The marketing costs for a $50 bottle of wine breaks down in the following way, within the three-tier system:
- 7% – cost of grapes and/or growing ~ $3.50
- 9% – cost of wine making ~ $4.50
- 4% – bottles, corks, boxes, labels ~ $2.00
- 2% – marketing ~ $1.00
- 13% – sales people, distribution from the winery ~ $6.50
- 3% – administrative costs ~ $1.50
- 2% – interest ~ $1.00
- 4% – taxes to government ~ $2.00
- 5% – actual winery profit ~ $2.50
- 20% – wholesaler markup ~ The people who get the wines to wine shops and/or restaurants ~ $10.00 (There’s overhead and payroll costs involved at this level.)
- 31% – wine shop markup ~ $15.50 ~ There’s a lot of overhead and payroll costs involved at this level. Today, restaurants mark up their wine to be much higher than a 31% profit… It’s easy to tell who they are, when you compare what a winery is offering as a retail price on their Websites. This is always their SRP (suggested retail price).
The more often you buy a bottle of wine directly from a winery, the more profit there is for the wine company owners. Because there’s more profit, it allows for those with advanced social consciousness to take better care of their workers, and some of actually do care about their workers… most especially the smaller wine companies. The smaller the company, the more direct contact/relationships exist. This exists even more so if the wine company is also growing its own grapes.
This information was sourced through my wine sales and marketing degree program notes.