Tom Doorley: ely Rewriting The Wine Rules
I have always been a fan of ely, the small empire founded by Erik Robson with whom I worked many years ago at Mitchell’s, the venerable wine merchants, when I was a student. Erik has an unerring nose for excellent wine and he has a head for business too. The little empire has been growing steadily in terms of bums on seats.
No better man, then, than to address the thorny issue of value for money when it comes to having wine when you eat out. In a recent email he pointed out a rather startling situation.
“There have been considerable cost increases in Ireland pushing wine beyond acceptable price points in terms of the quality-value ratio,” he wrote. “We have global shortage in wine production, emerging markets in Asia, vineyards increasing prices, transport costs and the two duty hikes in the past twelve months. It’s worth noting that a particular Côtes du Rhône costing €4.25 wholesale in France costs €10.50 here, before the respective VAT rates of 19.6% and 23%.” And, of course the standard 70% mark up on the wholesale price, plus VAT on the whole lot.
Erik is not going to make a lot of friends in the restaurant business, but he is certainly going to win a lot of happy customers because he is bringing down the cost of wine in ely and taking a hit in the process. The logic is that he knows happy customers come back.
“I’m in the process of changing some of our bonding arrangements which will reduce costs but in essence the main factor in reducing prices is simply taking a smaller margin on the now higher cost bases,” he tells me.
“There’s no support from the suppliers because I haven’t sought any (they are under enough pressure as it is) and operating costs certainly haven’t reduced,” he says.
“Nor is this a reaction to the economy,” he stresses emphatically, “as ely continued to grow in 2013, having had growth every year since 2009. No, it’s genuinely a desire to sell better wine at a value price point rather than lesser wines at the same price point. Our customers are still looking for quality but are also focused on value.”
I should interject here that when you buy a bottle of wine at €25 or under in a restaurant that charges the standard mark-up (and it’s standard here, in the UK and even in France) the producer gets about €1.10 for it – and that has to include the cost of the actual bottle. The fact is that we have positively punitive taxation on wine.
Erik adds: “As a team, everyone in ely dines out and many of us are continuously tasting wines with price points in mind. We are among the first to see the slippage of quality in favour of margin. We work on the basis of whether or not we’d be happy to pay for any wine that goes on our lists and there’s an awful lot of wine that doesn’t make the cut. Rather than list a wine in order to satisfy a price point, we’ve decided to restructure our price points.”
And the result is that ely’s wine lists, always fascinating and chosen with knowledge, enthusiasm and a lot of that otherwise over-used word “passion”, are now offering even better value.
And even though it is not the object of this excellent exercise, I hope ely makes lots of dosh by simply selling more wine, and better wine, to more people.
Here are some examples of what ely is offering as compared to the price were standard mark-up charged:
Domaine de la Bouissiere Gigondas at €49 instead of €59
Alta Vista Premium Malbec at €30 instead of €37
Ch. Haut Segottes Saint Emilion Grand Cru at €55 instead of €70
Alpha Zeta ‘R’ Ripassa for €30 instead of €37
Domaine Alary ‘La Brunotte’ Cairainne at €36 instead of €49