We’ve all been there: you’re seated at a restaurant perusing the wine list when you come across your favorite bottle. You know you just saw that same bottle at your local wine store for $15 last week, but they’re charging $30 for it. How can this be?
Before you get upset, understand that typical restaurant wine markups are about two to three times per bottle, according to Restaurant Sciences, a Massachusetts-based research group that tracks food and beverage consumption in North America, and four times for wine by the glass. Retail markups for wine are generally 150 percent. So, if a bottle of costs $10 wholesale, you’ll likely pay around $15 for it at the store and roughly $25 at a restaurant.
“Nothing on any menu isn’t marked up,” explains Chuck Ellis, CEO and president of Restaurant Sciences. In fact, typical restaurant food markups are three to four times per item, and non-alcoholic beverage markups, like fountain sodas and coffees, are typically marked up six times or more.
So why do restaurants mark up their wine? To understand this, you must start at the beginning. Wholesalers first determine the retail price, known as the minimum bottle price, or the lowest price someone can sell that particular bottle for, explains Matthew Murphy, president of Do Valle, a Connecticut-based importer and wholesaler/distributor. “This price is based on a number of factors: wine region, varietal, winemaking process, winemaker, vintage, brand name recognition, (historical value), scores by wine critics, taxes, and even gas prices.”
When the restaurant purchases the wine, they must then mark it up again, as they have myriad costs to cover.
Some restaurants use a standard markup formula (all bottles get marked up 250 percent), while others charge a flat markup fee (every bottle is listed at $20 above retail). And some, particularly fine dining restaurants with sommeliers on staff, determine markups on a bottle-by-bottle basis. For example, Carlton McCoy, wine director at The Little Nell Hotel & Residences in Aspen, oversees a 20,000-bottle cellar, marking up each bottle individually to ensure an accessible and well-priced list.
If a restaurant operates this way, certain wines will command a much higher markup than others. Generally speaking, wines that command the highest markups are very rare and highly collectible, says McCoy. “It’s pure supply and demand economics—if a wine is almost impossible to find, like a bottle of 2010 Domaine de la Romanée Conti Le Montrachet, it’s going to be marked up a lot.”
And when supply is limited and demand is high, each person along the way—the importer, distributor, and retailer or restaurant—has to take a cut. “At this point, it’s not about the quality of the wine anymore, it’s about status,” says Juan Carlos Flores, Wine Director at Capella Pedregal in Cabo San Lucas.
“Fortunately, most restaurants are very competitive, so there’s not room to abuse markups,” says Ellis. To ensure you’re getting a good value, always buy wine by the bottle. The price for a single glass is typically the wholesale price for a full bottle.
Similarly, avoid big name brands that retail between $5 and $40. Lesser-known vineyards don’t sell as well, so the markups are generally less in order to encourage people to buy. Plus, the quality is almost always higher, says McCoy, who puts the lowest markup on fun, experimental wines.
With the science of markups covered, let’s have some fun and look at the most marked-up wines in the world: Bordeauxs, small production Burgundies, Champagne, and cult California cabernet. Check out our list of the top six marked-up wines:
Château Pétrus: Located in the Pomerol appellation of Bordeaux, this small-yet-iconic estate produces a limited-production red wine made from almost exclusively Merlot grapes. It’s the estate’s only wine, and it’s highly allocated worldwide, and thus commands a high markup. “Today, many First Growth Bordeaux wines and Grand Cru wines are saved and traded like a commodity by rich Chinese businessmen (which has driven the price up further),” says Daniel Brennan, winemaker and owner/founder of Decibel wines in New Zealand. The price is always dependent on the vintage and what the critics say, adds Murphy, but because of the historical value of the wine—it’s been around since the early 1800s—Château Pétrus always commands high markups.
Domaine Coche-Dury: Based in Burgundy’s highly regarded Meursault, in the Côte de Beaune wine region, this producer has a reputation for making some of the best white wines in Burgundy, says Brennan, adding that a good bottle from the same Corton-Charlemagne appellation sells for about $65 wholesale, compared with Domaine Coche-Dury’s $2,000 bottle. “Interestingly, they’re marked up by everyone except the winemaker, due to their small parcels that produce as few as 250 bottles each year.”
Domaine de la Romanée-Conti (often abbreviated to DRC): This legendary Burgundy estate produces both white and red wine, and is considered one of the world’s best producers. Its bottles are also among the most expensive—new releases can sell for upwards of $10,000 per bottle—because they’re “produced from a miniscule vineyard with tiny yields that are highly allocated,” says Jonathan Horowitz, partner at Houston’s Lasco Enterprises, The Tasting Room, and MAX's Wine Dive.
Veuve Clicquot: This Reims-based champagne house has been around since the late 1700s—it was all but responsible for establishing champagne as the drink of choice throughout high-class Europe—and its retail presence is huge in the United States today. Though champagne costs a bit more to produce than other wines due to aging, the yields are extremely high and consistent from year to year at Veuve Clicquot. Thus, coupled with the brand recognition, consumers are willing to pay a premium for the label, and restaurants mark their bottles up accordingly based on demand. However, it’s important to note that Veuve commands an above-average markup (usually around 350 percent) to avoid pricing the wine too far below the minimum bottle price the restaurant wants to have on their list, explains Murphy.
Screaming Eagle: Due to the small quantities produced, the high ratings from wine critics, and the incredibly high prices, this California estate is commonly regarded as one of America’s first cult wines. The Oakville-based winery is also run by premier winemakers, which drives the price up even more. “Its scarcity and reputation create the demand and the ability to charge premium prices for it, which is why it’s much more often found in private collections, than on restaurant wine lists,” says Horowitz. In fact, bottles sold direct from the winery cost nearly half the price the wine sells for in the marketplace, says Jeff Leve, publisher of The Wine Cellar Insider (think $750/bottle wholesale compared with $3,000/bottle at a restaurant). Though it’s nearly impossible to get on their mailing list now.
Silver Oak: This family-owned California winery has produced exclusively Cabernet Sauvignon since the early 1970s, though its cult status isn’t due to insanely high prices—most bottles sell for under $120 wholesale—or small production. “But wines like Silver Oak can be listed at well above normal markup mostly due to its powerful reputation (and high scores by Robert Parker),” explains Brent Kroll, wine director for the Neighborhood Restaurant Group in Washington, D.C. “When this happens, it's essentially an establishment saying, I know people will buy this blindly.”
Kroll says this is common practice with many popular California wines because they’re promoted as brands as opposed to villages. “It's much easier for the consumer to identify with a brand.” Adds McCoy: “Most California Cabernet is extremely marked-up, which is not something I feel is warranted—while they may be high quality, they’re not as rare, and I think prices should be high only if the quality is high and the quantity is low.”