Wine Prices Cheaper Than National Average

Northwest Arkansas restaurants stock up on wine, offer bargain prices, by-glass servings

Budding enophiles in Northwest Arkansas have plenty of places to go to sample wines, and, compared to the national average, they may be getting a bargain at the same time.

“I don’t think there’s any price gouging going on,” says Stan Hastings, president of Moon Distributing Co. in Little Rock. “When you look at their time and energy and money, it’s all relative.”

According to Nightclub & Bar magazine and to two liquor distributors interviewed for this article, the average markup for wines sold in restaurants is 200 percent to 300 percent over the wholesale price. But a 300 percent markup is “exorbitant and ultimately self defeating,” says the industry magazine in a 1998 article.

We checked the prices of several different wines and found the markup to be between to 100 percent to 200 percent at area restaurants.

Hastings says a 100 percent markup is a bargain by restaurant industry standards.

Arkansas liquor stores mark wine prices up an average of 40 percent over wholesale, says a distributor who requested his name not be used in this report.

“[Restaurant wine pricing] is an issue that has been going on since I’ve been in the business, since 1964,” he says.

Two theories, he says, are common in the restaurant industry: low mark-up, more sales or high mark-up, fewer sales. Northwest Arkansas appears to be in the first category.

Assuming restaurants pay the same wholesale price as liquor stores, that would mean a bottle of wine that cost $7 wholesale would sell for $9.80 in a liquor store and $21 in a restaurant (at a 200 percent markup). The restaurants we surveyed would be more likely to charge between $14 and $21 for the same bottle of wine.

But restaurants don’t always get wine at the same wholesale price as liquor stores because liquor stores buy in larger volume. And in many cases, additional liquor taxes apply to restaurants but not to liquor stores. To make matters more complicated, private clubs in Arkansas can’t buy liquor from wholesalers: They must purchase it from liquor stores.

Suzie Stephens, owner of Cafe Nibbles in Fayetteville, says she doubles the wholesale price of wine sold at her restaurant, then subtracts $1. In addition to liquor taxes, Stephens notes that she has to pay for storage, refrigeration (in some cases) and labor to serve wine and clean up the mess.

People think nothing of ordering a beer at a restaurant and paying four times the liquor store price, she says, but they balk at ordering a wine that costs twice what it would cost in a liquor store.

A sliding scale of sorts applies to restaurant wine pricing. Nationally, tripling the cost of a bottle of a relatively inexpensive wine is common. But the more expensive the wine, the more likely a customer will be to suffer sticker shock when the bill arrives. Selling a bottle of wine for $300 that could be purchased for $150 at a liquor store might not set well with customers.

Taster’s choice

James at the Mill in Johnson stocks a whopping 121 different types of wine.

“He has what the industry calls a ‘library of wine,'” Hastings says.

Chef/owner Miles James buys many distinct wines and stores them at the restaurant until they mature to a drinkable age.

As far as pricing goes, James at the Mill appears to be in the 100 percent to 200 percent mark-up category.

A couple of anomalies at James at the Mill concerned two vintages of Caymus Vineyards Cabernet Sauvignon, Special Selection, Napa Valley. The 1994 vintage, which sells for $295 per bottle at James at the Mill, is $108 per bottle at Liquor World in Fayetteville. The 1995 vintage is more expensive at Liquor World, selling for $140, but it’s cheaper than the ’94 vintage at the restaurant, where it sells for $220.

Cafe Nibbles, which opened in July, was No. 2 with 90 different types of wine.

A trend at restaurants nationwide is to sell more wine by the glass so customers can try a variety of wines. James at the Mill offers 24 different wines by the glass. Cafe Nibbles offers 28.