Wine Mark-Up

SouthBank

Hi folks,


Would anybody know what are the typical mark-ups charged on a bottle of wine from each of the following types of businesses are:



1. Off-license
2. Restaurant
3. Bar
4. Hotel
5. Supermarket


Would I be right to say that the mark-ups charged by supermarkets and off-licenses will be a lot less than the other three types of businesses?


Thanks in advance,


SouthBank

jimmii

I'm involved with a licensed cafe where the gp% is roughly 70% for on site sales and also a retail outlet that also does some food and drink where it's around 30%. It's more hassle than it's worth for retail really!

It's safe to assume the big guys can negotiate discounts but I'd imagine it's incredibly hard for small off licenses to get by. On site sales are always way higher margin some places are charging more for a glass than they are paying for the bottle!

SouthBank

Thanks for the feedback Jimmii. I hope you don't mind me asking another couple of questions.



Does the mark-up charged change, as the retail price increases?



So, for example, would a EUR40 bottle of wine in a restaurant also have a markup of 70% or so (or would the higher price mean a higher markup)?


And lets say this same bottle retailed for EUR25 in an off-license. Would this also be 30%, or would the off-license need a higher mark-up, as I guess EUR25 bottles don't sell as fast.


Thanks again,


SouthBank

jasper100

SouthBank wrote: »

Thanks for the feedback Jimmii. I hope you don't mind me asking another couple of questions.



Does the mark-up charged change, as the retail price increases?



So, for example, would a EUR40 bottle of wine in a restaurant also have a markup of 70% or so (or would the higher price mean a higher markup)?


And lets say this same bottle retailed for EUR25 in an off-license. Would this also be 30%, or would the off-license need a higher mark-up, as I guess EUR25 bottles don't sell as fast.


Thanks again,


SouthBank

Margins will vary greatly.

A restaurant may well buy a wine for, say, €8 and sell it for €40, and the wine beside it might have cost €5.5 and also sell for €40.

When Tesco and Dunnes do promotions the margin could be 0% or below.

There is lots of smoke and mirrors with wine as no two restaurants have the same wine list and the offering also varies greatly between the supermarkets.

Unlike, say a bottle of 330ml Heineken or a measure of Smirnoff which can be bought in almost every pub and licenced restaurant.

jimmii

SouthBank wrote: »

Thanks for the feedback Jimmii. I hope you don't mind me asking another couple of questions.



Does the mark-up charged change, as the retail price increases?



So, for example, would a EUR40 bottle of wine in a restaurant also have a markup of 70% or so (or would the higher price mean a higher markup)?


And lets say this same bottle retailed for EUR25 in an off-license. Would this also be 30%, or would the off-license need a higher mark-up, as I guess EUR25 bottles don't sell as fast.


Thanks again,


SouthBank

In my experience the mark up for most brands tends to drop marginally as the retail price goes up. As jasper says it varies wildly as it's something people are used to seeing vary in price and on the whole don't seem to be to price sensitive too for some reason.

jimmii

SouthBank wrote: »

Thanks for the feedback Jimmii. I hope you don't mind me asking another couple of questions.



Does the mark-up charged change, as the retail price increases?



So, for example, would a EUR40 bottle of wine in a restaurant also have a markup of 70% or so (or would the higher price mean a higher markup)?


And lets say this same bottle retailed for EUR25 in an off-license. Would this also be 30%, or would the off-license need a higher mark-up, as I guess EUR25 bottles don't sell as fast.


Thanks again,


SouthBank

In my experience the mark up for most brands tends to drop marginally as the retail price goes up. As jasper says it varies wildly as it's something people are used to seeing vary in price and on the whole don't seem to be to price sensitive too for some reason.

markymark21

SouthBank wrote: »

Thanks for the feedback Jimmii. I hope you don't mind me asking another couple of questions.



Does the mark-up charged change, as the retail price increases?



So, for example, would a EUR40 bottle of wine in a restaurant also have a markup of 70% or so (or would the higher price mean a higher markup)?


And lets say this same bottle retailed for EUR25 in an off-license. Would this also be 30%, or would the off-license need a higher mark-up, as I guess EUR25 bottles don't sell as fast.


Thanks again,


SouthBank

ideally, if you are running a bar/restaurant you want to aim for around 25% cost of Goods for wine. I.e if the bottle costs €10 you'll be selling it for €40. You'll probably lose 2% (if you're good!) to wastage and then add on staff drinks, promo etc so this is a good figure to aim at to negate these losses.

However, that rule can be difficult to adhere to if you are selling premium wine. If the bottle costs you €25 and you charge €100 on the menu the wine might not sell and you've now got an expensive product not moving i.e dead stock

In my experience the more premium the wine the lower the margin. So, for example, a bar/restaurant owner might charge €75 for that €25 bottle of wine - the Gross Profit is only to be 66% rather than 75% if he had priced the bottle at €100, however, the cash in the till for each bottle sale is going to be €50 vs €30 for the first bottle.

What owners will usually do if they are smart is buy is some cheap but decent tasting wine that no one has seen in the off-licenses (they could buy in bulk from France or somewhere) and put a heavy margin on it. So for example the bottle costs €5 and they charge €35 giving them a GP of 85%. This is the case a lot of the time for 'house wine' where the wine is the cheapest on the list but actually has the biggest percentage mark up!

In menu design terminology, this would be called a 'Star' and it means an item which is popular + profitable.

prinzeugen

The mark-up depends on how its bought also.

For example, a wine that is imported pre-bottled will cost more.

Most wine on sale here from outside the EU arrives in big tanks on cargo ships and is bottled locally. (UK or Ireland)

The mark-up is dependant on what people will pay. A bottle of Proseco we sold for €9.99 is €35.00 in a restaurant round the corner.

One of the middle east airlines sold a bottle of red to first class passengers at €110 a pop. €12.99 where I worked.

joeguevara

A lot of people at a restaurant will buy the second most expensive wine on the list (not including the ultra expensive rare bottles) as they don’t want to seem crass by buying simply on expense. A lot of restauranteurs will put a cheap bottle as second most expensive because of this and cream the profits.

Bulk buying will make it cheaper. Also by buying direct from vineyard and getting customized labels will maximize profits but is a bit of a headache rom tax and vat. If you buy from cash and carry you won’t make as much margins.