A Guide to Wine Pricing

Photo by Wineemotion USA

For a restaurant to enjoy long term success, a well-developed wine program is essential.

However, more often than not, restaurants fail to maximize the earnings potential of their wine programs.

Understanding your clients and their preferences and then getting the product mix just right are important elements of any wine program. But it’s your pricing strategies that will make or break profitability in the long-run.

Getting the pricing right is more challenging than it sounds.

  • Price the wine too high, and you won’t sell enough.
  • Price it too low, and you won’t move enough high-margin product.

To optimize wine pricing, it’s important to understand:

  • the profitability potential;
  • strategic planning considerations; and
  • the need to make adjustments.

Let’s get started.

Photo by Wineemotion USA

Profitability Potential

The most profitable portion of your entire menu, if properly priced, should be your wine list.

You might have a Michelin-starred restaurant in the perfect location. You might also offer the most amazing wines.

But if you don’t price the wine properly, you’re leaving piles of cash on the table.

In today’s economy, that means your restaurant might not make it to the end of the month.

Photo by Wineemotion USA

Strategic Planning Considerations

Consider Industry Standards Along with Buyer Persona

It is important to consider how much is too much for your customers, and how low you can profitability be willing to go as you determine pricing.

The general industry standard is to offer 1-2 red and white wines at lower price points. From there, you offer 1 or 2 of each at mid-range price points. The decision to add a third, higher priced offering should be driven by what you know about your clientele.

There are many industry benchmarks for pricing:

  • The per glass price is typically calculated as 85% to 100% of the bottle’s wholesale cost.
  • The per bottle price is typically 200%, sometimes up to 300%, of the bottle’s wholesale price.

The Image of Your Establishment

Your reputation and brand image are critical considerations when pricing your wine offerings.

If yours is a casual establishment, customers expect reasonable and affordably priced wine. You are therefore limited in the choices you can make.

However, establishments that are more upscale or are known for serving unique high-quality wines can charge more. This is also true for those establishments that are especially innovative.

For example, Bodvino in Boise, Idaho has 18 wine dispensers from Wineemotion, allowing them to offer a self-guided wine experience with 144 unique wines on tap. Customers purchase a prepaid card, insert it into one of the machines, select their wine and then choose a one-, three- or five-ounce pour. On Tuesdays, Bodvino even gives customers $5 every time they recharge their card with $20.   

Of course, it’s possible to adjust your image and roll out a new strategy in order to increase the price point at which you are operating. When making a change, consider how you can maximize the upper range of your pricing:

  • Concept. When customers associate your establishment with an elegant and sophisticated overall experience, they expect to pay more for everything, including the wine. Things like a well-trained staff, elegant décor and exciting promotional events all contribute to concept.
  • Wine expertise. When you develop a carefully curated wine program, you can feel comfortable charging premium prices. Offer high-quality stemware and serve the right wines in the right glass. Provide the appropriate amount of education to your staff so they know everything there is to know about wine service.
  • Discoverability. When customers know they will learn about new wines with every visit to your establishment, they associate what’s called “discoverability” with your establishment. They develop loyalty and become repeat customers. By including a wide variety of unique wines by-the-glass, you increase the chances that customers will associate discoverability with your business and be willing to be pay a premium for that discoverability.

Carefully Consider Wine-by-the Glass vs Wine-by-the-Bottle

Selling wine-by-the-glass is far more profitable than selling wine-by-the bottle.

Traditionally, the only wines on a restaurant’s by-the-glass program were those the restaurant knew would move quickly. The reason for keeping the by-the-glass menu so limited was to avoid spoilage costs and to keep a line of already opened bottles out of the customer’s sight.

However, today’s wine consumer expects more options. At higher-end restaurants, they expect access to by-the-glass options for purposes of food and wine pairings.

The good news is that with advances in technology, restaurants can now offer more wines by the glass, avoid spoilage and opened bottles sitting on or behind the bar.

How, you ask?

Upon opening a bottle of wine, you know that the oxidation process starts right away and can change the flavor of the wine quite rapidly. Without a focus on wine preservation, this issue can quickly eat into your profits. Wineemotion’s wine dispenser systems solve this problem by preserving the wine taste and aroma for up to 30 days – transforming waste into profits.

Photo by Allie on Unsplash

Making Adjustments

When a particular bottle of wine doesn’t move as expected, many businesses simply remove and replace that bottle. However, you have likely put a good deal of time and effort into choosing that bottle. It’s very possible that you chose the right wine, just the wrong price point.

Because wine purchases are incredibly price sensitive, it’s important to commit to being flexible and trying a different approach from time to time.

  • Trust your gut. If you think your customers will like a particular varietal, give it a second chance but scale back the markup this time. Selling at a lower margin is better than not selling at all, right?
  • This one might shock you, but you might actually be underpricing your wine. One study shows that, on a night out, consumers are ready to splurge on the experience. They are not looking to drink the wine they already know well – and whose price they also already know well. Especially when it comes to red, they prefer a more expensive wine by-the-glass.
commercial wine preservation

Photo by Wineemotion USA

Remember that Pricing is Dynamic

Ultimately, wine pricing is a dynamic and interactive process.

Collect and analyze as much data as you can in order to gather insights about your consumers and their preferences.

If you make reviewing your wine pricing strategy a regularly scheduled operating procedure, you will optimize the profit potential of your wine program and ensure the success of your business – in good times and bad.

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