By Amy McCarthy
By Scott Reitz
By Scott Reitz
By Lauren Drewes Daniels
By Alice Laussade
By City of Ate
Yet the Beckmen Estate Cabernet Sauvignon carries a suggested retail price of $24.99, less than half Tony's "deep-discounted" price. After surveying a few restaurants, we found the Beckmen priced at a low of $39 at Sapristi! Bistro and Wine Bar in Fort Worth to a high of $52 at the Oak Grill in Ojai, California--a far cry from the up to $1,200 Winkler presented.
"That guy's making a killing," says Beckmen Vineyards winemaker Steve Beckmen. "I'm on the wrong end of the business."
So, it seems, are Tony's customers.
According to sources in the distributor and wine brokerage businesses, Tony's Wine Warehouse built its retail trade in large part by buying heavily from distributor closeout lists. From these lists, retailers and restaurateurs can buy wine at steep discounts, sometimes for pennies on the dollar. The complexion of these lists is varied. Sometimes it consists of what's left of the previous year's vintage after a wine producer releases the most recent vintage. At other times it is seeded with overstocked wines that may have been neglected by distributor sales forces, overwhelmed by the sheer number of labels.
And then there are the "distressed" wines. These are wines that have been damaged. The reasons can range from extremes in heat or cold, to packaging failure, to age. "It's well to remember...that 90 percent of all of the wine produced in the world is as good when six months old as it is ever likely to be, and most of those wines will deteriorate, not improve, after their second birthday," states The New Frank Schoonmaker Encyclopedia of Wine. So the potential for distributor warehouses to accumulate stocks of wine that might be past their prime is marked.
Distributors have a huge incentive to unload these idle wines, as their inventory is subject to ad valorem taxes. "We're all looking for an outlet for this stuff," says a source who once worked in distributor sales. It's how Monzain finds a market for these wines that draws fury.
Once he purchases the closeout wines, or any wines, for that matter, Monzain marks them up--not at several times wholesale or several times the discounted closeout price, but several times the producer's original suggested retail price. Example: Among his warehouse aisles, formed by rows of pallets stocked with wine cases, is a 1999 Husch Mendocino Chenin Blanc. According to Husch Vineyards, this wine had a suggested retail price of $8.50 upon release. Tony's sells the same wine for $24.95, a hefty three times retail markup.
Monzain--who strenuously denies Tony's buys most of its wines from closeout lists, and indeed, the store does carry some current releases--vigorously defends the pricing on this wine. "It's 1999. It's not a recent release," he says. "As a wine gets older, it gains in value...All wines gain in value as they get older."
"That's definitely not true," says Ronn Wiegand, publisher of trade journal Restaurant Wine and the first person in the world to hold both Master of Wine and Master Sommelier titles, the industry's highest professional designations. Wiegand counters that the percentage of wines that do gain in value as they age is extremely small, well under 5 percent.
Monzain explains his business model demands these high markups, because he offers customers tasting samples before they purchase. "Last year we opened 3,400 cases for sampling," he says. "So we cannot be at the same markup as everybody else because of that extra expense. But people are happy to be able to sample."
Yet not every wine producer is happy about the impression their wines will leave with inflated price tags, tasting samples or not. One of the wines included in the Tony's wine class list is the 2001 Foppiano Russian River Valley Cabernet Sauvignon. The Tony's "front line price" for this wine is $44.95. That price drops to $29.97 if it is purchased in a mix-and-match case (12 bottles) from the class list. Yet the suggested retail price for this wine is $17.50. "I think somebody really upcharged it," says Jo Diaz, spokeswoman for Foppiano Vineyards. "It's an outrageous price...Wow, whoever is doing that is doing an injustice--to the wine, to the family, everything."
Professionals in the Dallas wine trade, some of them Tony's competitors, fear they will permanently lose customers once they learn they've been lured by false wine information to purchase very simple wine at highly inflated prices. What will these consumers think once they discover a wine for which they paid $30 at Tony's costs less than $15 at a wine shop in Plano?
"It's hard enough to get people to drink--in my world--wines with funny-sounding names," says one wine salesperson. "When you make them expensive, and if they're closeouts that may have been wines that have seen better days, I'll never get that customer back."