On-Premise Wine Buyer: Aggressive, High Alcohol Wines are on Their Way Out

FILED APRIL 30, 2014

Dear Client:

Lettuce Entertain You is a Chicago-based restaurant company founded in 1971 that owns, licenses or manages more than 100 establishments in Illinois, California, Arizona, Maryland, Virginia, Minnesota and Nevada. The company is responsible for growing the Maggiano's Little Italy chain, which it sold to Brinker in 1995. It also manages the Paris Club Bistro and Bar in Chicago, Wildfire and several other concepts ranging from quick-service to fine-dining. WSD recently had the opportunity to sit down with the company's divisional wine director, Ryan Arnold, to discuss the trends he's seeing across the company's concepts. Below is Part I of our conversation, as you dear reader, are a fly on the wall.

Wine & Spirits Daily: When you're opening a new store or you're just re-evaluating your wine list, what's your basic strategy to appeal to the consumers that are going to eat at the restaurant?

Ryan Arnold: I'm a big fan of balance because -- to give you an idea -- we have on any given night maybe a 10,000-square-foot restaurant that can have anywhere from 800-1,000 people come through for dinner.

I'm not trying to teach anybody anything about wine, I'm trying to provide what they want. The first thing I do is identify who comes in the door. People that want big brands or people that want esoteric wines from unknown regions, like Dajora in France, maybe Sicily in Italy, maybe Priorat in Spain.

When you look at our menu... it's balanced with vintage depth so we have a lot of young wine, 2009 and current vintage wines, but then mixed in with those I have some Napa cabernets going back to the '80s and early '90s. That is because I have people coming in the restaurant that want young wine because it's so powerful and free, and then the next person that comes in wants something a little bit more delicate that has some age on it. So I take that into account and then I also take into account that a lot of people that are looking to spend money, recognize brands. We have brands of wineries that we work with - brands like Shafer Hillside and more recognizable labels. And then we have some wines too that no one's ever heard of. So the idea is sometimes we can cross sell. We can take people that usually drink Shafer Hillside and then sell them something from the west coast of Tuscany on the Mediterranean.

WSD: What wine types are selling well right now in your restaurants?

Ryan Arnold: I write lists for a good amount of [our restaurants] and it depends on what neighborhood we're in and what cuisine we're doing. In Chicago, for example, over about 70% of wine sold through distributors here is domestic wine. It's interesting because whether we have a French concept or an Italian concept, we always have a little imprint of California wine. It's shocking to see how they've actually outpaced Italian and European import sales.

Something I've noticed...there is this revolution in California where a lot of producers are moving away from the overly oaked, really alcoholic wines and a lot of the younger wine makers or up and coming wine makers are now starting to pull back on alcohol levels and sweetness levels and make these very Old World styles of wine. What's interesting is, a lot of our guests aren't aware of this so they just call for chardonnay, they call for merlot or they call for cabernet. Somms in the city have a big opportunity to keep people comfortable and assure them that this is California chardonnay, but get ready because it's not the same wine you had a year or two years ago.

WSD: Sparkling wine has taken off in the last couple of years. Are you selling those pretty well?

Ryan: Yes. Before I did this I worked in the importing business, and I used to import what is now probably the most well-known brand of prosecco back in 2004, 2005, 2006 when not many people knew prosecco. It is now to the point where in our American concepts, where we exclusively feature American wines or a French bistro, we get more requests for prosecco than any other sparkling wine. It's become euphonic, people don't realize prosecco is a grape from a certain place in Italy that makes sparkling wine.We sell more prosecco than any other category and that's including cava and that's including domestic sparkling and champagne.

Unfortunately, what's happened recently is the price of champagne has really, the majority of them, have started to out price the average consumer. For a good glass of champagne, you're looking at $18-$24 on the entry level price point. Whereas right now, you have premium prosecco at $12-$14 and cava for $12-$14.

WSD: Let's talk about what's not selling anymore.

Ryan: I've seen, as far as countries or categories, Chilean and Australian wine. I know Australian in the last few years has really been struggling. I think that depending -- again keeping in context what type of restaurant setting and check average -- but I think what's happened is the rise of the position or the title Sommelier. The Guild of Master Sommeliers has more applicants than they've ever seen before and since their inception. They have so many people, so many younger people trying to get into the Guild they don't even know how to handle it. I think what's happening is in this Guild, in this Somm world they teach certain styles of wine. They teach classic wine, they teach Old World wine - and high alcohol extracted styles of Syrah from Australia is not one of them.

So a lot of [sommeliers] in most of these restaurants are going away from that style of wine. I think in-fashion right now, maybe in the last year and a half, are these lower alcohol, more delicate styles of wine, completely different from what they make in Chile and down in Australia. I think that those types of wines that really compete with food, that really showcase the meal, they steal from the ingredients on the dish, I think those are starting to go away. Absolutely Chilean, specifically carmenere grapes. Carmenere had a small moment in the spotlight about two years ago. I remember they were promoting in the United States, trying to really do what Malbec did to Argentina. They thought they had their Malbec. I saw a lot of people testing and experimenting with it, in 2010, 2011. Not so much anymore.

WSD: Do you think Sommeliers generally fashion the wine trends as a group or do you think that they respond to trends?

Ryan: That's a great question. I really think they do not just respond... they help fashion them. I'm a proponent of what's happening in American wine right now for all the reasons I mentioned a few minutes ago. I think that there are several [factors] to attribute to that, but one of them is you see a lot of these younger wine makers on social media that are now really hanging out in the community with these Sommeliers. And what I've seen right now that is really fascinating is the collaboration. I really think that some of these Somms are really influencing or can be influencing styles of wine coming out of certain regions. That big style of blown out alcohol is going away and we're looking more to the old world now than ever. I think the Sommeliers do have something to do with that. Absolutely.

Stay tuned for Part II of Ryan's interview tomorrow.

WSD BRIEFS:

DON'T FORGET TO BOOK YOUR ROOM. Don't forget to book your hotel room at The Four Seasons Denver for the upcoming Wine & Spirits Daily Summit. Our room block cut-off date is Monday, May 5 and afterwards we cannot guarantee our special room rate. You can book your reservation by calling the hotel at (303) 389-3000, or by visiting their website http://www.fourseasons.com/denver and entering the Corporate/Promo Code WINE0614.

WSD PREVIOUSLY REPORTED THAT Proximo Spirits is set to take over the production of Hangar 1 vodka this summer (see WSD 01-27-2014 ). This week the company has revealed some of the specifics about the facility. Namely, that the production of the brand will move to a 32,500-square-foot distillery at the Alameda Naval Air Station in California, which will include a new 500-gallon still and a tasting room that will open in summer 2015. Caley Shoemaker, who has worked at the company's other micro-distillery, Stranahan's Colorado Whiskey, will head up production on the brand. Although the company did not confirm in the release, you'll recall, it was reported that they are planning to triple the production of the brand.

AS A RESULT OF THE HIGH DEMAND FOR WHISKEY, age statements are beginning to conspicuously disappear from bottles. Heaven Hill has decided to call out those producers and add an age statement to its Bernheim Original Straight Wheat Whiskey. From its introduction in 2005 until now, Bernheim carried no age statement on the label, but the whiskey now features an "Aged 7 Years" statement on the redesigned face label. It is still bottled at 90 proof and still available for approximately $30 a 750 ml. "With the success and critical acclaim we have been seeing with Bernheim since its introduction nearly a decade ago, we think the change to a new label with a prominent age statement will continue to lift the brand profile," says Susan Wahl, senior brand manager for American whiskeys at Heaven Hill.

STE. MICHELLE WINE ESTATES WINEMAKER Ray Einberger is retiring from the company, effective immediately. Before starting at Columbia Crest in 1993, Ray was hired on at Round Hill Cellars, Silverado Vineyards and Opus One, reports Great Northwest Wine. At Columbia Crest he was promoted to executive vp, overseeing winemaking and viticulture within a decade and for the last three years he has been an in-house winemaking consultant, traveling between Washington and California to help out with the company's luxury brands. After 20 years with Ste. Michelle, he will likely take a six months break and move on to other products already under way in California. "I want to get back to my roots with high-end, small-production wines," he says.

SONOMA COUNTY-BASED AVALON WINERY HAS REVEALED a new wine and package design for its 2012 California cabernet sauvignon called Cab. Avalaon sources grapes from California regions such as Napa Valley, Lodi, Paso Robles and Monterey County to produce the varietal. With an annual production of 245,000 cases, Avalon Cab retails for a suggested price of $12. In addition to the 2012 Avalon Cab, Avalon will also be releasing its 2012 Napa Valley Cabernet Sauvignon, produced from grapes grown in selected Napa sub-appellations. Both of Avalon's new releases will be available nationwide at fine dining establishments as well as fine wine retailers.

ILLINOIS-BASED TERLATO WINES HAS ADDED ITALIAN WINE BRAND ANSELMI TO ITS PORTFOLIO. Terlato will feature four wines from Anselmi: San Vincenzo, Capitel Foscarino, Capitel Croce and I Capitelli, a dessert wine. They range in price from approximately $18-$50. Anselmi's new portfolio mates at Terlato include the likes of Chimney Rock, Flor de Campo, Greystone Cellars, Mike Ditka Wines, Sokol Blosser, Two Hands, Lapostolle and nearly 70 others.

TENNESSEE-BASED PRICHARD'S DISTILLERY IS NOW THE FIRST small distiller member of DISCUS to rise to full membership under a new graduated program launched this year. Phil Prichard, founder of Prichard's Distillery, joined DISCUS as one of the association's original small distiller affiliate members in 2010. Recall, DISCUS defines a small distiller as one that produces less than 40,000 cases per year.

STOLI GROUP USA IS ATTEMPTING TO CAPITALIZE on the popularity of the Moscow Mule cocktail by launching a Stoli Ginger Beer. Stoli Ginger Beer will come in a 4 pack and be available at leading retail outlets and within on and off premise locations. The 4-pack will retail for approximately $6. Stoli will take its Mule campaign trail across the country to engage fans with over 330 managed bar events across 12 markets including: Boston, Chicago, Dallas, Denver, New York, New Jersey, Philadelphia, Miami, Washington, D.C., and Northern and Southern California.

Until tomorrow, Emily

"I can live for two months on a good compliment."
- Mark Twain

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We are happy to announce that our Wine & Spirits Daily Summit is taking place in Denver, Colorado at the Four Seasons Hotel on June 4-5, 2014. Come join executives across the industry, in addition to Wall Street analysts, advertising executives, consultants and more.

Our speakers include Kevin George, svp, global cmo for Beam Inc.; Stephen O'Neill , svp, strategy and transformation, Pernod Ricard USA; David King, president and coo of Anchor Distilling Company; Mike Lakusta , ceo, EthniFacts speaking on multicultural consumer trends; Danny Brager, svp, Nielsen; John Beaudette, ceo, MHW Ltd.; Donna Hood Crecca, senior director, Technomic; a craft distiller panel with Sam Seiller, evp & managing director for Angel's Envy, Melkon Khosrovian, co-founder of Greenbar Distillery, and Steve Johnson, president and ceo at Vermont Spirits Distilling Co.; and an on-premise retailer panel with Mac Gregory, director of food and beverage, North American division for Starwood Hotels & Resorts Worldwide ; Ryan Arnold, divisional wine director, Lettuce Entertain You Enterprises; Megan Wiig , senior manager of beverage innovation, Ignite Restaurant Group; and Mark Gmur, president and founder, The Mark Wine Group.

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