What is the average profit margin on wine in catering?

Wine is a significant part of revenue for most caterers. Margins are often higher than on food, but there are pitfalls too. How do you set a selling price that's attractive to customers but still leaves enough margin? And what factors ultimately decide what you earn on a bottle of wine?

Profit margins on wine: what can you expect?

In catering, most businesses mark wine up 2.5 to 4 times the buying price. That works out to a buying cost of roughly 25 to 35%. In other words, of every euro a customer pays for a bottle of wine, 25 to 35 cents goes on the buying price.

The margin varies a lot by segment. On cheaper wines (buying price 4 to 8 euros a bottle) caterers charge relatively higher markups, sometimes 3.5 to 4 times the buying price. On pricier wines (25 euros and up) the markup is often kept lower, because too high a selling price dampens demand. A bottle you buy for 30 euros and put on the list at 120 euros still sells to most customers.

A realistic profit margin on wine for caterers

For caterers the margins often work a bit differently than for restaurants. At a catering event you set the price in the quote, not on a menu. That gives you more freedom, but the customer also has less to compare it against. Common guidelines:

• House wine (buying price 4 to 6 euros): selling price 15 to 22 euros a bottle
• Mid-range wine (buying price 8 to 12 euros): selling price 25 to 38 euros a bottle
• Premium wine (buying price 15 to 25 euros): selling price 40 to 65 euros a bottle

Note: these prices exclude VAT. The high VAT rate of 21% applies to alcohol in the Netherlands. When you draw up a quote, make it clear whether your prices include or exclude VAT.

How do you work out the right selling price for wine?

The most common method is cost-price markup. You take the buying price of a bottle of wine and multiply it by a factor. That factor has to be high enough to cover transport, storage, staff and margin.

A simple formula: buying price × 3 = selling price excluding VAT. Then check whether the price fits the type of event and the guests attending. For a casual garden party with house wine, a factor of 3 works fine. For a corporate dinner with a more select list you can go higher, but then the wine in the glass has to live up to it.

Don't forget wastage either: corked bottles, breakage, leftovers that don't sell. Especially at bigger events it's wise to build in a small buffer. One broken case at a wedding eats into a chunk of your margin.

What factors shape your wine margin?

Beyond the buying price and selling price, other factors affect your margin too:

• Service level: do you serve wine by the glass or by the bottle? Serving by the glass gives a higher yield per decilitre but needs more staff.
• Type of event: at a corporate dinner a guest pays more readily for a quality wine, at a school reunion they don't.
• Venue: an off-site venue brings transport costs and sometimes cooling costs with it.
• Season: wine in summer, in hot weather, calls for different buying than a winter reception.
• Regular supplier: a good relationship with a wine wholesaler can get you direct discounts or exclusive selections.

How do you buy wine smarter for better margins?

Buying well shapes most of your final margin. A few things that work well in practice:

• Buy by the pallet or case, not by the single bottle. Volume gets you a discount.
• Work with one regular wine supplier and negotiate on annual volume. Buying more gets you better prices.
• Buy in by season: some wines are cheaper if you buy well ahead.
• Use a small fixed wine list per event type instead of hunting for something new every time. Less decision fatigue, better buying.
• Record per event how much wine actually gets drunk. After a few events you can judge much more accurately how much you need.

That last point pays off fastest. Caterers who track what actually gets used per guest buy in less and end up with fewer unsold bottles afterwards.

Frequently asked questions

What VAT applies to wine in catering?

In the Netherlands the high VAT rate of 21% applies to alcoholic drinks, including wine. When you draw up a quote or invoice, you need to apply this rate correctly. Non-alcoholic drinks fall under the 9% rate. Always state clearly whether your prices include or exclude VAT.

Is it better to charge for wine by the glass or by the bottle?

That depends on the event and the client. Charging by the glass brings in more revenue per litre, but needs more precise pouring and more staff. By the bottle is simpler to manage and clearer for the client. Bottles are more popular at corporate dinners, while charging by the glass or per person is more common at buffets.

What counts as a good margin on wine for a caterer?

A common guideline is a cost percentage of 25 to 35% on wine. That means the buying price makes up 25 to 35% of the selling price. On cheaper wines you tend to sit nearer the bottom of that range, on pricier wines nearer the top.

Can I sell wine myself as a caterer, or do I need a licence?

In the UK you need a premises licence to sell alcohol. At an event away from your own premises you either work under the venue's licence or apply for a Temporary Event Notice from the council. Sales have to be authorised by someone holding a personal licence, and you check age under Challenge 25. Always check local rules and ask your municipality if you're unsure.

How do I record drink sales correctly in my accounts?

Make sure you list drinks separately on every quote and invoice with the right VAT rate (21% for alcohol, 9% for soft drinks in the Netherlands). Keep your purchase invoices too, so you can compare buying against sales. A record per event of what you bought in and what was actually used helps you plan and price better next time.

How much wine do you budget per guest for an evening?

A common rule of thumb is half a bottle per guest for a dinner lasting a few hours, roughly three glasses. For a two-hour reception that's lower, for a wedding with a long evening it's higher. If in doubt, work with half a bottle and agree with the client how you'll handle anything opened beyond that.

With Catermonkey your drinks lines sit in the same quote as your dishes, with the buying price behind them. So you see what a bottle earns you before you send it.

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