Beverage Program Costs Are Climbing. Here’s How Bars Are Cutting Waste Instead of Prices

The beverage industry is facing mounting pressure from several directions. Tariffs, supply chain disruptions, and general inflation have pushed costs up across the board. Over the last year, the collapse of Republic National Distributing Company (RNDC) has made steady supply trickier than ever. Labor costs are rising, and the public keeps hearing that no one drinks anymore. There is also a bewildering array of products and categories that could easily overwhelm even the most seasoned professional.

The skilled buyers and drink stewards keep steering through the push and pull of outstanding service and the plain facts of running a business. Their methods differ greatly, ranging from taking advantage of bulk buying to knowing their audience well enough to deliver the experience they want, even when the bottle they desire most is either out of stock or has risen sharply in cost.

When Prices Soar

Prices for nearly every item in beverage alcohol have risen sharply over the past five years. Wine director Will Jones, who works at The Hope Farm and Little Bird in Fairhope, Ala., states the case plainly: “I cannot sell Premier Cru Burgundy for the same price we could five years ago.” As a substitute, he points to affordable choices such as Hautes-Côtes de Beaune, Hautes-Côtes de Nuits, Bourgogne Rouge, or Bourgogne Blanc.

Beverage director Felipe de Assis Villela, who works at Bluepoint Hospitality Group in Easton, Md., offers customers a choice between two Grand Cru wines. A German Grand Cru costs under $200, while a Grand Cru Burgundy runs $1,800. He understands that not every patron can manage the price of the Burgundy.

Guests can still get excited about substitutes, but nobody likes to pay more. Raising margins or markups further, whether the clientele can afford it or as a last attempt to extract extra profit, only makes the issue worse. Once a bottle has already been raised by the producer, importer, and distributor, an aggressive restaurant markup of 200-300 percent ends up punishing the guest.

“I’m not so obsessed with a percentage mark,” admits de Assis Villela. A mix of common sense and a desire to actually move certain wines has led to a program that serves both guest and restaurant, even if the profit margin looks smaller. “I’m still making money, but the percentage may not look like what I had to do on Long Island.”

Buying in Bulk

Buying in bulk is one of the easier paths toward greater profit. Distributors commonly grant volume discounts when customers are ready to acquire a large number of cases. This approach can guard against shortages, though it demands storage room that not all restaurants or bars possess.

“We’ve gotta buy five cases at a time or 10 cases at a time — that’s usually our limit for storage in [most of our] properties,” notes Amanda Reed, director of beverage at E3 Co. Restaurant Group in Seattle. If a deal is good and there is plenty of supply, she commits to X amount but brings it in five cases at a time.

The RNDC Collapse

Over the past couple of years, the wholesale category has experienced tremendous upheaval. The collapse of RNDC from being the second-largest beverage wholesaler to filing for Chapter 11 bankruptcy in under two years was a significant factor in the current instability. Tariffs have also played a role, contributing to both higher costs and greater challenges in getting products into the U.S. in the first place.

Time Is at a Premium

Beverage professionals frequently find themselves pressed for time, particularly in an environment where they are expected to handle a variety of administrative and managerial responsibilities, regardless of whether those duties were part of their original reason for joining the industry.

“When you first become a buyer, you’re so excited to sit down with reps and get to be this figure of authority,” says Johannus Grevelink, beverage director for José Andrés Group. “The reality is that if you open up my inbox every day, I have 40 to 60 emails from people about their product and how it could be a great fit at José Andrés Group or at one of our outlets with the name spelled wrong. Sifting through all that — I don’t know anyone that could have the time to do that.”

Hidden Costs

The sticker price isn’t the whole cost. Keeping consistent placements reduces training and printing expenses. With labor costs climbing constantly, gathering staff for tasting and training on new products is a significant expense.

What Works

What works involves a mix of replacement, large purchases, and being open to smaller profits. The method of de Assis Villela stands out: he concentrates on getting wine sold rather than raising prices as far as they can go, so the program benefits both the guest and the restaurant at the same time.

The Bottom Line

Real pressures are being faced by the beverage industry, yet the pros refuse to give up. Instead they are switching suppliers, buying in quantity, and handling guest expectations with a calm approach. The profit margins may lack dazzle, but the systems are helping both guests and restaurants alike.

Running a beverage program is tough right now, but there is still hope.

Source material: “Beverage Programs Are Under Pressure. These Pros Are Finding Ways to Adapt.,” VinePair.

beverage program · restaurant wine · RNDC · supply chain · wine director