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How Wine Bottles Are Priced in Retail & Hospitality: A Guide

December 19, 2019
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Scott
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bar inventory software

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 your 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.

Wine Price: Pricing Wine Bottles

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

According to data from California wine shipments:

  • Jug wine. The average wine price of jug wine is just below $5. Jug wines make up about 12% of total retail sales.
  • Popular table wine. The average price of popular table wine is between $5 and $10. This type of wine makes up 26% of total retail sales.
  • Super premium. Super premium wines have an average price of between $7 and $20. These make up 29% of retail sales.
  • Ultra premium. Ultra premium wines have an average price of over $20 and make up 33% of wine retail sales.

All prices are based on 750ml and adjusted for 2020 dollars.

Wine Price and Markup

It’s not uncommon for bars and restaurants to mark up their wine bottles 200 to 400% over the wholesale price.

And the cheaper the wholesale price of the wine bottle, the higher the markup.

For example:

  • Jug wine would likely be marked up at around 350–400%.
  • Popular table wine would be marked up around 300–350%.
  • Super premium wine would be marked up around 250–300%.
  • Ultra premium wine is typically marked up below 250%.

While it 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 are typically much more expensive 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 at a 65% profit margin ($97.50 profit). The choice is clear.

What’s the Right Wine Bottle Price for Your Bar?

That's the rough retail pricing. But what about your bar or restaurant? The wine pricing markup is a lot higher than a liquor or grocery store.

Make some observations about your concept and clientele. 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.

What Kind of Concept Are You?

Wine has an aura around it—and the wine industry is a growing one.

People associate it with elegance, finesse, and culture. That may not be what wine means to you. But 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:

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

That’s why 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.

So think about your concept and the pricing flexibility it gives you.

Are You Committed to Wine?

Some bars are sufficiently focused on wine to charge a premium for it.

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.

How Does Your Clientele Behave?

Next, think about how your clientele interacts with your business.

Like how much they spend and when they visit.

If your customers are spending $20 per person, they’re probably not excited for an expensive wine list. But if they’re spending $50 per person, they’re likely in the market for a wine pairing. And all-ears on a wine sales pitch.

Determine Your Markup Percentage

What is the Average Markup on a Bottle of Wine?

We know bars and restaurants mark up wine bottle prices 200% to 400% above wine bottle cost, or what they pay for them.

Where your bar or restaurant falls in that range depends. On your answers to the self-discovery questions in the prior section. It's important to learn how to manage cost for restaurant business and limit overhead expenses to succeed.

It also depends on the type of wine you sell, which of your wines sell well, and what your competitors are charging.

Taking wine inventory consistently is crucial to knowing what's selling. And a wine inventory spreadsheet can help. You should also offer a range of wines so your bartenders have options for upselling. And a way to increase restaurant sales.

Bar profitability ebook

Concept and Clientele

Casual concepts with customers that spend under $30 per person may have a tough time marking wine up over 300%.

Stay between 200–300% on your markup and you won’t risk wine lists closing and eyes rolling at your ambitious prices.

A casual concept may have better luck 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. You can get away with marking your wine up in the 300–400% range.

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 happy hour to prevent losing your customers.

Bar inventory software

Embrace Dynamic Wine Pricing

No menu—for food, drink, or anything else—is going to be perfectly priced.

There are many variables involved with how to price a bottle of wine in a restaurant. There's no one-size-fits-all solution. Seasonality, cost of goods sold, and consumer trends will always change your supply, demand, and profit margin.

Optimal wine list pricing is flexible wine list pricing, then.

That's what restaurants with great wine lists do.

They collect and analyze menu data and react to it. They adjust based on pour 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.

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 shows you exactly how beer pricing and alcohol pricing impacts alcohol sales.