Living LuxeDecember 8, 2010 By: Jack Robertiello Night Club and Bar Magazine
Despite the Economy, Guests Open Their Wallets for Ultra-premium Spirits
When bars aiming to make a splash throw open their doors, inevitably the drink menus are peppered with brand names that signify quality — and price. A focus on the high end of the pricing spectrum might fly in the face of the recent economic trends, but it seems to be the norm among new cocktail-oriented bars. Take, for example, the new Forty Four at the Royalton Hotel in New York City; it’s high end to start with, given that the six bartenders who put together the drink list — Richard Boccato from Painkiller in NYC, John Lermayer from The Florida Room in Miami Beach, Pernod Ricard ambassador Simon Ford, Contemporary Cocktails’ Willy Shine, Misty Kalkofen from Drink in Boston and Eric Alperin from The Varnish in Los Angeles — are among the best-known in the country. A menu like the one they created, with drinks priced $15 to $17, must use top-shelf brands, and even the secondary spirits in the drinks run at the high end: Cherry Heering, Carpano Antica Formula Vermouth, Chartreuse and Benedictine, among others.
At Drago Centro, chef Celestino Drago’s newest venture in downtown Los Angeles, sommelier and beverage director Michael Shearin recently introduced a fall cocktail menu that displays no sign of retreat from high-end brands. The drinks, normally $12, include the Autumn Night’s Dream, made with Martin Miller’s Westbourne Gin, Crème Yvette and St-Germain, are all super-premium brands. Other drinks highlight such brands as Karlsson’s Gold vodka, Zaya Rum, Appleton Estate V/X rum and Belle de Brillet Poire Cognac — all super- to ultra-premium products.
Menus at these and other cocktail-centric bars are one part of the reason high-end spirits are still de rigeur — when drink prices break the $10 barrier, it’s hard to drop down a level in ingredient quality. Says Drago’s Shearin, “I definitely take price into consideration when creating drinks for each seasonal menu, but there are other, better ways of keeping costs down than using cheap liquor.”
Bar operators aren’t the only ones playing in the higher price ranges. When Banks Five Island Rum recently launched, an all-star team of New York bar stars — PDT’s Jim Meehan (who worked on developing the rum), Julie Reiner of the newly opened Lani Kai, Eben Freeman of the Altamarea Group and Dushan Zaric of Employees Only — helped roll out cocktails designed to showcase the spirit’s fruity, pot-still-driven qualities. Clearly presented as something special at the upper echelon of the lightly aged rum category, pricing for Banks was set to push the $30 barrier, but folks involved with the brand privately admitted the ultimate price would depend on initial response from the market.
That’s a far different attitude from a few years ago, when marketers for high-end spirits seemed to be competing for the honor of bringing out the most deluxe, the most prestigious or the highest price point spirit in the category. The logic behind that model mostly disappeared with the recession’s onset. Yet while conspicuous consumption may be less in vogue and some high-end brands may struggle to sustain growth, there’s no precipitous drop in spirit prices at the top. Marketers may hold off a bit on introducing more expensive products, but there’s still plenty of consumer interest in spirits that are special, whatever the price. And that means there’s plenty of ways for your bar to gain profits.
The persistence of super-premium brands is partially a result of the shattering of so many price barriers in the 2000s. Cocktails selling for $15, bottles of rare malts pushing the $1,000 range, vodkas like Jean Marc XO and Crystal Head going for $50 a bottle — all of this helped create the idea that something rare and well made was worth more, and in turn, it created consumers who now like to shop at many price points up and down the ladder.
Partially driven by the craft distillery boom, which is bringing a flood of new small-production spirits to the market, there’s a constant thirst for the new among operators of bars and restaurants. Beyond the small distillers, producers of some categories — notably tequila and mezcal — are constantly importing new brands, most at super-premium and above price points.
Some categories have shattered low price sensitivity among fans; while it was once possible to find a handful of modestly priced single-malt Scotches, for example, many of those smaller malts have undergone repositioning, with higher prices arriving along with new packaging and profiles.
Even among blended Scotch whiskies, suppliers seem undaunted. The recent repackaging of the best-selling Dewar’s range included an 18 year old priced about $80 retail (roughly the average price for that age) and the Signature at nearly $200. Clearly, keeping prices tight all along the line is of utmost importance in suppliers’ minds.
For some operators, the economic rollback had a serious impact at the top end. The Brandy Library in New York City defines itself with an enormous collection of rare malts, brandies and other ultra-premium spirits, depending largely on consumers willing to spend lavishly. But according to owner Flavien Desoblin, while his traffic is strong, the current picture is quite simple: “We have a large proportion of corporate clientele who used to bring in four or five clients and order a few rounds of the most expensive whiskies or Cognacs we had, but since the summer of 2008, that’s all changed. Wall Street guys and bankers are much more careful about conspicuous spending because of how it might look to their coworkers or clients.”
At Brandy Library, orders might have averaged $60 or more until 2008, but now they are about half that, though Desoblin says since the summer he’s noticed an uptick in check totals, as customers are starting to loosen up on spending. These customers also want to know more about the spirits they order, something Desoblin, who heads a staff of brandy “librarians” well-versed in their stock, says is crucial when trying to sell top-end spirits.
Cordials especially are buoyed by the recent higher-end intros; while the bottom seems to have fallen out of the inexpensive end of the category, such brands as Crème Yvette arrived with great fanfare — and a $40-and-up retail price. Other recent examples include the planned national rollout of the pear-flavored liqueur Xante at about the same price and Gran Classico bitter apertif, priced at around $30 retail. That’s just the cordial category, where many of the best-selling products are suffering even though their price points are far lower.
“When a product like Crème Yvette comes out, we’re anxious to play around with it and see what we can do with those flavors, especially if it’s something with historical references,” says Shearin. Bartenders’ eager anticipation of other high-end products with interesting flavor profiles is carving out backbar space in a crowded market.
The Chain Game
Casual dining chain restaurants provide a good barometer of the consumer’s willingness to spend. While many chains may be carrying slightly fewer high-end spirits as they deal with the recession through inventory and SKU reductions, there’s still great customer loyalty to break-away super-premium brands like Grey Goose and Patron, says David Commer of Commer Beverage Consulting, who works with chains including Mimi’s Café, T.G.I. Friday’s and Lone Star Steakhouse.
But chain operations at the higher end recognize the wisdom of focusing on featuring the best; at the many Palm restaurants, single-malt Scotch dinners are still a fixture, and the signature cocktail list features super-premium brands like ABSOLUT, Stolichnaya, Ketel One, Ciroc, Hendrick’s, St-Germain and Cointreau. There’s even an ultra-premium Upper East Sidecar made with Remy Martin VSOP and a Martini featuring Ultimat vodka.
Commer says chains, like most restaurants and bars, are caught in a bind when it comes to figuring out how to market high-end spirits in today’s economy — if they are too focused on driving foot traffic through discounting and low pricing, they may unnecessarily undermine what they can charge at the top-end.
To solve that problem, Shearin now offers a two-tier menu at Drago Centro, one set for happy hour food and drink items and prices, and the other featuring the bar’s regular prices. The $5 happy hour drink menu includes four changing classics — the recent list included the Sazerac and Pendennis, made with value brands Pikesville Rye and Seagram’s Gin, meant to bring in an entirely different set of customers than the rest of the evening, says Shearin.
But on the other hand, he’s surprised that, despite the economy, he still goes through a significant amount of Macallan 18 Year Old single malt, Highland Park 18 Year Old single malt and Don Julio 1942 Extra Anejo Tequila, all ultra-premium brands. Proof positive that no matter what the state of the economy, for drinkers, price resistance to the patron’s favorite brands is still rare. NCB