U.S. restaurants turn to wines for sustenance

LOS ANGELES/NEW YORK Wed Nov 4, 2009 12:49pm EST

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LOS ANGELES/NEW YORK (Reuters) - Morton's, an expense account steakhouse, and California Pizza Kitchen, an upscale U.S. pizza chain, are going against the grain with their wine strategies in a bid to reap revenue from the vine.

Morton's Restaurant Group Inc MRT.N is taking advantage of the wine glut and auctions to restock its cellars, even as most white tablecloth restaurants cut their own stocks to preserve cash.

California Pizza Kitchen Inc CPKI.O is taking its wine menu upscale as wine sales at bars and restaurants decline.

"We estimate that alcohol sales will fall (4.9 percent) to $83.8 billion in restaurants, bars and other on-premise establishments in 2009," said David Henkes, a vice president at food service research consulting firm Technomic.

For wine, he expects U.S. sales to fall to $10.2 billion in 2009 from $11.8 billion in 2008.

Overall sales at Morton's steakhouses have to some degree mirrored those trends as businesses slash expense accounts for executives and the restaurants' typically well-heeled customers cut back on eating out.

A Morton's diner, who once looked for wines well above the $100 mark, such as Screaming Eagle, Colgin Cellars or Harlan, is now more likely to seek $70 to $80 wines, said Tylor Field, Morton's vice president of wine and spirits. And more customers are ordering wine by the glass rather than the bottle.

Morton's, which has at least 200 items on wine lists in all its restaurants and 500 in major markets such as San Francisco, New York and Chicago, has been able to take advantage of the world-wide wine glut.

"Now, a lot of wineries are dealing in bulk juice," said Field.

MINING WINE AUCTIONS

Morton's has teamed up with California vintner Charles Krug to offer a Cabernet Sauvignon, Krug 1881, by the glass for about $13. It has had similar deals with other top name California wineries such as Gundlach Bundschu.

Morton's prices for wine by the glass run from $8.50 to around $25, he said, adding: "Most people love what's in the middle."

He has also been able to mine the wine auction market, which has recovered from its lows of January, but remains well down from its highs of May 2008, as measured by the Liv-Ex 100 Fine Wine Index.

In the past year, at least two iconic New York restaurants -- Le Cirque and the 21 Club -- have trimmed their wine holdings through auctions. And in Paris, La Tour d'Argent, the landmark restaurant that dates back to 1582, is cleaning out its 450,000 bottle wine cellar in an auction in December.

While Morton's diners may be trading down, those at CPK seem to be trading up.

The pizza seller introduced several Napa and Sonoma wines from high quality vintners such as Cakebread, La Crema and Stag's Leap, offered by the glass, as well as by the bottle.

It had been getting its highest percentage of wine by the glass sales in the $7.50 range, but the new wine program is convincing some diners to splurge.

"We are selling a lot of La Crema and that's at $11.50 a glass," co-Chief Executive Rick Rosenfield said, adding the program has increased wine sales and the average price of wines sold.

"People are trading up. It's having the effect we were hoping it would have," Rosenfield said.

CPK chose wines that allowed it to return "to our roots of really focusing on wines that people know that are really terrific," he said, adding that the restaurant was also considering having a private label wine, something akin to Morton's Krug 1881.

(Reporting by Lisa Baertlein in Los Angeles and Leslie Gevirtz in New York; editing by Andre Grenon)

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