Wine list markups - less in Europe, elsewhere?

[Robin Garr]

This is going to sound like a silly question from a frequent world traveler, but I've got to ask it anyway, as background for the <I>Wine Advisor</I> article I'm writing about wine-list pricing and a new approach ("same as retail!") that a local eatery is trying on:

In the US, I believe most restaurants typically mark up their wine list three to four times their wholesale price, which works out to about twice to 2 1/2 times retail pricing on the wine list.

It seems to me that restaurant wine list pricing in Europe (and Australia) isn't usually quite that predatory - maybe it works out to 1 1/2 times retail? But I'm kind of ashamed to admit that when I travel, I'm often either not watching prices as closely as I should, or dining in a group and splitting costs.

I hope a few of you will please give me a quick reality check before I embarrass myself in print: How do wine-list markups really compare in the US, Europe and Down Under? And is there general agreement with my premise that US wine lists typically run prices at 2 times retail or more?

Robin, when I took the Andrea Immer Robinson course last year, one of the speaker said that the "rule" among wine consultants in the UK is consultants to "treble [restaurant cost] and add VAT".

One somewhat fairer approach, again in the UK, is to use selling price inc VAT = Purchase price ex VAT x 2.5 + £3. She mentioned the chef that came up with this formula, but my notes aren't clear -- it was probably Chris Chown, the chef in Wales with the big rep but please don't attribute it to him without checking.

Here's a short note from one of Jancis's articles:

Page 99 of Bibendum Wine Ltd’s 2006 Trade List reveals a vital, if unappetising, aspect of restaurant life.

Headed Gross Profit Table it lists down the left hand side the ex-VAT price points of many of the £25 million worth of wine the company sells to restaurants, hotels and increasingly to gastro-pubs. Across the top are the three percentage points most restaurateurs apply to the cost price, 60, 65 or 70%, and below these are the sales prices calculated to include VAT and to ensure that the wine list generates the necessary profits. The differences are marked: a wine that costs £5 can sell at £14.70 with a 60% GP or £19.60 with a 70% GP whereas a £10 bottle sells at £29.40 at 60% GP or £39.20 with a 70% GP.

http://www.jancisrobinson.com/articles/nick060715

My personal impression is that UK restaurant wine pricing is similar to the US; similarly in Belgium and Denmark.

My personal impression in France and Italy is much less clear --
usually there I have no idea of retail pricing of the wines we drink since we try for the local stuff, and often the restaurant's private label wines.

Regards, Bob

[Robin Garr]

My personal impression is that UK restaurant wine pricing is similar to the US; similarly in Belgium and Denmark.

My personal impression in France and Italy is much less clear

Bob, upon more reflection and looking over some of my notes, I think you're on target: Anglo-Saxon Northern Europe does it much as we do. The Latin countries where I usually travel mark up much less, although they do mark up. I'm thinking that in Italy and France I expect to see wine for maybe 1 1/2 times retail at an upscale place, maybe less at a trattoria or bistro.

On the US side, there are lots of formulas, but if you want one to support the two times retail concept, look at The Only Wine Book You'll Ever Need by Danny May here.

Robin,
It is hard for me to give quantitative numbers and I even think your 2 X retail in the US is low. I have friends that have a place in Paris and he is always complaining about the price of wine in a Paris restaurant. The good news is that the everyday wine is reasonable and quite good but a known label like we would buy in the US is everybit as expensive in a US restaurant.

I have found quite the opposite in Tuscany. I spent a lot of time in wine stores and we ate at very good restaurants. I found the pirce mark-up to be well less than 2 times retail, more like 1.3-1.4 times. This is small town Italy and not Rome or Vienna so it may vary across the country.
Walt

[Robin Garr]

On the US side, there are lots of formulas, but if you want one to support the two times retail concept, look at The Only Wine Book You'll Ever Need by Danny May

Cheeky title, Bob. Do you think the May book is worth a look as a general reference? I thought I keep fairly close track of new titles, but that one's new to me.

[Robin Garr]

It is hard for me to give quantitative numbers and I even think your 2 X retail in the US is low.

Walt, thanks. I would agree that wine-list pricing varies from state to state, city to city, and I suspect that the competitive situation is perhaps a factor.

Your observations about Italy fit with my experience, as best I can recall, although as I said at the top, I probably haven't been paying as much attention to the bill over there as I should. I think perhaps the trattorias and bistros in Latin countries tend to run up the price less than the temples of gastronomy.

I liked the May book, Robin -- cheeky but easy reading -- probably too simple minded for you. I met him a few months ago and liked his resume -- he seems to know the wine business pretty well.

I'm going to stop drinking [but not tasting and spitting] wine for a month, one of my regular "dry" periods, and I plan to write and post a short note about this book, as well as a few others, during the month to stay in the wine game. In the meantime, here's his resume according to the publisher.

Danny May has more than twenty years of experience in the wine retail, wholesale, and restaurant business. He is currently president of Aardvark Wine Company, a wholesale wine distributorship in Massachusetts. He's also part-owner and full-time co-manager of La Bruschetta, formerly a full-service restaurant in the Berkshires, which he converted into a gourmet takeout and retail wine store. A resident of West Stockbridge, MA, his monthly wine columns appear in Berkshire Homestyle Magazine.

Don't take too much on my limited experience here in the North of England but I'd say in modest eateries the markup is 300%.

I've paid 21 UKPs for wines I bought locally for 6.99 UKPs.

Thats about +40$ for 14$

No doubt city centre and places with '*' chefs will add more.

Cheers, Dave C

Dave's comments are a fair reflection of my experience. 3x shop price is typical and if you can get 2x shop price you're doing well. I've experienced 4 x shop price (but despite it being a favourite restaurant up until that point I've not been back).

Occasional restaurants do a sliding scale, so higher end wines have a lower % markup (but still higher £ markup). This is probably the best way to go, assuming they foot the bill for corked/spoiled wines, plus opportunity cost.

There are also some predatory prices in europe, but often more of an option for decent wines by the glass. On the whole I'd say Italy is fairer than UK (and the food better as well).

regards

Ian

And now the follow-up question!

How much do they mark up bottled water????

Cheers, Dave C

Hi Robin!

Just a few points of data:
In Austria, I would consider a markup of 2xretail quite reasonable (actually close to cheap). But this might reflect more the lower end of wines because that is what I can afford.

Italy, from my experience, generally is cheaper.


But of course it all depends......

Regards, Robert

And now the follow-up question!

How much do they mark up bottled water????

Cheers, Dave C

It all depends on whether or not they have a water sommelier!

Cheers, Carl

My unscientific experience is that in France (and I presume elsewhere in Europe as well) you are more likely to find the gems of "businesspeople" who are not in it for the money, but rather the culture, art, etc, and therefore the markups are minimal.

Of course you have "purist" businesspeople in the US as well, but perhaps with the whole importing and three-tiers aspect it is more difficult for them to survive. Whereas I have run across way more non-capitalists in the wine business in France.

Robin,

In my limited experience in Canada, the markup is usually about the same as the US - 2.5 to 3 X retail in most better restaurants. More if you are talking by the glass. Although I have a found a 2-3 of restaurants that have about a 2 X markup, which I think is reasonable. However, the best deal I have ever had at a restaurant was less than 1.5 X markup. A Drouhin Oregon pinot for $55 (retails for about $38-$40) in a Bloomington, Indiana Italian restaurant this past May.

Robin
You've got me on my favourite topic. In order to correctly assess this problem, you have to go to other route causes. Other rip-offs. Rent, staff & their benefits ( Superannuation, workers Compensation, sick pay, holiday pay, just to name a few. OK back to the wine mark ups, recently in Hong Kong I experienced the highest mark ups I've seen anywhere. A bottle of Elderton Shiraz 2004 $HK465, approx $75 Oz. Given that they buy at export prices Ex Oz around $10 Oz, then add HKG tax 40%, there's a huge mark up. A great excuse to have AFD's. In Sydney I invariably dine at BYO's & take my own stem ware sometimes. I'd love to go to some of the more up market restaurants, but refuse to pay their exhorbitant wine prices. Most don't have fantastic cellars anyway, but rely on regular supplies from their wholesalers. Just check their back vintage list to prove my point. Hats off to the USA guys who are adopting a fairer pricing approach. They deserve to get increased patronage

Cheers

Dennis

The only difference between getting the food and wine to table is that the food has to cooked and the wine has to be stored. Methinks the cooking is a little more costly. Yet restaurants double the cost of goods for food, and triple or quadruple the COG for wine.

Somebody splain this please.

Welcome to the forum Dennis! Lots of good people here, stick around as we taste Shiraz on the Wine Focus here next month. Do you know Cam or David Lole?

Lowest mark-up in Europe without any doubt is Italy. The rest I know — Austria, Germany, France, Benelux, Switzerland — is just about as high as everywhere. The highest mark-ups I have ever seen are Michelin starred eateries in and around Paris.

I don't remember Spain and Portugal too well, but the mark-up over there might be slightly lower than on average.