The Average Net Profit Margin Per Bottle of Wine
There's more to wine than just popping the cork. According to Tincknell and Tincknell Wine Consultants, the U.S. wine industry has a three-tier sales structure. As a bottle of wine progresses through this structure, each tier imposes its own markups and retains a certain profit margin upon selling it to the next tier. The system consists of producers, whether that is a winery or importer, then wholesale distributors, followed by what it calls on-premise and off-premise sales. On-premise establishments include restaurants and bars, while off-premise vendors include wine shops and merchants. Direct-to-consumer sales are separate from this system and may enforce higher-than-retail prices.
"Wines and Vines" commentator and viticultural professor James Lapsley gives an example of a winery that operates on 50 percent gross margin. For a bottle of wine that ultimately retails at $20, this means that a winery will sell a case of wine for $110, at about $9.65 per bottle, keeping $55 to cover administrative costs, taxes and profit. Wine Curators consultants also take the $20 bottle as a point of reference and figure that the winery sells the bottle to the distributor for $8, in order to reap a 50 percent profit margin.
As the middleperson in the three-tier wine distribution scheme, distributors have to pay shipping to obtain the wines from the producer. Shipping charges can vary greatly, but Lapsley maintains that most distributors are working on 28 to 30 percent profit margin, selling wines to retailers for about $13.40 for a $20 retail bottle of wine. Wine Curators concur that distributors generally receive 30 percent profit margin for the bottle of wine, which varies depending on retailer buying power and relationships with wineries.
As you get to the retail wine shop, you'll see profit margins climb. Lapsley says that retailers will aim for 30 to 35 percent margin, whereas Wine Curators says that 30 to 50 percent is a typical range to expect. This translates into the wine shop charging 1.5 to twice as much as what they paid for the bottle of wine.
Direct-to-consumer retail sales involve suppliers selling wine directly to consumers through any of the following venues: tasting rooms, wine clubs and wine subscriptions, mail order, telephone sales and Internet sales. This type of selling charges the consumer a suggested retail price (SRP), which is based on the three-tier system and is regulated by the state where the consumer purchases the wine. Tincknell says that the SRP will be higher than "street retail" prices. Due to the variability in state sales regulation and the taxes that the supplier may be required to pay, quoting a profit margin for this type of sales is not straightforward.