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Wine Price | Wine Bottle Price and Restaurant Wine Markup

December 19, 2019
|
Scott
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It’s an open secret:

Everyone knows wine is marked up massively in bars and restaurants.

It’s common to see a $20 bottle of wine at the liquor store. Then see that same bottle of wine on a restaurant’s wine list for $60.

It’s one of the easiest ways to increase restaurant sales and bar profitability.

And that makes pricing your bottles of wine a delicate exercise. Because people are aware of restaurant wine markup, they’re suspicious of high prices.

Rightfully so:

Who wants to pay 400% more for something?

But, the fact that we’re even having this conversation means they’re willing to pay 200% or 300% more.

How Much Is a Bottle of Wine?

An average bottle of wine costs around $14 retail. But retail wine prices depend on the type of wine.

How much is wine, depending on type? Let's check out some telling data from California wine shipments.

Average Cost of a Bottle of Wine: Retail

wine price: how much is a bottle of wine

Above are the commonly-accepted market segmentation of retail wine and their average retail price. The average cost of a bottle of wine depends heavily on the segmentation.

The breakdown of average price of wine:

  • Jug wine. The average wine price of jug wine is just below $5. Jug wines make up about 12% of total retail sales.
  • Popular-premium. The average price of popular table wine is between $5 and $10. This type of wine makes up 33% of total retail sales.
  • Mid-premium. The average price of popular table wine is between $10 and $15. This type of wine makes up roughly 8% of total retail sales.
  • Super-premium. Super premium wines have an average price of between $15 and $20. These make up around 8% of total retail sales.
  • Luxury. Luxury or ultra-premium wines have an average price of over $21 and make up 7% of retail wine sales.

The above average prices of wine are based on 750ml bottles and adjusted for 2020 dollars.

Now, wine price at restaurants is another story. 

Restaurant Wine Markup

Here's how much wine costs at a restaurant: it’s not uncommon for bars and restaurants to mark up their wine bottles 200 to 400% over the wholesale price. Remember, bars and restaurants don’t pay retail like you. They’ll pay a touch less from B2B wine vendors.

What is the Average Markup on a Bottle of Wine in a Restaurant?

Here’s the average markup on a bottle of wine in bars and restaurants:

  • Jug wine would likely be marked up at around 350–400%.
  • Popular- and mid-premium wine would be marked up around 300–350%.
  • Super-premium wine would be marked up around 250–300%.
  • Luxury wine is typically marked up below 250%.

This is called graduated markup. The lower-cost bottles get the highest markups, and up the ladder. While restaurant wine markup seems high, it’s actually quite small compared to the markup on an ounce of liquor. 

Look at it this way:

While the gross margin on wines tends to be lower, the gross profit isn’t. That’s because bottles of wine price is typically much higher than cocktails.

You can sell five $8 cocktails that took five minutes each to make at an 80% profit margin ($32 profit). Or you can sell one $150 bottle of wine that took two minutes to uncork and pour at a 65% profit margin ($97.50 profit). The choice is clear. Your restaurant balance sheet will thank you.

How Much Does a Bottle of Wine Cost from Wholesalers?

Retail wine price is typically marked up 50% over wholesale prices. Take a wine that’s $7 from a wholesaler. That means the wine will be priced at around $11 retail and around $26 at a restaurant.

Factors Affecting Wine Bottle Price

Why is this so? There are numerous factors that go into determining wine bottle price. Let’s take a look.

  • Wine bottle cost. The most obvious and impactful factor affecting wine price is wine cost. Because retail and restaurant markups are first based on the wholesale price. The cheaper companies acquire their wine, the cheaper they’re able to price it.
  • Operational and overhead costs. Restaurant operations aren’t cheap. Neither are overhead expenses. And they also vary among restaurant concepts and types. The more expensive it is to run a business, the higher the wine markups may be to compensate for it. On the other hand, the lower the restaurant expenses, the lower wine can be priced.
  • Labor cost. Similar logic here as with operational costs above. Businesses have to make up for large, expensive workforces. Often that takes the form of higher prices. Wine prices, in this case. And the opposite is also true. A small cafe with 3 employees may have some downright reasonable wine bottle prices.
  • State and local laws. The tax rate for alcohol varies between states. Washington state, for example, has the highest alcohol tax rate at $32.52 per gallon. While Wyoming and New Hampshire effectively have no tax on alcohol. This also affects wine price.

This is why it’s so important to learn how to manage costs for restaurant businesses. Investing in some of the best accounting software for restaurants is a great way to do this.

bar profit margin ebook

Wine Bottle Price Strategy for Bars and Restaurants

There are a few things to consider when hammering out your wine bottle price strategy. You need to consider profit, sure. But you also need to consider what you can get away with.

That involves making some observations about your concept and clientele. Then you’ll get a good idea of how to price a bottle of wine in a restaurant. That’s because it will determine the flexibility you have when setting markups.

Concept

The wine industry has an aura around it.

People associate it with elegance, finesse, and culture. Those associations play a part in how much the average person is willing to pay for a bottle of wine. Wine even tastes better when it costs more.

It’s clear, then:

Many people experience wine through the prism of their own expectations.

That’s why how you present wine—and yourself—matters. So think about your concept and the pricing flexibility it gives you.

Ask yourself:

  • Are your servers and bartenders thoroughly trained on the wine list and its food pairing options?
  • Have you invested in quality glassware, with specific glasses for different varietals?

If you spend time, energy, and money on your wine program, then you’re justified in marking up your wine bottle prices to reflect that. And charging commensurate corkage fees.

Casual concepts with customers that spend under $30 per person may have a tough time marking wine up over 300%. Casual restaurants should probably stay between 200–300% on their restaurant wine markup.

A casual concept may, in fact, make more money with a wine by the glass program.

But let's say your concept is on the formal side. You’ve invested in your wine program and people are spending over $30 per person. Upscale concepts can get away with routinely marking their wine up in the 300–400% range.

A destination restaurant can get away with marking up their wine bottle prices higher than a steakhouse. A steakhouse can mark up bottles higher than a trattoria, who can, in turn, mark up more than a fast-casual spot.

If you’re delivering on the public’s expectations of wine and wine service, they’ll pay for it. There's a fair bit of psychological pricing you can leverage in this sense.

Clientele

Next, think about how your clientele interacts with your business. Like how much they spend and when they visit and what they order.

This all goes hand-in-hand with concept, but it’s worth considering independently.

If your customers are spending $20 per person, they’re probably not excited for an expensive wine list. If they’re ordering sandwiches, likewise, they’re probably not looking for vino.

But if they’re spending $50 per person, or they’re buying grilled meat, they’re likely in the market for a wine pairing. And all-ears on a wine sales pitch.

It’s actually pretty simple because you know these people. Put yourself in their shoes. Do they actually want $75 bottles of wine?

Type of Wine

People will pay more for a wine from a fashionable region. Or one that generally appears more luxurious or sophisticated.

It’s just like a formal restaurant concept having a longer leash on markup percentage than a casual one.

Have wines with the right image. That gives you even more flexibility with your restaurant wine markups. For example, red wines are more associated with quality and food pairing than whites.

People will pay more for reds.

The same goes for wines from trendy appellations with high-end reputations: Tuscany, Bordeaux, Burgundy, etc. If it feels upscale, people are willing to pay.

Consider this the next time you’re determining the price of your new Super Tuscan.

Competitor Pricing

The last thing to consider is how much competitors in your area charge.

Restaurant wine markup is based on the wine bottle cost: the price the bar pays to the vendor for the bottle of wine.

Your competitor is probably not paying the same thing as you. They could be using a different vendor or have an advantageous relationship with that vendor. They could be ordering way more than you and getting a bulk discount.

There are a lot of factors, so don’t assume your competitors’ prices should be your prices.

But:

There is one useful thing you can glean from your competitors’ wine bottle price list. It’s how much people are willing to pay for a bottle of wine.

You may not know the markup or the profit margin for each bottle of wine, but you’ll know what bottles are selling.

How? By paying attention to wines that are front-and-center on the wine list. Or the wines that have been on their wine list for a while. Then you’ll avoid underpricing by knowing what people consider an acceptable price for certain bottles of wine.

You should also try to match their bar promotions, like implementing some happy hour ideas to prevent losing your customers.

Pairing Options

You may have an upscale concept, but is your menu designed with wine in mind? If it’s not, that’s fine. Wine is not fickle. It pairs well with many things.

But some wine pairs excellently with certain dishes. If you put that thought into your menu, that’s another wine pricing feather in your cap. You can push markup a little higher if you’re selling a pairing experience.

That’s why a food and wine pairing menu is so profitable.

Wine-by-the-Glass Pricing

Another wine pricing strategy can factor in how you’d price wine by the glass. You can price a bottle the same as its constituent glass of wine—if they were sold separately.

Let’s say you have a wine that you charge $10 a glass for. There are roughly 5 glasses of wine in the most common of the wine bottle sizes: the 750ml wine bottle. 

This strategy would price our bottle at $50, then. Typically bottles are a bit cheaper than the summation of their glasses, but some restaurants do this very successfully.

Adjusting Wine Price

Don’t immediately draw the conclusion that folks don’t want your wine if it doesn’t sell well. And don’t think that wines that sell well are priced optimally.

Seasonality, cost of goods sold, and consumer trends will always change your supply, demand, and profit margin.

Wine pricing is dynamic. You won’t get optimal pricing for the greatest profit on your first try. You have to test different markup percentages, compare that to revenue, and calculate gross profit. Only then can you be sure a price is worth sticking with. Hey, how to price a menu can be complex.

Flexible wine pricing is what the best wine lists do. And it starts with consistent data collection and analysis.

They collect and analyze menu data and react to it. They adjust based on liquor cost or to cover the lower margins provided by food. Food cost notoriously eats at profits. They focus on menu engineering by leaning into popular products, capitalizing on trends, and reducing prices on slow-movers. This works on an a la carte menu, table d hote menu, or a prix fixe menu, so give it a try.

And that’s exactly what BinWise Pro helps beverage programs do.

As a beverage inventory management solution, BinWise tracks everything you sell—and at what price. Having this perpetual inventory system shows you exactly how beer pricing and alcohol pricing impacts alcohol sales.

You don’t have to struggle with a bar inventory template and manually calculations to do this. You can rely on BinWise Pro, like restaurants across the world do.

bar inventory software