Beverage report

A two-part series on how to better your beverage program.

By Leslie Wu

There’s a new consumer out there: one armed with more knowledge than ever about wine and spirits, iPhone in hand and apps at the ready. To add to this challenge, changed driving laws and a newly released set of Health Canada low-risk alcohol drinking guidelines, not to mention the aftermath of recessionary spending, all add up to a customer watching what they drink and how much they spend.

Given these factors, are you making the most out of your beverage program’s profitability? We talked to experts across the country in a two-part series about how you can lift your spirits (and other potables) to the top shelf.

Part one will look at the basics of building a wine and spirits list, as well as changing customer tastes and tips on how to make your beverage program more profitable.

“The ‘millennial generation’ has been a boon to the beverage business,” says Ted Kalaboukis, managing director, Andros Communications, consultancy to the beverage alcohol industry. “These consumers are much more open to trying new types of beverages with the caveat that building and retaining brand loyalty is much more challenging, as is the challenge of standing out in a plethora of brands.”

This spirit of adventure, however,  can also lead to a customer that is more discerning and harder to please.

 “As the consumer’s level of sophistication improves, this offers a further challenge to restaurateurs,” says Shari Mogk-Edwards, LCBO vice-president, merchandising & Vintages.

Whether you’re a new restaurateur building your list from scratch or just want some ideas to make your list shine, here are some suggestions on how to differentiate your beverage items from the rest of the pack.

Keep your focus

At your bar, it’s important to start small. Begin with high quality ingredients and on  the small side of things, says Colin Turner, bar manager at CinCin Ristorante+Bar. “You can’t get a collection of 150 scotches overnight. You have to let it build naturally. Depending on the size of your restaurant, start with a list of five to seven cocktails, and make them consistently and well.”

Apply the same focus to your wine list. “Don’t try to be the jack of all trades, unless you’ve got a million dollars to spend on your list,” says Taylor Thompson, wine director at the Ritz Carlton Toronto. “Choose an area and own it. People will look at your wine list and call it something and you want to be able to choose what they call it.”

Balancing act

Although you don’t necessarily need a big wine list, be sure that it has sufficient variety to interest the consumer. “We always like to encourage balance, whether it’s through the familiar retail and consigment, balance of price point, and new exciting versus traditional,” says Craig De Blois, sales manager at Lifford Wine Agency.  “You need staples such as a pinot noir, malbec, California chardonnay, and New Zealand sauvignon blanc, but also make room for small producers and interesting finds.”

Don’t be afraid to venture outside of the fan favourites. “What works for me is building a wine list that’s unique,” says Owen Knowlton, restaurant director and wine director at Vancouver’s West. “You don’t do anyone any favours by putting wines on your list that are big sellers in liquor stores. Don’t list the top 10 wines that anyone can find, instead, find a boutique or lesser known winery or region in order to introduce the consumer to something that they might not be familiar with. It used to be that people brand shot, but now they’re putting themselves in the sommelier’s hands.”

It’s always important to consider your market. “If you’re a pizza place, look at maybe offering a craft beer or something to inspire the customer to come back and try,” says Turner.

“A key for restaurateurs is to keep a wide array of flavours on the drink menu and know how they compare and contrast to the food offerings,” says Forest Kenney, communications manager at Molson Coors Canada. “Typically menus have done an okay job of linking wine notes to food profiles, but wine’s diversity of flavour only goes so far. An array of beers, from porters to stouts to lagers, all bring their own unique characteristics, as do flavoured beers or even ciders. Pairing suggestions can really be expanded in the future which could really help a restaurant’s average cheque size.”

Change it up

“Wine lists need to be diverse (price, style, geography) and constantly evolving. By-the-glass offerings and “flights” are key,” says Heather Rankin, sommelier and co-owner of Halifax’s Obladee, A Wine Bar. “Navigation should be intuitive, friendly and informal. Local offerings (if you live in a wine-producing region) should be considered. Gone are the days of the annually updated wine list—it has to be flexible, ever-changing.”

You don’t, however, need to dive head first into changing up your wine list, says Will Predhomme, senior sommelier at Canoe restaurant.

“You can gradually move into it. You don’t want to take away from your big movers, or remove the recognizability factors, but you can slide in things by putting it on the list by the glass or pairing it with an item on the tasting menu. Recognize where your drivers are: you don’t want to alienate people who like chardonnays, for example.”

The price is right

Vertical pricing is one thing that helps wine sales tremendously in restaurants, says Hans Jost, owner of Jost Vineyards. “I see some restaurants that think they can’t sell a bottle of wine over $35, so they don’t stock it. If you want to start having wines selling at higher price, you have to have wines that are higher in price than the category that you want to in order to move people towards the middle ground. There’s no easier and cheaper method for a restaurant to offer, and you hardly have to inventory any products at the high end. Don’t deny customers the chance to spend money on wine.”

“I think in this economy, you have to have balance between high end and low end wines,” says Knowlton. “It’s nice to have a themed wine list, but don’t count people out.  Some people want to go high end or special, but you have to have beautiful value on your list.”

Raise a glass

Perhaps it’s time to reevaluate your by the glass program. Are you offering diverse selections or new offerings? Steve Kriaris, president of Kolonaki Group, advises restaurants to offer more wine by the glass.

“I also feel that the new wine dispensing machines are brilliant for BTG programs,” he says.



At the table

Looking beyond the list, when it comes to wine and spirit sales, much of the perceived value for the customer comes from the interaction with your staff.

Story time

People like stories and people like solutions, says Kalaboukis. “Offer both: whether you offer wine/beer or spirits pairing suggestions with your entrees and appetizers or whether you tell a brief story related to the beverage product on your menu or wine list, it engages your customer,” he says.

Be sure your waitstaff, not just your sommelier or bar manager, is readily equipped to deal with questions from customers. Educate your staff by bringing in brand ambassadors from time to time so that they can understand where spirits or wines come from, says Turner.

Ask the right questions

Sometimes, a customer purchase can be swayed by something as simple as how that question is asked. “In a careful way, assume the sale,” says Jost.

“Ask ‘and what kind of wine would you like this evening?’ rather than ‘will you be having wine this evening?”

Keep it fresh

How often do you change your table displays? “Customers are always influenced by table features, cocktail list, promotion and wine menus, so by changing them up monthly and working with premium brands as part of these offerings will generate increased revenues,” says Kenton Tasker, director of sales and marketing for Crystal Head Vodka & Patron Spirits. “By changing them up on regular monthly/possibly seasonal bases will keep things fresh and new for returning customers.”

Taste test

Offering a small sample or splash of wine to the wine person at the table can work wonders for a sale, says Jost. “It shows confidence on the restaurant’s part for what they’re doing and good faith in the product, and because of the way that human nature works, you’ve almost created an obligation to buy.”

Some wine agents and representatives will cover the cost of a bottle for tableside samples.“A bottle goes a long way, the consumer loves it, and the restaurant can move a lot of wine in style,” says Jost.

Tips on elevating the bar experience

As soon as the customer sits at the bar, there’s an opportunity for connection.

At BarChef in Toronto, the mise en place is set on top of the bar, so the customer is awash in scents of bunches of herbs, spices and various infusions. “It’s done with the idea of efficiency and aesthetics,” says BarChef’s mixologist Frankie Solarik. “The artful design of the setup on the bar is arranged to create a sensory perspective and create more of a personal experience, where customers are drawn to ask about infusions or different techniques. It’s like sitting at a chef’s table.”

Looking to expand a customer’s horizons? Offer them a flight of spirits that combines the comfortable and the new, says Colin Turner, who provides guests with flights of bourbon at CinCin Ristorante+Bar.

“It’s all about giving them the experience at sitting at bar, and hopefully they carry that expanded view to the retail side when they purchase at their local liquor store,” says Turner.

What people are drinking

Wine

There’s a definite interest in lighter style wines, according to sommeliers from across the country. “I’m seeing customers looking at more acid-driven wines as opposed to sugar or fruit driven wines,” says Will Predhomme. “Rather than the immediate gratification of a richer, fuller, heavy fruit, heavy wood wine, they’re going for crisp wines that aren’t as alcoholic or big. I think we’ll see that in the next five years, we’ll see more acid-driven wines that are better pairings for food.”

Owen Knowlton also sees people moving away from big reds and oaky whites towards cool-climate, fruit-driven wines that are lighter and not overly tannic for drinking with dinner. “Food friendly, such as pinot noirs from Oregon, have good acidity and cleansing aspects with dinner, as opposed to the soft acids and massive tannins of a shiraz, for example,” he says.

Hans Jost also sees more interest in lighter wines, with about 10 or 11 per cent alcohol. “Whether it’s for health reasons or drinking and driving rules, I’m not sure,” he says.

Heather Rankin in Halifax sees people experimenting with obscure varietals and regions. “People are branching out from Aussie shiraz and sampling less common varietals from say, Portugal or South Africa (or even wines from their local region if they happen to live in wine country). They’re also interested in knowing what they’re drinking and learning about where it comes from/how it’s made,” she says.

B.C. wines are more popular out west than before; in fact, in most Vancouver restaurants, it represents about 30 per cent of the wine list, says Knowlton. “Even with international clients, there’s no reluctance to order local, and the price range is not an issue.”

Knowlton sees good value in wines from northern California, such as the Sonoma coast, with full-bodied style pinot noirs with good acid and low tannins.

“Chardonnay’s taking a big piece back,” says Taylor Thompson. “I can sell chardonnay to everyone. It’s Ontario’s best grape.”

He also sees California cabernet sauvignons continuing to be big sellers, and is also looking at high-end Italian wines such as Brunellos and Barolos.

Predhomme sees more restaurants starting to list more quality local wines and also support for artisanal product. He also thinks that wines from Greece, Portugal, Austria and Croatia are doing a good job in changing consumer perception about wines from those regions.

In terms of consumer buying at the LCBO, going local is resonating with VQA customers, and a price band of $15 to $20 is driving this growth, says Carolyn O’Grady-Gold, who is the director of the Vintages program for LCBO (this represents a premium product, as most LCBO sales are under $10.)

Consumers are responding to regionality, especially in areas like California. Interestingly, consumers are also gravitating towards blends, such as the Cupcake Red Velvet wine. “Customers don’t mind paying a premium for something that says ‘red wine’, as long as it works in terms of their taste profile. People are trying things that they can name, that aren’t difficult to pronounce, that they can remember,” says Shari Mogk-Edwards.


Champagne/Sparkling wine

Sparkling is starting to be more mainstream than celebratory with the consumer,” says Mogk-Edwards, who sees growth in cremant and prosecco, Ontario sparkling and Cava.

Celebrity endorsement from rappers such as Jay-Z and Opera for brands such as Armand de Brignac Champagne (aka Ace of Spades) has also helped to drive customer consumption, says Steve Kriaris.

Spirits

There is a resurgence in classic cocktails such as the whisky sour.

The resurgence of classic cocktails is reflected in a similar shift in premium spirits. “We’re seeing a lot of brown spirits, such as American bourbons, ryes, scotch and Tennessee whisky,” says Colin Turner. “People want more flavour. Their palates are more educated and adventurous than they used to be 20 years ago, when all they wanted in a cocktail was a vodka coke, or anything sweet in a martini glass.” Turner is seeing people requesting spirits by name and brand.

There’s a new generation of whisky consumer that are being recruited by American and Irish whiskey, says Chris Robertson, business unit director, spirits and beer with the LCBO.

Roberts also sees growth in LCBO sales of spiced rum products (19 per cent over last year), especially a new category of Canadian spiced rum.

Beer

There’s a growing appreciation among consumers for beer’s role at dinner table, says Robertson.

“There are a lot of options – some might argue that beer is a better pairing for food, given the carbonation factor. The LCBO is seeing specialty and more high end accounts  purchasing craft beer, and it’s one of the fastest growing segments (albeit on a small base),” he says.

Beer pairs well with food.

In terms of low alcohol or calorie beers, there is some movement in this market, says Forest Kenney. “We do see that our lower alcohol beers are growing, but that growth isn’t being fueled solely by their alcohol percentage, more on the unique value proposition that they bring to the drinker.”

To app or not to app

Nowadays, a sommelier or bar manager is likely to be confronted by a customer with a smart phone app that suggests food and beverage pairings. Some of these apps are moving beyond basic “red wine with meat” style advice and using the restaurant’s menu or specific review or score.

Some bar managers see apps as a good thing, but know that these guests require careful handling. “The guest feels more empowered, armed with information about ingredients,” says Turner. “I may guide them into a slightly different area by saying ‘that looks like a great drink, can I create something similar for you?’”

Predhomme feels that apps are useful for à la minute checking of scores, but, he cautions, scores are not necessarily in sync with each person’s taste.

Thompson also doesn’t think that apps are specific enough. “Every bottle, dish and person are going to be different. People relying on an app are going to say no to a lot of things…that’s closing a lot of doors.”

Apps, however, can also make for a more engaged customer. “It’s a bit of information that means the customer isn’t so tentative about talking about wine, and opens up conversation,” says Knowlton. “It’s a tool that’s going to help me, if anything. I’m not afraid of it.”

Apps can also be a tool for sommeliers and bartenders themselves, not just the consumer.  “When I started, I had to go flip through a book and pray it was in there,” jokes Dave Mitton, president of the newly formed Ontario chapter of the Canadian Professional Bartenders Association and owner/operator and “drinkslinger” at the Harbord Room. “Now I have an iphone.”

Consumers have so much information available to them today; educate yourself on products you like to see, urges Tasker. “Many brands now carry QR codes that immediately take you to the supplying company’s website that provides detailed information on their location, facilities, product attributes and quality. I say embrace this information and make a conscious choice when selecting your products.”


Drinking trends in Ontario’s

full-service restaurants

By Vince Sgabellone

Vince Sgabellone is a restaurant industry analyst for the NPD Group, which has more than 25 years experience providing consumer-based market information to the foodservice industry. For more info, visit www.npd.com or contact vince.sgabellone@npd.com.

Consumers have been cautious about their restaurant spending ever since the recession hit in late 2008.  Not only are they visiting less often, but searching to maximize the value from every single foodservice dollar they spend, consumers are choosing to cut back on the add-on menu items that operators count on to drive their average ticket and profits; including desserts, side dishes and appetizers.  Among the hardest hit segments of the menu is beverages (see chart below).

Ultimately, the beverage category of most importance to the full-service restaurant (FSR) segment is alcohol.  One out of every three adults consumes an alcoholic beverage when they visit an FSR, making it the most frequently ordered menu item.  Unfortunately, one third of consumers report that they are ordering less alcohol in FSR restaurants than just a year ago.  

Shifting tastes

Beer accounts for about half of all alcohol occasions in FSR restaurants, a share that has held steady in recent years.  

Cocktails form the smallest portion of the alcohol mix, and have been in steady decline, with wine picking up the incremental share.

As Canada’s population continues to age, this trend can be expected to continue.  Wine consumption follows a steady growth curve as we get older, while cocktails are more favoured by the younger set.  Beer consumption peaks somewhere in between, dropping off as we age.   

The recent decline in FSR traffic occasions can be attributed largely to males, who are responsible for the majority of the beverage alcohol sales.  Female consumers are increasing their FSR visits, and their likelihood of imbibing, but continue to trail the male alcohol consumption rate by about 25 per cent.  This translates into a decline of 8-million beverage alcohol occasions from recent highs.

At the bar

Canadians enjoy visiting bars to hang out with friends and socialize, according to the NPD Group, FSR Dining Report.   

Most operators capture less than half of their patrons total bar occasions, as most bar visits tend to be spontaneous, rather than planned.  This makes it imperative that operators create a memorable experience during every bar visit.  

Alas, there is a wide variance in satisfaction with the bar experience among major FSR operators, indicating an opportunity for improvement among a number of top operators.

Revenue growth opportunities

The increasing popularity of wine creates some exceptional revenue opportunities for FSR operators.  Most significantly is the fact that wine drinkers tend to spend more on their total meal than beer or cocktail drinkers.  

Much of this traces to the simple fact that the demographic that orders wine also tends to have more disposable income.  

Beer drinkers meanwhile are a very loyal bunch, with 40 per cent deciding to order their favourite beer on every occasion.  

The other 60 per cent of beer drinkers can potentially be influenced by server suggestions, menu mentions, and a wide range of other merchandising tools.  

Premiumization is another technique that FSR operators can employ to drive the profitability of their alcohol occasions.  

This concept can be applied to improve bar snack menus, create premium food and beverage pairings, and upgrade the overall bar experience.

The last call

Canadians are cutting back on their visits to FSRs, but remain committed to maximizing their gratification of each and every occasion.  

Operators that can appeal to their customers’ sense of adventure, while creating an atmosphere that builds loyalty, will be able to drive their beverage alcohol sales and recapture some lost revenue.





Stay tuned next month for  part two of this series on beverage decisions, to  be continued in January.
In it, we’ll explore new drinking and driving laws and their effects    on  consumer spending. We’ll also take a look at  ways to differentiate your beverage program using elements like barrel -aged cocktails.