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Overview: As the fine wine market continues its recovery from the pandemic, a growing number of US restaurants are pushing wine prices to unprecedented levels, leaving some producers struggling to justify their markups.
The Full Story
A recent report by Gino Colangelo, founder and president of New York-based wine PR agency Colangelo & Partners, has highlighted the extent of the problem. According to his data, on-trade wine sales in the US have fallen by around a quarter since 2019, while ready-to-drink cocktails have gained share.
Colangelo’s findings are backed up by industry data showing that wine’s dollar share of the on-premise channel has decreased by 0.3% over the past year. Meanwhile, more than 75% of US wine drinkers say they would not pay more than $16 for a glass in a restaurant.
The trend is seen as part of a broader shift towards “preloading” – drinking at home before heading out to avoid inflated markups on wine and cocktails once at the table. This has led some producers to wonder how they can justify prices that have ballooned by as much as five times the wholesale cost.
Production & Profile
The majority of US restaurants are now inflating their marks ups 6:times rather than using a four-time markup convention like in yesteryear. The shift is largely driven by rising costs, including rent and staffing expenses.
A recent example cited by Colangelo is a Prosecco with a wholesale cost of around €1.70 appearing on the menu at $60 – effectively five times more expensive than its retail price in Europe.
Brand & Industry History
The current trend towards inflated wine prices has been building for several years, driven by increasing demand from affluent consumers willing to pay premium prices for high-end wines.
However, the shift is also seen as a response to changing consumer behavior and rising costs in the industry. As Colangelo noted, “wine has become an easy line for operators to push margin through” – with many restaurants now using wine as a way to drive up sales without having to increase food prices.
What This Means
The trend towards inflated wine prices raises several concerns about the future of fine dining in the US. As Colangelo warned, “if people stop drinking in your restaurant because your prices are prohibitive, then it’s a very short-sighted way to approach pricing.”
The crisis is also seen as part of a broader shift away from traditional wine culture and towards more casual, affordable options.
Consumer Takeaway
In the end, the trend towards inflated wine prices will likely have one major impact: it will make fine dining less accessible to many consumers. As Colangelo noted, “ordering a bottle for the table has become a strange experience” – with young drinkers more used to paying by the glass.
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