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Tim James: Listing fee or “reciprocal gesture”?

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You’d surely have thought this good enough business, even for the most sharkishly-minded: a bistro owner buys a modest, but well reputed wine from the producer; that evening it’s on his wine-list at a mark-up of well over 200%. It’s available by the glass too – a glassful costs 20% more than was paid for the whole bottle. If you were a customer and you realised, you might start wondering if you weren’t being ripped off (just a bit).

The Stack, Cape Town.
The Stack

But that sort of egregious profit is apparently not enough for Cape Town club The Stack (with bistro, bar, function rooms, etc). A slightly disguised listing fee is now being demanded (the nasty practice was highlighted last year on this website, here). Wine producers have been told by Stack owner Nigel Pace that “we are requesting that wine farms sign up for membership at The Stack at the very favourable rate of R12,000 for the year (normal rate is R15,500)”.

But, no, that’s not a listing fee, it’s “a reciprocal gesture”. Yet the reciprocal gesture that’s required gets bigger the more wines the producer has listed. Mr Pace blandly reveals the true nature of the deal by adding that “Should we end up listing more than one of your wines then we will add R1,500 per additional wine onto your membership fees.”

When I approached Mr Pace for comment he sent me a document which calls this demand for R12 000 a “promotion” and says “We do NOT view this as in any way similar to a listing fee”. In his email, he refers to the increased “membership” fees for additional wines, the crudely obvious implications of which have clearly come to embarrass him:

“The question of having more than one wine listed has raised a flag about this promotion potentially being seen as a ‘listing fee’ in disguise. We understand how this might have come across… [T]his is not – nor ever has been – our intention and as such, we will not pursue the incremental cost to wine producers having more than one wine listed.”

That is, our flimsy disguise slipped a little, so we’ve had to adjust it. Actually, the sleight of hand is even more devious, as is revealed by probing the Stack website. The R15 500 annual membership fee on which Nigel Pace is offering his “favourable” discount (and which he intimates is tax-deductable “as a marketing cost”) is the fee for what are called “City members”. Country members (living more than 65 kilometres distant from the club) are charged R11 500. Now, almost by definition, most wine producers would fall into that “country” category in the unlikely event they wanted to become members. So in fact the “favourable” rate starts looking to be quite the reverse – even before the fee increases consequent on having more wines listed (additions that have apparently now been dropped).

But that’s beside the point. There are “perks” involved in being a member of this club (if you want such perks), but being forced to expensively become a member if you want your wine to be listed is essentially a wordy version of being simply being told to pay the money or lose the listing. And it’s not only the producer losing out, of course (and the taxman) – it’s the customer who gets a wine list that’s based on producers’ willingness to acquiesce in a practice which most of them would probably acknowledge as sordidly unacceptable if they knew about it (especially if they also knew they were also paying more for a glass of wine than the restaurateur/club owner paid for the bottle).

Incidentally, the producer who (shocked, amused and incredulous) forwarded me the Stack email-of-demand and gave me the example in paragraph one has politely declined to pay up. It is to be hoped that more will do so.

When Christian Eedes last May wrote about the issue of wine listing fees listing fees charged by restaurants he suggested the practice was “at least distasteful if not outright illegal” and that it “continues unabated”. To repeat what he said then:

Winemag.co.za condemns the practice and urges all wine producers to resist paying them while we will also continue to expose restaurants who solicit such fees – the only way the situation is going to be addressed is to continue to bring it to the public’s attention.

  • Tim James is one of South Africa’s leading wine commentators, contributing to various local and international wine publications. He is a taster (and associate editor) for Platter’s. His book Wines of South Africa – Tradition and Revolution appeared in 2013.

9 COMMENTS

  1. Call it what you want: if it walks like a duck, talks like a duck and, in this case, stinks like a duck, it’s a friggin’ duck.

    And only a 200% mark-up on wine? That would mean one would be able to order something like a FRAM Shiraz at comfortably less than R200 (remember, they pay trade prices). Unfortunately, it’s more like an unashamedly greedy 300% – 400% mark-up for most restaurants.

    Good work. Keep on naming and shaming these places. And please, not only them but also the producers who help to perpetuate this repugnant practice by paying these preposterous fees.

  2. Completely agree that listing fees are detrimental. But remember that retail chains do it too, for all products. Just takes a different form, with rebates, promotional allowances and mandatory discounts. We know that the promoted wines are by far the most sold in retail. Those promos are paid for by the producer, so essentially a fee to get in front of the customer. Not too different to a listed fee when you accept the psychology of purchasing wine.
    Those colourful spreads that you get through the mail…? Pretty much all paid for by the producers featured.
    Unfortunately for wine producers (and consumers) the economics of it will always win out. And with too many samey wine brands and too much decent quality mid range wine around its not going to change any time soon. It’s incongruous with the constant talk of trying to increase the prices paid for SA wine (and it’s by no means unique to SA).
    It’s noble to say that producers should refuse to pay the fees and there are some that can get away with it. But for most it’s idealistic.

  3. Kwisp, perhaps my mark-up indication is ambiguous. A 100% mark-up would imply doubling the (trade) price. A 200% mark-up would imply trebling it. In this case the price to the consumer was well over three times the trade price. (Though much more for the glass price – unquantifiable as I don’t know the size of the glassful.) I seldom notice a larger mark-up than that in Cape Town restaurants.

  4. Good work. Keep on exposing. I will not support any establishment that requires listing fees. Shame on them if they cannot make a selection based on quality, value and how it pairs with their menu. Disgusting practice.

  5. free trade ?? whats wrong with a restaurant setting its own terms of trade ?
    is the wine farms so desperate that they will pay the fees .
    if they are unhappy just move on.
    the restaurant pays the rent , hires staff , runs the business , why cant the ENTREPRENEURS run business as it decides .
    at winemag u must pay a fee to have a wine tasted – is that wrong ?? no its the terms of business .

    • It’s a fair comment to say that the restaurant(s) in question are setting their own terms of trade. But why then aren’t they charging the food suppliers to use their products? Why is wine the product to be exploited? Let them charge Clover or Gastro Foods a listing fee to use their m
      dairy products or meat! Do you think these suppliers would fall for that? Of course not! The fact of the matter is that these restaurants are already making upwards of 3 times the money they paid for a bottle of wine – is that not enough incentive to stock a product? Why should wineries pay over and above that 300% ? It is greed, simple as that and I for one will not support restaurants, nor wine producers who pay listing fees.

      • well i guess clover and gastro foods isnt that desperate for business as some wine farms.
        of course u mustnt support them.
        but thats the choice for all involved , restaurants , wineries , clients.
        i still think its a free trade area and the buyer sets the rules , thus u as a buyer from restaurant can make your rand speak , just like the restaurant makes its rand speak.
        i guess there is no problems with many winemakers taking kick backs from barrel merchants or chemical suppliers ?? no vineyard managers will tell u about the kickbacks for money they spend on vineyard chemicals , ask them about other nightly activities provided by the GIF SMOUSE

    • Sure, free trade and all that. Nobody said it’s illegal. It’s just an ugly practice all round. Which is why they go to great lengths to try and stuff the wolf into sheep’s clothing like The Stack does here. You’ll never see a brass placard outside of a restaurant saying, “Proudly Charging Listing Fees”.

      It would be almost acceptable if these kinds of places had a great variety of very good wine, great stemware, a temperature-controlled cellar, always served the different wines at the correct temperatures, had capable sommeliers that provided sterling wine service and could suggest properly thought (and tasted) through wine & food matches. At least the consumer and the producer will then pay for added value. But they don’t. The kind of establishments that provide the above mentioned, generally do not partake in legal listing fee extortion.

      Free market or not, we all know that legal listing fee extortion excludes the smaller producers that don’t have the budget for it. We also know that it excludes ethical producers that don’t have the stomach for this arrogant greed fest. Not to mention that it results in a shoddy end product for the consumer. If legal listing fee extortionists are not ashamed of what they are doing, they should not have a problem to appear on a data base so that the consumer may be informed and so that the free market may operate enlightened. Please. Someone. Just start it off.

  6. Apart from requesting a listing fee, however it’s disguised, what disgusts me is that the wine went on the list the evening the wine was delivered. Reasonable mark-ups I understand, but those should include treating the wine so customer gets best experience. This wine must’ve been disturbed during delivery & subjected to changes of temperature. Then what is glassware & wine service like? There is no excuse for poor service today with SASA (Sommeliers Association) & WSET courses. That The Stack has backed down on the incremental charge tells you everything you want to know about this opportunistic (not business, Vines) move. There are much better, more effective ways of marketing wine producers; listing fees aren’t one.

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