Wine markups in the UK

[Siharris28]

Hello all, first post so go easy...

Had a superb lunch at The Capital yesterday, food was absolutely first rate. Had a nice bottle of Cotes du Rhone, priced at £55. Looked up the list price which is £12!

I am obviously aware this is where the money is made, and the food price was actually reasonable (£30 for 3 courses), but is this kind of markup, around 400%, the norm? I thought it was more like 200%.

[Matthew Grant]

They tend to be around 3 times the retail price, £12 marked u pto £55 seems well over the top but I wouldn't be surprised if there were a lot more examples of this around London.

[Scott]

that is a particularly diabolical markup (78% GP!), but unfortunately it's not that uncommon.

the reason for it, is no more complicated than beverage profits subsidising the food costs. that and the sometimes manaical egotist who believes that you should be grateful to sit in his/her establishment and should pay whatever they say.

so, bottomline. the wine is a real "touch your toes" affair, on the basis that you might not be prepared to pay the true cost of the food (with appropriate margins).

there are some very decent places with more honourable practices though.

[Siharris28]

that is a particularly diabolical markup (78% GP!), but unfortunately it's not that uncommon.

the reason for it, is no more complicated than beverage profits subsidising the food costs.  that and the sometimes manaical egotist who believes that you should be grateful to sit in his/her establishment and should pay whatever they say. 

so, bottomline.  the wine is a real "touch your toes" affair, on the basis that you might not be prepared to pay the true cost of the food (with appropriate margins).

there are some very decent places with more honourable practices though.

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Hmm, thought it was excessive, thanks for the replies. Food was great though, so probably a sacrifice worth making. Just.

[Alan Smeaton]

As a wine lover, this is truly the most annoying thing I find about eating out. Sadly, the vast majority of restaurants apply a flat multiplier, regardless of the purchase cost. As a result, the better the wine I drink, the more I am subsidising the food prices of those who knock back the house red. There are some enlightened places that apply a reduced margin or flat mark-up on better wines to encourage people to drink better. Sadly these are few and far between.

My wine bill in a restaurant routinely exceeds the food bill, and I wouldn't mind if I didn't feel I was being ripped off. Don't believe the age old excuse of the holdng costs for the wine cellar. There aren't too many restaurants whose cellars are awash with verticals of Chateau Petrus. Most wines on most lists are available very quickly from the on-line supplier.

Rant over, must go somewhere to lie down and get calm.

[bakerestates]

Not defending this mark-up but given you said 'nice bottle of Cotes du Rhone', when you looked it up did you get the exact one - right vintage, right wine of the producer's - many producers have three or four levels of wine and differnet entry levels. As an example, if you said you had a nice bottle of Soave from Pieropan, it could have been Classico that cost the restaurant say £6.50 or La Rocca that cost them say £15.50.

Can an establishment be seen as good value if the food is but the wine is'nt. In this case, for you, the establishment was.....just!

[Basildog]

Here's some stuff from back in the day

click

[ajnicholls]

Le Champignon Sauvage is surely an example of somewhere with a genuinely interesting wine list that doesn't even enter the obscene mark-up territory of other starred establishments. So it can be done!

[Andy Lynes]

I was there a couple of weeks ago and was amazed that their house wine is still only £11! What other two star in the UK offers that sort of value?

[Scott]

i find most places will BYO if you ask nicely and are prepared to pay appropriately.

what works best for me is this: I'll buy bottles of your house wine - you don't open them.

that way they make above average profit on that bottle (i.e. no cost basis) AND they get to sell it again.

meanwhile, I can drink some of the good stuff from my cellar.

[Siharris28]

Not defending this mark-up but given you said 'nice bottle of Cotes du Rhone', when you looked it up did you get the exact one - right vintage, right wine of the producer's - many producers have three or four levels of wine and differnet entry levels. As an example, if you said you had a nice bottle of Soave from Pieropan, it could have been Classico that cost the restaurant say £6.50 or La Rocca that cost them say £15.50.

Can an establishment be seen as good value if the food is but the wine is'nt. In this case, for you, the establishment was.....just!

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Pretty sure I got the vintage, variety and producer right. Think they are making their money on the vino in this case.

[Scottf]

I had a shit lunch at The Capital a couple of weeks back to follow on from a poor dinner on my previous visit. No idea how this place maintains 2 michelin stars.

Totally agree re. wine mark ups. 2006 Cloudy Bay SB is £75, yet is £15 in Croydon House of Fraser and they must be making a little on that.

[Matthew Grant]

I agree no more than a solitary star IMO. Then again maybe it's something to do with the air in Croydon, it must affect our tastebuds adversely

[ravelda]

No - defininitely not a Croydon thing - I was there the week before Scott and had a very disappointing tasting menu there - it really lacked any flair and was not particularly well balanced. comapred to the meal that I had enjoyed at LCS the night prior it was a solar system away!

[malcolmwilliamson]

The following, shamelessly lifted from a wine forum I frequent, gives one high end restaurant owner's justification for his huge mark up on wines:

At Raymond Blanc's Le Manoir aux Quat' Saisons, Oxford, Domaine des Comtes Lafon's 1999 Meursault sells for £220 - more than four times the retail price at Farr Vintners.

Mr Blanc said it was unfair to compare a retail price with the wine list price. "They'll have a warehouse of concrete, steel and glass against what I own at Le Manoir - expensive art work, an enormous garden to maintain, fine chairs and tables," he said.

[ajnicholls]

Totally agree re. wine mark ups. 2006 Cloudy Bay SB is £75, yet is £15 in Croydon House of Fraser and they must be making a little on that.

Cloudy Bay is without doubt the most over-rated wine on the planet and not even worth the £15

[Alan Smeaton]

Totally agree re. wine mark ups. 2006 Cloudy Bay SB is £75, yet is £15 in Croydon House of Fraser and they must be making a little on that.

Cloudy Bay is without doubt the most over-rated wine on the planet and not even worth the £15

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An example of very clever marketing. Once it had attracted some good reviews, at a time when NZ sauvignon blanc wasn't too well known over here, the myth grew up about the wine being in short supply with limited allocations to wine merchants. A total load of rubbish but it increased the hype. As you say, very overrated, although in any event I prefer sancerre to NZ sbs anyway, finding the latter to be a bit too "tropical fruit" for my taste.

[naebody]

At Raymond Blanc's Le Manoir aux Quat' Saisons, Oxford, Domaine des Comtes Lafon's 1999 Meursault sells for £220 - more than four times the retail price at Farr Vintners.

Mr Blanc said it was unfair to compare a retail price with the wine list price. "They'll have a warehouse of concrete, steel and glass against what I own at Le Manoir - expensive art work, an enormous garden to maintain, fine chairs and tables," he said.

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Apologies: I know this has been explained repeatedly both on here and in articles such as this, but I guess I must be bit slow. Fixtures and fittings are fixed costs. Likewise the cost of a corkscrew and a condecending waiter to pour the stuff. So why does it make sense to make £165 profit on a bottle of Comtes Lafron when you're only taking £10 on your house bottle of Banrock Station?

Surely, in an over-stuffed and novelty-hungry restaurant market like London's, there is a gap in the market for someone to introduce a wine list priced at retail plus a fixed corkage charge?

[SBonner]

As a London and Vancouver resident this falls on deaf ears. We have horrid government mark ups on wine so even with an exchange rate of 1 pound equally $2.20 Cdn it is still cheaper for us to drink wine in a restaurant in London than Vancouver. The English market is dominated by private wine merchants vs NA government monopolies - you are still getting a fair shake. What irrates me is wine writers or MW's who have a vested interest in a wine merchant company writing about wine in the papers and making a profit off the sales (a whole different post and thread I think)

Stephen Bonner

Edited August 1, 2007 by SBonner (log)

[Andy Lynes]

Surely, in an over-stuffed and novelty-hungry restaurant market like London's, there is a gap in the market for someone to introduce a wine list priced at retail plus a fixed corkage charge?

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Malcom Gluck got there before you at The Frontline - click.

[bakerestates]

'......Rather than the 300% mark-ups of many restaurants we simply add £10 and VAT to the cost price. So the better the wine the better the deal. Where else can you get a bottle of Persimmon Viognier 2006 for just £18?...'

I sold this wine (03 vintage) for £13.50 three years ago. It cost £4.07 ex VAT so that was at a margin of 65% and cash profit of £7.42. The 06 costs £4.69 list (they may get a discount).

Applying £10 plus VAT accross the list is making a higher margin than saying wines from house to £18 at a sliding scale from 70%-65% and then looking for a £10 plus VAT margin. As such, you would take more money on £18 plus wines but at a lower margin. As a challenge to Mr Gluck, who incidently has stayed at my establishment but failed to recognise the value in this list, where else in the on trade can you get a bottle of Barolo Margheria 1998 from Massolino for £45.

Drives the accountants potty mind you.....

Sure I'm not in London but my costs are not that different.

[Scott]

The following, shamelessly lifted from a wine forum I frequent, gives one high end restaurant owner's justification for his huge mark up on wines:

At Raymond Blanc's Le Manoir aux Quat' Saisons, Oxford, Domaine des Comtes Lafon's 1999 Meursault sells for £220 - more than four times the retail price at Farr Vintners.

Mr Blanc said it was unfair to compare a retail price with the wine list price. "They'll have a warehouse of concrete, steel and glass against what I own at Le Manoir - expensive art work, an enormous garden to maintain, fine chairs and tables," he said.

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Mr Blanc of course realises that many of his costs, tied up capital, warehouse storage etc, are the same as that of the retailer offering the wine for 1/4 of what he does.

Mr Blanc might also explain how he maintains his expensive art works, his garden, his fine chairs (????) when someone only drinks water, or house wine

[Scott]

Surely, in an over-stuffed and novelty-hungry restaurant market like London's, there is a gap in the market for someone to introduce a wine list priced at retail plus a fixed corkage charge?

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Malcom Gluck got there before you at The Frontline - click.

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the frontline markups are a bit of a myth. they're a bit higher than he claims, but it is a friendly place nonetheless.

[britcook]

I can't help thinking that we are focussing on too small an area, maybe we need to step back and look at the whole picture. Now if all restaurant owners were swanning around in chauffeur driven limousines because of their outrageous markups on wine there might be good reason for an outcry, but in truth restaurants fail on a regular basis, often costing their owners large amounts of money. Even St Gordon of Ramsay is not immune to failure, and you have to admit he does know a thing or two about running a successful restaurant. In catering ingredient costs are on average around 30% of selling price and to stay in profit (give or take a few percentage points) you have to get that return. Wine is just another ingredient, albeit one that you don't have to do a lot with, and therefore selling it for 3+ times its cost is no different to anything else you sell. The market seems to be a little distorted in the UK because of the high initial cost of the wine (punitive tax regime) and the reluctance of the good ol' British punter to pay a reasonable price for the food. The restaurateur has to turn a profit to stay in business and so he has to take his profit where he can find it, and sadly for us it is usually on the wine, after all putting, say, an extra £10 on a bottle will have less of a visible impact on the diner than will putting the same on the main course.

[Scott]

Britcook,

what you're really talking about is a fragmented industry, with few barriers to entry.

there are people who absolutely know what they're doing: David Page, Nigel Plats Martin, Sir Terrence, Jeremy Corbin etc.

and there are people who do not. But the fact remains, the failure of the industry is as much down to the participants as it is to the inherent risks of small business. When you add some of the odd customs and idiosyncracies of the restaurant business, then it becomes even easier to see the traps and pitfalls for inexperienced or deluded entrepreneurs.