How wine is priced at restaurants

Low Prices, Classic Vintages: Wine article from WSJ
about fine dining in San Sebastián, Spain


Spanish restaurants make some memorable bottles, out of reach in America, affordable again
By STAN SESSER
San Sebastián, Spain

At a New Orleans restaurant in the mid-1980s, I saw a 1971 Trotanoy Bordeaux, a great wine of that vintage, listed for $19—$119 should have been more like it. I called the waiter over to order every bottle they had, wrapped to go. Sorry, the waiter replied, you have to drink what you order on the premises. So my friend and I stayed at Commander's Palace past midnight and consumed three bottles.

Those days of unexpected bargains are long gone. Or so I thought, until a recent dinner in San Sebastián in the Basque region of northeast Spain, one of the outstanding eating cities in the world.

I was looking over the lengthy wine list at Arzak, which has three Michelin stars and prices to match; its main courses range from $75 to $92, and that's a la carte. But there was another shocker pricewise. While so many restaurants use wine as a major profit center and never pass on to their customers the low prices they paid for their older wines. at Arzak, many of the older vintages were actually cheaper than the current release.

For instance, the restaurant was asking $950 for the 2006 Mouton Rothschild, a famous first-growth Bordeaux, but only $700 for the 1970 Mouton, an excellent vintage. The 1970 should have been priced a lot higher than the 2006, due to its rarity and because it would taste expansive, not closed-in, like the too-young 2006.

I asked owner-chef Juan Mari Arzak what was going on. "These wines were bought long ago," he said, "some of them by my grandmother. We raise the prices a bit each year but not very much. We want people to enjoy the wine; that's the way it should be."

My dining companion, the food and wine tour guide Gabriella Ranelli de Aguirre, an American who has lived in San Sebastián for two decades, said that keeping prices down for older vintages was typical of those San Sebastián restaurants that had been around for many years. Although it was 1 a.m., she insisted we drive to a restaurant called Rekondo.

We kept pounding on the door until the owner, 75-year-old Txomin Rekondo, appeared. His sleepiness vanished as soon as he heard that I was going to ask about wine, his favorite subject.

Mr. Rekondo started by handing me the thickest wine list I've ever seen, a 221-page ledger with each entry neatly handwritten. His cellar, he said, comprises 80,000 bottles in a series of underground rooms; when one room fills up, he simply has another one dug under the restaurant's parking lot. Rekondo itself features an outdoor terrace shaded by a huge tree, and a big grill separating two traditional dining rooms. But the first thing you see when you walk in is a wine bar, with wines offered by the glass.

When I looked at the prices, it was New Orleans all over again. The great 1970s Riojas of the family-owned, more than 130-year-old López de Heredia were priced between $54 and $81; by contrast, Per Se restaurant in New York offers two such vintages on its wine list for $575 each. (A spokesman for the Thomas Keller restaurant and its sister, French Laundry in California's Napa Valley, said: "Our international wine pricing includes the cost of importation, local distribution, taxes and often times a broker fee, which typically triples the original price of the wine. In Europe, most restaurants can purchase directly from the winery, so are not subject to these costs.")

For the most expensive French wines, it might turn out to be cheaper to fly to Spain, have dinner at Rekondo, and fly back to the U.S., than to order the wine in your local upscale restaurant.

The bargains didn't end with Europe. The 1982 BV Private Reserve Georges de Latour, at that time one of California's outstanding Cabernets, was priced at $49. According to winesearcher.com , it sells for an average of $116 in U.S. wine stores that carry it—before any restaurant markup is imposed.

For an American in Spain, almost every wine list is a bargain, since restaurants tend to mark up their wines about 50% over retail, compared with two or three times retail at many American restaurants. But Rekondo was clearly something special, and Mr. Rekondo showed me around his complex of wine cellars, with dozens of classics, from an 1890 López de Heredia to an 1893 Mouton to a 1926 Haut-Brion, another first-growth Bordeaux.

"I opened this restaurant in 1964," he stated. "I started putting wines away immediately, because nobody collected wines at that point." Why has he left the prices so low? To the contrary, he answered. "For a long time we didn't raise the prices at all, but then we realized our customers wouldn't appreciate them unless they had a high price. So seven or eight years ago I raised all the prices. But we realized they couldn't be off the charts. We're looking to give satisfaction to our clients. That's important, isn't it?"

Mr. Rekondo has developed an inventive way of dealing with a major problem when someone possesses 80,000 bottles of wine—the probability that some of them will get too old and begin to oxidize. He puts those wines he suspects have reached their time on a special list, with big discounts from the already low prices. The day I visited, that list, all from the 1970s and 1980s, ranged from $18 to $27. The food isn't that pricey either. Rekondo specializes in steak, and an entrecôte costs $27.

There's one piece of good news and two bits of bad news on Rekondo. The good: Mr. Rekondo's two daughters, Edurne and Lourdes, are active in the business. (Edurne, who shares her father's love of wine, has already defied tradition by scanning his handwritten wine list into a computer.)

Now the bad: You can't order wine to take back home to the U.S. Everything has to be drunk at the restaurant.

Also, Mr. Rekondo says he's jacked up the prices of some of his favorite wines that he can't bear to part with so that they won't sell. As an example, he points to Pétrus, a Bordeaux from Pomerol, one of the most expensive wines in the world. The Pétrus from the great 1982 vintage, he says, is €3,000, or a bit more than $4,000.

That price might not prove quite the deterrent he hopes. The French Laundry restaurant in Napa Valley has the 1982 Pétrus on its list for $12,875.