restaurant’s wine-list. So instead of eloquently and strategically marketing one’s wine as a potential complement to the restaurant’s culinary offering, as well as to the eatery’s general individual ambience, all the winery’s marketer has to do is hand over a wad of cash and bingo, your wine is accepted for re-selling by the dining establishment.

Annual amounts may vary from R3 000 to R26 000 charged to get your wine onto the restaurant list.

Now I am no enemy of free-market capitalist business practices. But that a growing number of restaurants here in the Western Cape are partaking in this mild extortion leaves a bad taste. The main reason for this is that wine is already a healthy and easy contributor to an eatery’s bottom-line. So why squeeze the producer even more?

Restaurants will buy at a 30% trade discount. This means the bottle of Chateau RippedOff you and I pay R100 for in retail will be sold to the restaurant for R70. But if you think said establishment is going to charge us R100 to enjoy the wine at the table and be happy with a 30% profit, cloud cuckoo is waiting. For said restaurant will place a substantial mark-up on the price at which the wine was bought. Think 300% to 500% on trade price. This means by the time it appears on the wine-list, Chateau RippedOff will carry a tag of between R210 to R350. Minus R70 from those two sums, and the restaurant is sitting with a substantial return.

What makes this profit tastier is that wine is an easy part of the restaurant value-chain. It does not have to be cooked to perfection and sauced by a trained chef. It does not need a uniform, nor does it require the paying of UIF benefits and taxi-fare. The wine only has to be stored and poured, in return giving love, pleasure and profit.

Which begs the question: why, with the restaurant already gaining a happy profit from the reselling of wine, do certain elements in the sector see the need to bump-up the wine-related income by slapping on an added listing fee?

If blatant greed is not the answer, then I do not know the difference between a steak tartare and a Beef Wellington.

The other nasty issue with a restaurant relying on a pay-for-play wine-list, is that the diner is blissfully unaware of this sleazy underhandedness. Many of us frequent a restaurant assuming the same amount of care and the same spirit of hospitality that goes into the food preparation and the service will apply to the selecting of the wine-list. Chardonnay from limestone soils to accompany the seafood dishes. Elegant Cabernet Sauvignons to partner the accurately grilled beef. Bright cool-climate Sauvignon Blanc for those spicy Asian dishes. Wine and food offered with an holistic approach towards customer satisfaction, one would expect.

When the restaurant relies on listing-fees, it displays a crude disrespect to its culinary offering by using money as the sole criteria for making its wine selection. Lack of respect for the diner, coupled with ignorance. Not exactly conducive to adding integrity to your hospitality offering, is it?

Of course, as long as wineries are willing to fall for this scam, it will go ahead unabated. The only party that can have a say is the customer. And for this, the wined-and-dined foodie media have a role to play by alerting the public to restaurants entertaining unethical wine-lists. Restaurant guides such as Eat Out should, along with a restaurant’s wheel-chair friendly status and the offering of vegan options, state whether the establishments listed play the listing-fee game.

Those provincial bodies who oversee the hospitality industry should force guilty restaurants to blatantly state – on the wine-list – that this list is based on wineries who have paid to see their products offered for sale, and that the selection was not the personal choice of the restaurant and is about as democratic as a parliamentary election in Rwanda.

Of this we don’t need to know, we must know. For the choice is ours.

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22 thoughts on “Wine and the Restaurant Rip-Off

  1. I agree with all above, and hoped after the wine industry saved many restaurants from closing during Covid they would start ripping off the veggie distributors instead. Those who didn’t physically give wine away to save restaurants, certainly saw the un unprofitability of an alcohol free restaurant and closed business until they could profit from wine sales again. Funny how quickly they forgot and have started asking for free fridges, stock deals & listing fees.

  2. A sad reflection of what is happening. Thanks for sharing – I’ll certainly try and and enquire at more eateries if they’ve chosen the wine intentionally or are simply listing because someone paid the fee.

  3. Glad you got that off your chest Emile.

    It’s an offensive practice that especially undermines the smaller producers who simply don’t have the cash to buy their place on the list. Unlike the big wholesale producers and distribution companies.

    As consumers our most powerful weapon against this scourge is our patronage.

    Simply support ethical restaurateurs. There are loads of them. A quick scan of the wine list will reveal whether they are taking the piss or not.

    On a slight but not wholly unrelated meander, using your example of R70 trade price, and assuming a list price of R210-R350, the server, with only a 1o% tip will make substantially more money per bottle than the producer’s net profit.

    This sums up the value chain for those in any doubt.

    1. Thanks Adam. You may find this interesting: in 2006 Kader Asmal, chairman of the erstwhile SA Wine&Brandy Company, told me that ‘a certain Mister Adam Mason’ had alerted him to the listing-fee practice, and was I aware of it….!

  4. The problem is, even for those of us that know this practice exists, how can we tell if we are eating in a venue with listing fees. The wine lists in many restaurants in Johannesburg are woeful but it is hard to tell whether or not this is poor taste or poor business ethics on the part of the restaurant owners. Personally, I would love to name and shame and doubt Eat Out (which largely ignores Gauteng) has the guts to do it as they rely on the advertising rand.

  5. The ethical wine lobby and smaller producers themselves could start a name and shame list of restaurants that adopt this practice… for publication in various places visible to the public… not just the Eatery magazines and websites !! The practice started with supplying umbrellas and printing menus for struggling restaurants.. sounds like it has now has got out of hand ?? Alternatively the wine industry could start a list of good practice ethical restaurants… this is becoming a far greater requirement of the upcoming generation spend!

  6. I can name a number of brands in the Meridian, Distel, RGBC, DGB, Pernod Ricard, Vinimark and Diagio portfolios that are prepared to pay listing fees. It’s not always hard cash on offer, can be free stock, trip to France, tickets to Rugby etc etc etc.

    1. Yello! I am focussing on the blatant upfront listing-fee extortion. Am not in-tune with the nuances of printing, ice-bucket and umbrellas.

  7. What I find even worse is that a wine farm like Babylonstoren marks up their own farm wine in their own farm casual pizza/ pasta restaurant from retail of R150 to R400 . On management being challenged later I’m told that’s what they need to charge to make a profit and don’t think complaining is going to change their pricing . Needless to say I have dined out repeatedly on this story of greed , !

    1. Actually it retails for R135 at the farm not R150 …..and let’s not forget trade is probably R70

  8. Restaurant customers who know about the listing fee atrocities are already voting with their wallets. However, the sad reality is that most people are entirely oblivious regarding these unethical listing fees.

    I’m not sure if engaging an industry body like Vinpro would help, because of the political clout of the larger producers (who are the chief perpetrators of listing fee dark deeds).

    What needs to happen, is for the smaller producers to come together and for each to put a small fee in the kitty. Then start marketing an “ethical wine list seal/badge” of some sort. Prominent, simple, explanatory. All restaurants that qualify will pay their small annual fee and in return they will get a sign that can be displayed next to their name board, as well as the right to print it on their wine lists, websites and promotional material. This movement’s website should also list all these ethical restaurants’ in alphabetical order, so that potential patrons can do a quick and easy check before they make restaurant bookings.

    The free market works both ways.

  9. I agree with all of Emile’s comments with regards to listing fees, the main fault here lies with the producers/suppliers who offer cash deals in order to own a percentage of a list. From there the restaurants who accepted this became greedy.
    I understand that the below was not his primary intention, but this article doesn’t only focus on the negative effects of listing fees, it suggests that restaurants should not mark-up their wines the way that they do.
    What I don’t agree with is the following:
    1. “Restaurants will buy at a 30% trade discount.” Who is selling their wine at 30% trade discount? I’ve never seen that. It’s normally 20-25%.
    2. “Think 300% to 500% on trade price” Not in my entire career in food and beverage have I encountered a 500% markup. Not even at the most expensive hotels in South Africa or the world. This is an exaggeration. Most 5 star hotels mark up at 250-300%, most other restaurants 200-250%
    3. “What makes this profit tastier is that wine is an easy part of the restaurant value-chain. It does not have to be cooked to perfection and sauced by a trained chef. It does not need a uniform, nor does it require the paying of UIF benefits and taxi-fare. The wine only has to be stored and poured, in return giving love, pleasure and profit.”
    For so long, so many of us have worked tirelessly to try and rid the SA hospitality sector of this exact stigma. We mark wine up so that we can pay for: a sommelier, training, certification for staff working in the restaurant, their uniforms, their transport, their staff meals, being able to serve wine at the correct temperature from a working fridge (we don’t need it sponsored, but without the mark-up we cannot buy it) glassware, glasswashers, the list goes on…
    People drink wine at wine bars, restaurants and hotels for the experience, not just for it to be “poured”.

  10. On Friday was charged R2750 for Capensis Chardonnay at an establishment in Main Road Franschhoek. Plus compulsory 15% tip makes the wine R3162. Sommelier told me it arrived that morning. Current retail R950.

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