In a recently conducted survey on our website at Winestyle.biz, we asked the wine and restaurant industries to complete and answer truthfully a few questions about wine listing fees. The results of this survey are below and divided into various categories.
Wineries have their say: -
Of all the responses received a staggering 74% of them pay listing fees to various establishments with the majority of the fees going to restaurants and the rest divided between liquor outlets for inserts in catalogues and display space. One comment received which we thought deserves a big cheer, is that the listing fee is paid to the sales representative.
Wineries are mostly charged per wine listed and are paid to the various establishments predominantly in the form of cash, stock and advertising on a yearly basis and negotiations are discussed with the member of staff in charge of designing the wine list. It is a concern that only 16% of negotiations are with the General Manager and even less at 7% is with the Owner of the business.
Generally speaking, they are striving to ensure that service staffs employed by these establishments have the product knowledge of the wine by offering training sessions (a free service) and incentives (cost to winery).
The big question asked and answered: - 73% of the wineries have NOT seen a marked increase in sales since paying for a listing fee.
Restaurants have their say: -
We were not surprised that the restaurant industry were not forthcoming in completing the survey (reasons could include: - fearful, nervous, apprehensive....perhaps!)
43% of the restaurants responded that they receive listing fees, which are charged for per wine listed. Payment is equal in the form of cash and stock at the inception of the list. None of the restaurateurs discussed the fees with the owner of the winery and negotiations are with the representative of the farm.
The representative performs the majority of the product knowledge training and a staff member with training skills conducts 29% of training in-house. On the up side, 71% of restaurateurs create incentives for staff to sell and up-sell all wines listed.
The Costs Involved: -
Apart from the survey, we did receive information from a winery via our contact page (who will remain anonymous) on some of the costs. For the year 2010 listing fees at restaurants amounted to R52, 000, catalogue inserts at retail outlets like Makro and Ultra Liquor etc R110, 000 (which does not include end row displays and in-store promotions). Some restaurant chains charge R1, 300 per wine, but then you are listed at all the stores in the chain. Up to 7% discount to the distributor who has the wine on their portfolio, which does not guarantee listings. Think about it, re-read and you do the Mathematics!
Our Opinion (everyone is entitled):-
The most discouraging part of the restaurant survey was that they were NOT prepared to outsource the design of the wine list OR outsource a training company at their expense to perform basic wine training! It is usually left up to the floor manager (who has a lot of other duties), distributor (with usually 60% of their portfolio represented) to compile and train the list. Yet, they receive fees and have mark ups of up to 300% on the wine list.
To those who do not pay or receive listing fees, design and compile your own lists based on the merit of the wine, see training as an investment, we commend you! May you create many memorable dining experiences for your patrons! Comments from all parties via the online survey are posted below with names omitted.
With loads of cash, stock and discounts being given and received, does the small business owner, consumer or guest care? Yes, we think so .........
NIKKI DUMAS
32 comments:
We do not pay restaurants. We pay the Sales rep a bonus based on additional listings versus delistings. - Winery
We do not enter onto any wine list / listing if we need to pay. We do on the occasion supply free stock 1X6X750ml per listing, if we had a good listing with a customer for a few months.
In the past few years, we realised that it is the restaurants that do not live long and struggle to pay bills that practice these listing fees. - Winery
I refuse to pay listing fee's and consider it a slippery slope, however listing fees must not being confused with a rebate system, which is part of any well structured business. - Winery
The practise is disgusting, but supported by the "Major Suppliers" who in fact create a situation of absolute domination considering only that they can offer the best product for the customers. But free fridges, free menu printing costs, free aprons, free ice buckets and free all sorts of other merchandise materials are offers difficult to turn away by customers. - Winery
We should definitely stand together as an industry to try combat these as much as we can! - Winery
In some establishments, it really works, in some it does not but how else do you get on a list? The whole listing fee issue is getting out of hand and some establishments really want way too much money, something Distell or DGB can afford but not a small independent wine farm. Along with listing fees for restaurants, we also have to pay huge amounts of money to be in a catalogue for Makro or Ultra or PnP etc. range from R5500 up to R8500 per wine. That is very hard to pay so much money before you even had sales; again, it is the smaller guys that have a problem with it. Along with that, we have to pay for display space, gondola ends, etc. and with that, we have to give discount to be in the catalogue!!! Where does this leave the wine farm before a single bottle is sold? - winery
If everyone stopped paying for listings, it would not happen. - Winery
If a restaurant is going to charge a listing fee, then a contract needs to be signed with a time period and certain terms and conditions - like any other long term purchase. We have experienced with certain establishments that after a short period of time, a larger company comes along, buys their entire wine list for themselves and their portfolio and kicks us off. We get no notice and have such lost that initial listing fee, and due to no official documents being available, we have no leg to stand on. - Winery
Sadly so that people sometimes only take note of a small wine farm when you prepared to pay. Nothing just on merit it seems. - Winery
The sales do not always help spike the sales. The outlets just make use of who will or may provide the most incentives and moves on to the next offer once done. There are many such examples. There is no security once a listing is paid.
It is all about what the outlet can get and use as a bargaining tool towards the next producer. Playing and pushing for the best 'value' to his outlet. - Winery
We do not pay to list a wine at any outlet or restaurant etc. You must create a marketing plan/ support to ensure that your wine will be selling. We have a policy, that wines that do not sell, we will give a refund. These builds trust in the brand and the buyer.
Restaurants - must support local wines on their wine lists. Restaurants are spoiled with big companies supplying umbrellas, cash etc. -Winery
Find that some restaurant chains are asking too much and we have thus decided to discontinue our partnership - it has become way too ridiculous and costly. We are extremely cautious. - Winery
We know this happen and we believe we will not pay to be on a listing. We are selling a product that is good and you are getting value for money. If the restaurant would like to have the wine on their list, they will order it. People eat at some restaurants because the wine is good and the food. To have bad wine with good food do not work and the other way around. - Winery
I am glad that I am out of the rat race and now successfully run my own business, a Country House, incidentally on a wine farm. As Operations Manager of a well known Cape Town Hotel, already seven years ago, I was really disgusted to discover what was going on in the restaurant and Hotel business. I successfully produced three Diners Platinum Awards wine list just with my passion and knowledge of the products and without having Distell, to mention one, represented in my wine lists.
As a principle we do not pay listing fees - the restaurant should be proud to stock our wines, we ensure our wines are of the utmost best quality and that is our commitment. - Winery
Listing fees are all over the place and unfortunately; this questionnaire does not cover everything. I could click almost all of the above.
Listing fees are requested regularly at both restaurants and liquor outlets.
Payment is usually cash, but can also take place through free stock, goods in kind (umbrellas/aprons).
Most payments are once off per listing, but some are monthly, some yearly, and some are per item listed, while others are per brand.
Most restaurants/stores that request a listing fee DO NOT require staff training. Very few restaurants ask for staff training, although as a winery we always offer it.
Staff training and incentives helps sales. Listing fees do not help sales.- Winery
The problem is that the smaller guys...like us, have to compete with the big brands and big companies on paying these fees. You either pay or you are not on. Restaurants know this because they will get the money one way or the other. Therefore they dont care what their wine list looks like. This is especially bad in Cape Town and mainly in Franchise Restaurants because they have this carrot of having 30 outlets blah blah...
So how do we stop all this? Get the competition commission or something like that to investigate this in detail...maybe Cart Blanche should do it :-) It really has become an issue for the smaller producer to "if you cant beat them join them" because there just isnt any other way to get listings. Thats how bad it has become!!!
Do not pay for listings it is a crooked practice. - Winery
I have heard of this urban legend. I have been in the restaurant industry for 11 years, I do the wine list for my restaurant, I have never been approached by a wine farm or wine rep to buy a spot on my wine list. It may go on in the bigger establishment or chain restaurants but I have never been approached. - Restaurant
It should be oultawed that CERTAIN restaurants in CERTAIN areas DEMAND and get isting fees. Any Good restraurant worth its salt should list a wine because they believe in it and can sell it. Why should they get listing fees??. This cost ends up with the consumer as listing fees are somehow costed into the price of the bottle. This cost is ammortised over the portfolio and those not getting listing fees have to pay for the unscrupuless restaurants. - Restaurant
Listing Fees are a lot more evident in Cape Town than any other region in SA, why is that is my question? - Winery
Unfortunately, due to marketing budget constraints, we are not in a position to pay listing fees in order to secure listings at restaurants.
Personally while we understand the difficulties being faced by the Restaurant trade as a small wine Estate we cannot support this, and as such have noted many wine lists becoming dominated by low price wines, often produced by the two main corporate producers in SA who have the budgets to support listing fees etc. - Winery
I simply cannot believe that this practice still exists in our industry.
Do restaurants require listing fees from Coca Cola? Do they ask their food suppliers for discounts and freebies and "buy one steak get one free"?
This is a ridiculous practice. Quite frankly, I value my product and I do not need to give it away free. I am not so desperate to get rid of it that I will pay people to buy it. - Winery
As a rule, we do not pay for listings, but we will make an exception where the list is not too big and the costs are related to sales volumes.
We professionally believe that it is not beneficial to pay for listing fees. - Winery
The producer is always the one that needs to fork out for listings, especially on the on-trade. The agent and restaurant/establishment rarely has any % share in the listing procedure/cost ... once again the producer pays for the whole route to sales! Enough is enough! - Winery
Listing fees do not increase wine sales, but staff training and incentive systems do! - Winery
We refuse to pay listing fees. I think it is immoral and should be stopped. It is an attempt by the big wine merchants to exclude smaller wine sellers from the market. - Winery
I do NOT pay listing fees. Where I am listed in a restaurant, I, as owner, visit them personally. Where appropriate and relevant I will give them a bottle of wine to taste as a group. - Winery
Well done on your survey Nikki.
It would be interesting to see the names of the writers and of the restaurants/wineries of the Commenters above.
Chris
Dear Chris,
Many thanks, it was an anonymous survey and writers were not requested to sign in or reveal their names and company details.
If they would like to do so on this platform, they are most welcome.
Think you missed the number one reason why restaurants did not respond... Apathy! (Wish it was different but "it is what it is")
Restaurants already milk the margin on wines - they make more profit than the whole supply chain from vineyard to delivery combined and that for the least amount of effort.
I would love restaurants to justify their 300% Mu when most of their points of justification can be shot down - the listing fee just adds insult to injury.
Bottom line is boycott restaurants that offer badly chosen wine lists combined with awfull service by ill-informed staff
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