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Factors Affecting Wine Price Mark-up in Restaurants

Published online by Cambridge University Press:  17 August 2018

Florine Livat  and
Hervé Remaud
Florine Livat*
Affiliation:
Kedge Business School, 680 cours de la Liberation, 33405 Talence Cedex, France and Bordeaux Wine Economics
Hervé Remaud
Affiliation:
Kedge Business School, 680 cours de la Liberation, 33405 Talence Cedex, France and Ehrenberg-Bass Institute for Marketing Science, University of South Australia GPO Box 2471 Adelaide, South Australia 5001, Australia; e-mail: herve.remaud@kedgebs.com.
*
e-mail: florine.livat@kedgebs.com (corresponding author).
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Abstract

The purpose of this study is to examine how restaurants determine the percentage of wine mark-up. Wine sales are a substantial contributor to restaurants’ profitability, therefore a better understanding of the factors affecting mark-up is critical for the industry. Here, the mark-up is expressed as a percentage over the cost and refers to a cost-plus pricing strategy. Sommeliers from around the world, the majority of whom were members of the International Sommelier Association, were approached to complete our Internet-based questionnaire administered between February 2014 and May 2014. Of the 800 who began the survey, 267 fully completed the questionnaire, generating 1,869 observations. We regressed the declared percentage mark-up against restaurant and wine list characteristics, including managerial practices and wine steward characteristics, and showed that if the restaurants apply a simple rule of thumb to set wine prices, focusing on every price segment, it appears that sommeliers do not have much impact on the percentage mark-up. (JEL Classifications: C23, D21)

Keywords

cost-plus pricingmark-upsommelierwine
Type
Articles
Information
Journal of Wine Economics , Volume 13 , Issue 2 , May 2018 , pp. 144 - 159
Copyright
Copyright © American Association of Wine Economists 2018 

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