David Clarke: On wine listing fees

January 28, 2015
by David Clarke
in Opinion & Analysis
with 28 Comments

Money“The strong do what they can and the weak suffer as they must” wrote Thucydides, Athenian historian, philosopher and general, who lived between 460 and 395 BC. Welcome to the world of listing fees for restaurant wine lists.

Ever wondered why so many wine lists in South African restaurants have the same generic and uninteresting wines listed? It isn’t because of a lack of choice. According to Platter’s 2015 South African Wine Guide, there are more than 950 wine producers in South Africa producing 7,000 different wines. Why aren’t they represented in the nation’s wine lists? Because of the continual and unquestioning acquiescence of some wine companies, the practice of enforcing listing fees sadly results in many wine lists having a similar, banal feel to them.

It is not an uncommon practice in South Africa for restaurants to charge to stock their wines. A recent example presented to me was a request (actually an ultimatum) of R6 500 for an annual listing. For one wine. With no guarantee of subsequent orders.

Multiply this by 50, or even 100, wines on a list and revenue quickly mounts. These wines are then sold to (mostly) unsuspecting guests at normal restaurant prices. The subsidies are not passed on, in whole, or in part. I use the word “unsuspecting” as normal restaurant goers tend to assume that restaurants choose the wine they sell based on a combination of taste preference, suitability to the cuisine, value, service and personal relationships. It does not cross the minds of the vast majority of guests that some establishments’ wine lists are decided by whether or not producers can afford (and are inclined to “buy”) a spot.

Why is this a problem? Listing fees limit customer choice and create an obstacle to market for the majority of wine producers. The quality and diversity of the South African wine scene is at an all-time high – in  the over 350 years of production there has never been a more rewarding time to drink Cape wine. Restaurants can be (and many are) at the forefront of this shift towards wines of quality and uniqueness. And it is precisely this uniqueness, this South African-ness, impossible to replicate in other parts of the globe, that has captured the world’s attention.

Yet, a great many restaurateurs are profiting from maintaining the highly unsatisfactory status quo of offering wines that are (usually) manufactured in industrial quantities, and produced in such a way to maximise profits for the producer. Not the grape grower, not the workers. These techniques minimise the effect origin has on the product, therefore the only necessary ingredient in wine, the grapes, could come from anywhere – and the wines produced as a result often taste bland and worse. Thus marketing the Brand with a capital “B” and not the intrinsic product becomes the number one aim.

The absurdity of it all is that while the investment of energy, money and time is spent on increasing market visibility and devising plans to convince the public that the brand represents such qualities and virtues as a long ancestry, a timeless elegance, permanent class, unbounded quality, a superior location and so on; it is these exact elements (among others) that are removed, or at least compromised, in order to cut costs. I don’t want to drink those wines; I don’t want others to drink those wines.

That being said, not all wine producers who pay listing fees are making generic, soulless product; many feel they have no option but to pay. This puts increased financial pressure on the farm and diverts funds from other types of investment. This predatory practice also creates upward pressure on the price of wine, as producers need a higher margin to help subsidise the restaurateurs.

Let restaurants choose their lists on a combination of quality, value, taste, suitability and service. If restaurants are willing to sell off their wine lists for a price, one can only imagine the formula used to create the food menu and the criteria used to choose the ingredients and suppliers.

What’s the solution? Another quotation: “I am not worth purchasing, but such as I am, the King of Great Britain is not rich enough to do it” observed Joseph Reed, a lawyer, military officer and statesman of the Revolutionary Era in the United States and here lies the key.

If wine producers, collectively, agreed to not pay listing fees, the practice would cease to exist. Imagine what could be achieved if that capital was rather invested in the industry via training or mentorship programs.

Until all wine producers unite and become “the strong”, most producers shall remain “the weak” – and suffer as they must. And everyone, especially the unsuspecting restaurant goer, will continue to lose. But not the restaurant owner, they have the producer’s money, and they have the diner’s money. And they are playing you for fools.

  • David Clarke hails from Australia. A qualified sommelier, he now runs a wine agency called Ex Animo, Part of his job involves trying to sell wine to restaurants.

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28 Comments

  1. LeonDecember 16, 2016 at 7:49 amReply

    Fantastic read.. Being in the restaurant industry for over 16 years and knowing amounts being offered and paid to achieve listing is mindblowing. I have over 178 wines listed on my wine list and and can proudly say that not once have I requested or hinted at any producer for listing fee. I might have asked for odd empty barrel on occasion.As far a BYO we do not allow it as there is enough choice and a wide spectrum of wines on our list.(you have to draw the line ;we had a very well known banking corporate last week that brought their own lovoka and shot glasses for their christmas lunch with not even consulting me or any of our team!!) I have personally tasted and selected these wines over the course of the years and see my wine list as a extension of my passion and creativity- call me a bad or stupid restauranteur/chef for not asking listing fees but to me this is depriving diners from experiencing new wines as smaller private farmers and producers simply cannot afford to pay these amounts..

  2. Ali NicolAugust 6, 2015 at 5:07 amReply

    Great article. We have exactly the same issues here in Hong Kong – and the same sentiments from both the trade and consumers. As we have no wine producers here it’s the importers and distributors that “pay to place” wines on a great number of restaurant wine lists here. This is not exclusive to the wine.industry – the beer and the spirits industries are complicit also. We wrote abiut this yesterday and received overwhelming support from the trade (those that don’t accept payments for listing) and many.consumers wishing to know where they can drink wines that are listed because theyre great wines and not paid to be on the list. Sadly, as for as it being a practice of corruption, it is hard to prove as payments are hidden and disguised as something legitimate. As you say, it is and always has been the end.consumer that suffers from a lack of diverse choice.and an overall lack of quality wines.

  3. Jacques MalanJuly 13, 2015 at 6:50 pmReply

    If we had a list like this, I would only support restaurants that do not charge a listing fee.

  4. SkroefpropJune 24, 2015 at 3:00 pmReply

    Great article David. I would also add that BYO policy should be looked at. Recently visited a restaurant in Cape Town CBD and was not allowed to bring wine in for the party I was hosting. They could rather charge me R100 a bottle corkage than force me to order from their poor selection of wines! The whole culture around restaurants and wine-lists need to change. If a restaurant has a decent enough offering of wines and some wines that can truly sell on quality and value, they would most likely not need to bribe producers to make a profit.

    • David ClarkeJune 26, 2015 at 10:18 amReply

      Hi Skroefprop – thanks. Slightly disgree with your thoughts on BYO – restaurants are under no obligation in my opinion to let you bring in your own booze. Can I bring in a bottle of my favourite brandy and just order cokes? Or my favourite beer and smash down a dozen over a lunch?

  5. Jeremy WalkerJune 22, 2015 at 6:17 pmReply

    Six months on from this article and I’ve just received “an offer” from The Cape Town Fish Market to pay them a listing fee of R24,192 per product. It is time to name and shame but also time to list the genuine wine-restaurants who select their wines according to factors other than being paid a listing fee. I would be more than happy to share the list of restaurant customers that we supply who have never so much as hinted at wanting a listing fee.

    I hope this comment reaches you, David – and perhaps others even though it is six months since your article and other comments first appeared.

    • David ClarkeJune 23, 2015 at 11:43 amReply

      Thanks Jeremy, appreciate your bravery in naming names. Awareness is key here.

  6. Andrew HuddyFebruary 20, 2015 at 8:42 amReply

    David this article is to the point and spot on, and as we have seen by the comments a very touchy subject, with few prepared to step up, name an shame for fears of a lash back.

    Yes, the restaurants are the prime contributours to this, typical SA attitude currenty “what’s in it for me”??
    The chains are the WORST!!
    One just has to try list a wine with a well known Portugeuse restaurant chain across SA to see this….
    BUT the big distributours are equally at fault, tempting new ventures with “incevtives”….

    Thinking the best way to go about this is to create a POSITIVE list of establishments who don’t and lets give them the support they deserve!

  7. Myrna RobinsJanuary 30, 2015 at 9:53 amReply

    Well, as the naming and shaming is unlikely to happen according to several comments above, why dont we take up Cathy Marston’s suggestion and compile, on this website, a list of restaurants that do not charge listing fees.
    Thanks to Nadine, above, we have one: Magica Roma, Pinelands.
    Even if its only wine producers and “500 foodies” that follow the growing list, they have friends and the word will spread.
    I will check on a couple that I think will fall into this category, and add them.

  8. Cathy MarstonJanuary 29, 2015 at 10:17 amReply

    Just in the interests of being positive and proactive as opposed to (I suspect) simply nosy – I would rather see a list of restaurants which DON’T ask listing fees and which have a great list. That way I will know who to choose when I dine out. Naming and shaming is merely to satisfy prurient curiosity – to which I happily admit I am also prone – but does little to help us all make good choices if we shun one fee-asking restaurant only to ricochet across to another.

    • Tom OrpenJanuary 29, 2015 at 12:49 pmReply

      I couldn’t agree more with Cathy, let’s give credit to those that deserve it, and those that deserve our business.

      Well done David!

  9. NadineJanuary 29, 2015 at 9:46 amReply

    David, loved your article, and apart from the fact that I run a boutique winery in Stellenbosch and refuse to pay listing fees, your point about the customer being done in by this practice rings true. I am so frustrated with the choice of wines that are offered often at top establishments. Same old same old (and don’t get me started on the mark-ups). I look at the restaurants we supply, e.g. Magica Roma in Pinelands (no listing fee, reasonable mark-up, invoices paid on time) and we sell heaps of wine through them. Other restaurants can learn from this model and actually generate profit from increased wine sales, rather than getting a listing fee from the winery. Spend more time on sourcing appropriate wines for you establishment, good quality, the type of wine someone will order a glass of and enjoy it so much he’ll order a bottle next and then you will see your wine sales blossom and your profits bloom and the customer will certainly benefit.

  10. David WibberleyJanuary 29, 2015 at 3:35 amReply

    Restaurant a of course the bad guys here…..it’s not like the restaurant are giving free meals to the value of R6500 to have a winemaker been seen eating at that restaurant. Who decides that that restaurant is even worthy of such status. Without the quality wine offering what would that restaurant have to offer. I for one, place value on relationships formed. Why would I charge an estate monies, just so that they know me. It’s totally in the restaurants interests to squeeze for better prices and to make sure they get their ” worth “….ask one of those restaurants what they are doing for wine tourism in South Africa or creating international awareness of what we do here. Are any of those restaurant involved in a community initiative that gives back. What do they need the money for? Only to sustain individual lust. I don’t eat at restaurants that don’t have decent wine offering, and would rather take my own. So do you charge an estate for a job that someone can’t do properly? They, the estate, did all the work! Not you!! The restaurant, mostly, followed an trend and sucked their thumb!!

  11. Neil GrantJanuary 28, 2015 at 10:49 pmReply

    Hi Tim and David,
    As a SASA board member and an independent restaurant owner, I personally have never asked for a listing fee and never will. I wish that the restaurant industry would stop the practise, it’s not healthy.

  12. David ClarkeJanuary 28, 2015 at 10:27 pmReply

    Thank you all who read and commented.

    Tim: Certainly this is not the only (ab)use of power in the industry. This doesn’t, in my mind, excuse or justify the practice.Of course companies seek advantages. It is up to each where they draw their own line (rightly or wrongly), and individuals and producers/suppliers/etc to respond. At no point did I advocate a hypothetical (and unobtainable) “level playing field” [excellent sport reference by the way, TJ] – I lamented the restriction of customer choice. Interesting point you make about (1) distribution and (2) advertising. Hard to sell wine without some level of distribution, the level of which will depend on needs and means of each producer. Advertising: most top brands do not advertise; consider the examples you mentioned: Sadie, Mullineux, Kanonkop – R&R may do so. You will also need to read paragraph 8 “That being said…” to see that I stipulated that there are producers of good wines paying these fees also. If you truly believe that the enforcement of wine list fees “doesn’t necessarily reduce the range of wines on offer”, then I would humbly suggest that you do not grasp the scope of the issue.

    Perhaps you could join me “on the road” for a few days over the next month? We can chat about this subject (and others) while talking with restaurant managers and owners, and you can report it for winemag.co.za? Just a thought.

    I am not sure whether Sadie, Mullineux, Kanonkop or R&R are asked (or pay) listing fees.

    I admired Kyle Martin of Cabo Esparanca naming names today on twitter https://twitter.com/KyleLikesWine/status/560451298743828480

    And inspired to do the same.

    The R6,500 fee per wine for one year was asked on behalf of Moyo Restaurant group by Fournews Developments.

    Angela – I respond by asking them what the money is for. This, so far, has ended the conversation.

    Louis – the real injustice is not “to the small guy” – absolutely understand the realities of “business” and big vs. small etc. – it is to the customer. Many of whom probably don’t care. But it is difficult to care if you don’t know. Thus the piece was written.

    Sorry for the rambling – been a long day. :) d

  13. FCHJanuary 28, 2015 at 9:33 pmReply

    ahh the great “listing fee” debacle; ie: bribe.
    Sorry Louis, I struggle to understand your argument- its the large companies that “entices” the restaurants into said scenario? Yet, if you dont pay someone else would…?

    Ok-onto the article, I completely agree with David and cant really add much to it. Naming & shaming wont make any difference, where would one “shame” them? On a platform like this where half the industry and 500 foodies might read it… Will make no difference to Mr & Mrs Smith sitting for their hake and taters at a rather large national seafood enterprise (ps: i have it on good authority, said (unsaid) national seafood enterprise asks for a 6 figure sum for a listing, not a paltry R100 000 either 6 figure; substantially north of this) i am wandering off topic.
    No, naming and shaming wont make one bit difference; no, there will most definitely not be a industry wide holding hands in this regard.
    Unfortunately this is a beast the industry has created, many a restaurants (not saying every one) uses the wine industry as a interest free revolving loan. As pieter says, a WAY BIGGER issue is restaurants ordering, receiving ( deliveries are still free, arent they?) sold at 200-300% mark ups, re order, re sold….. And dont you believe it, that invoice will not get paid. Geen skaam as my gran would say. Its not a R1000 or even R6500 “listing fee” that breaks the camels back, its tens of thousands of Randelas of unpaid invoices that does.
    There is a tale (or tail) of some of the older guard ( when they still stood together) that visited a restaurant that was unobliging in settling its invoices with a small producer, the heavies came, sat, ate and drank until they reached the equivalent in outstanding invoice value and headed for the door. Needless to say restauranteer thought nothing of this, until he got a friendly reminder he was physically facing the king pins of the wine industry…. Ah the days.
    I salute those brave enough to take on the fight, and I shall not buy any product which I see appearing on a apron, umbrella, menu, tablecloth, ice bucket or any other form of “brand representation”. Just doing my bit you know

  14. Tim JamesJanuary 28, 2015 at 9:13 pmReply

    Another thought, David. Does the Sommeliers Association of SA, on whose executive you serve, have a position on this practice? Can we assume that some (proper) sommeliers connive at this sort of thing, or not?

    • David ClarkeJanuary 28, 2015 at 10:30 pmReply

      Hi Tim,

      Not an official position (as we have not discussed it explicitly) – but I state with a fair amount of confidence that my thoughts would closely echo those of the executive.

  15. Louis RuinartJanuary 28, 2015 at 7:40 pmReply

    Restaurants charging listing fees have received bad press today and I am not saying it is totally unwarranted.

    However, lets put this into perspective. The larger wine distributors in South Africa, just as soft drink, beer and cigarette companies carry a lot of weight in their respective fields and have serious budgets to entice restaurants into taking on the brands which they represent, and unfortunatley a precedent has been set – if you don’t wish to pay, someone else will.

    As I mentioned on Twitter earlier this morning “Listing fees” come in many disguises – huge rebates, continuous sponsorship deals, refits, signage, besides dirty cash!

    Is this an injustice to the small guy, yes unfortunately it is, but at the end of the day, business is about making money and we are as unlikely to resolve the issue of listing fees as we are of restaurants placing huge mark-ups on wine. Sadly it’s the shadier part of doing business – worldwide – and whilst principles do and should apply, they just don’t seem to show up on a companies P&L statement.

    There have been numerous calls today to name and shame the restaurants that ask / demand listing fees. David, maybe your follow up to this debate should be about 1. the incentives made to hotels and restaurants by the medium – large distrubution companies; 2. the personal incentives made to the F&B managers / sommeliers such as free stock, golf trips, weekend vacations etc.

    Restaurants are not the only bad guys here!

  16. Amy BotesJanuary 28, 2015 at 6:40 pmReply

    Name and shame! I run a restaurant and I have nothing to hide. We choose wine on merit and merit alone!!

  17. Angela lloydJanuary 28, 2015 at 5:16 pmReply

    How do you respond to those restaurateurs who give you an ultimatum or request a listing fee, David? And do they ever indicate they know it’s wrong to do it?

  18. Rob PaytonJanuary 28, 2015 at 1:57 pmReply

    David – The respect you show the restaurateurs by not naming them is not reciprocated in their treatment of the wine industry – I would add my voice to the ones that call for naming and shaming. If they feel charging for listing is a legitimate busines practice, they should have no problem with being named surely?

  19. Pieter de WaalJanuary 28, 2015 at 10:03 amReply

    Harry Haddon wrote a similar article almost five years ago: https://wineandi.wordpress.com/2010/03/11/cape-town-restaurants-are-starting-to-take-the-piss/

    If I recall correctly Harry went as far as compiling a list and publishing some names on his blog.

    Seeing the need to expose such behaviour, as well as restaurant and retailers who do not pay their bills even after having sold your wine months before at massive markups, I registered a domain http://www.swines.co.za (or if you’re into acronyms, the Society for Wine Industry Norms, Ethics and Standards) a number of years ago, but never got around to getting it going.

    I’ll be more than happy to donate the domain to anyone who feels passionate enough to set up a blog to expose unethical behaviour in the wine industry. Unfortunately it probably won’t have much effect, apart from informing the small producers who do not have budgets for listing fees where not to go and waste their marketing time.

  20. KwispedoorJanuary 28, 2015 at 9:59 amReply

    If there’s nothing wrong with this practice, restaurants and producers should have no problem with it being public knowledge. But (like reverse osmosis machines) it’s all shrouded in secrecy…

  21. Tim JamesJanuary 28, 2015 at 9:07 amReply

    It’s very nasty, I agree (just as when shops sell good shelf space, or only stock certain brands). But where do those who believe in the beauty of the free market (not me) draw the line? It’s never a level playing field. Producers who can’t afford a distributor’s fees suffer compared with others – they don’t have well-connected and experienced people to, eg, take their wines around to restaurateurs, retailers and journalists to taste. Producers who can’t afford to advertise, or participate in trade shows, suffer. Should we say that all producers should agree not to do any of these things?

    David implies that it is the big brand owners (presumably Distell first and foremost), with dull wines that buy space on lists. But even if you accept that all the wines of such brandowners are dull, etc (which I don’t) there must also be a whole lot of others who are handing over money to appear on substantial winelists, if it’s a widespread practice. So the practice doesn’t necessarily reduce the range of wines on offer (except at places like the Spur) – it merely filters out some, not all, of the producers who choose not to pay the fee, or can’t afford to. I suppose it’s the little-known producers who get filtered out (and, incidentally, I presume that they too are trying to “maximise their profits”?). I can’t imagine that Rupert and Rothschild, Kanonkop, Mullineux and Sadie (as examples that most serious restaurateurs would want on their lists) are asked for listing fees.

    It’s all a pity. But it’s called competition – and, as usual in competitions, those with most money and power are likely to have the advantage. Limiting those advantages is a tricky business. But let’s try the way that everyone suggests but does nothing about – actually name the names of the restaurateurs and purchasers involved, don’t just say it would be a good idea to do so. Who demanded R6500 from you, David?

  22. Erich ZeelieJanuary 28, 2015 at 9:03 amReply

    A well written article David.

    Seeing that we all concur on the naming and shaming, perhaps we should put it into effect?

    A quote overheard from a prominent wine farmer a while back: “The last time the farmers stood together was on a boat making its way to Ceylon.” Unfortunately it is a sad truth that our industry is regarded as knife-fight where no rules apply and each participant is trying to slash the other’s throat. So much more can be achieved through co-operation and collaboration.

    To paraphrase the great Madiba, “alone we are weak, together we are strong”. That is the only way how we will be able to move our industry forward, with the people growing the grapes and their sundries actually being better beneficiaries.

    Amandla!

  23. Tania ZimmermanJanuary 28, 2015 at 7:59 amReply

    “They should be named, shamed & boycotted by the wine industry!”

    The Sa wine industry couldn’t organise a hose if they were all in room on fire. Look at the mess they’ve made of their price positioning in the UK.

  24. Mark McCarthyJanuary 28, 2015 at 7:35 amReply

    I could not agree more. David is spot on.

    This is a common practice amongst many restaurants. They should be named, shamed & boycotted by the wine industry!

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