Pricing Wine: Is the Bottle Half Empty or Half Full?
Barbara Keck’s astute observation that wine by the glass has not seen a price reduction where many other food and dining related items have is right on the money. This creates a conflict for me personally as a wine merchant and as one who likes to buy wine by the glass.
As a wine merchant, I have to argue for continuing to price wine per glass at the cost of the bottle. The risk for the restaurant or bar is simply too great to run losing money by opening bottles and leaving them half-full. We know that even if one invests thousands of dollars on Argon or Nitrogen gas systems, wine will not be good to serve to the public after about a week. Especially places that specialize in having extensive wine lists will put themselves at great risk if they do not cover the cost of opening bottles.
On the other hand, as a consumer I have to take issue with this strategy. This would imply that since 1 bottle serves just over 4 complete glasses, that there is a 300% markup on the price of a glass of wine. As a consumer I say HOW RIDICULOUS! Especially in tough economic times how can that be justified. Well, like I said, it is justified in the risk that the restaurant or bar is taking in opening the bottle.
Now if we want to stimulate bottle turnover in this environment of volatile markets and crises, what bars and restaurants should do is reduce their price by the bottle. Their prices now are totally unjustified as there is no risk involved on that type of purchase. When a customer buys a bottle, the restaurant is guaranteed a profit. I have seen bottles in wine bars and restos go for as high as 7 times the wholesale price. This is outrageous. Not to mention that the industry standard for restaurants is to markup about 150% from wholesale prices where retailers are only marking up 50%. This means that a 10$ bottle retail would go for about 20$ in a restaurant (this would be at about 8$ per glass).
If restaurants were to reduce their bottle prices to only a 100% markup, where their 8$ glass wine goes for 16$ instead of 20$, they may assure themselves of more turnover and at least the same profit if not more. Of course, I’ve never owned a restaurant…
