Pricing Your Wine

If only the wine sold itself.

You want to create it and share it with friends and visitors to your winery. If only someone would take the bulk of the production from you at a great profit to you wouldn’t life be great?
Unfortunately, you must sell your wine, and to sell it the wine must be correctly priced.
Price the wine too low, and you don’t make enough to cover the costs. You also feel like an amateur (chose your own word) for not reading your market correctly.

Price the wine too high, and you will be storing it in inventory.

Correct pricing is not guesswork.

It is the result of selecting your market segment, knowing what your customers like, why they buy from you, and assessing competitive offerings. Your own costs come last.

So how well do you know your market? Are you selling

  • directly to the consumer,
  • to restaurants,
  • and/or to the LCBO?

If you said all of them then you may want to reconsider.
The table below illustrates four broad segments related to wineries that require different strengths and provide different rewards. Not all wineries need to play in all arenas.

Segment Why They Buy Pricing Considerations and Challenges
Tasting Room Entertainment.People visit the County and a winery visit is part of the experience, and it
it is usually a fun filled time
Customers are willing to pay a premium for the experience.
On holidays one always pays more.
You control the experience.
You must manage the tastings.
Calculate waste vs. revenue per tasting.
Select staff for selling ability.
Wine Club Customers love the price point of the wine.
It saves running out to buy wine at the LCBO.
They feel special and privileged.
Willing to pay a premium price for a premium wine.
However, the experience must be perceived as providing great value for the price
To secure loyalty
must offer some deal such as a free gift or meal coupon.
Requires continuous reinforcement to maintain loyalty.
Expect high turnover among members.
Requires recruiting and monitoring by dedicated staff.
Restaurants To make a high markup on resale.
To carry the type of wine their customers demand.
Because they have a relationship with you
To entice the restaurant to select your wine among many competitors, the price must be low enough to make margins attractive for the restaurant. You have little control.
Substantial investment in sales force.
No volume advantage.
Remote inventory management.
LCBO Politics.
Ontario shelf space.
Competitive pricing depending on how badly one wants shelf space. They hold the power.
No control by winery.
Very low margins


In which segment do you offer the best value proposition? I would argue that in most cases it’s the one where you have control i.e., the experience and where the customers are primed to purchase. This of course means direct sales via the tasting room. It’s up to you to create the right environment, have the right staff, and market yourself successfully.

Restaurants control the price at which your wine sells, and the way they chose to recommend your wine.

The LCBO holds all the cards and the margins are tiny.

It’s up to each grower to decide where they are best positioned to meet the demands of the various segments. Ultimately it’s a matter of weighing the costs against the expected revenues.

Making Great Wine and Great Money

I stand in awe of the individuals I have met that established and operate a vineyard and a winery here in the County. They had a dream and the strength to carry it out.
Having a dream, a vision and passion are necessary ingredients of creation. They permit a dream to become reality. These visionaries have talents and energy that the rest of us can only dream about.

However, once the vision has become reality a different skill set may be required. The ship builder needs a captain to pilot the ship. The winemaker needs someone to sell their wine.

  • Few of us are blessed with the ability to visualize the dream and then continue on to create an enterprise that is self-sustaining, grows over time and produces the financial and psychic satisfaction to reward the efforts that have been invested.
  • Most of us are good at some things and less strong in other areas. So once the dream has become real we often need a team to help carry on and build a healthy and vibrant enterprise. The early building blocks of that team are the right kind of accountant and the right kind of banker. They will form the start of an advisory board to the CEO (that’s you).
  • They will want to know whether the business is profitable. If not, when will it be?
    • Can you explain your business plan?
    • Are you covering your administrative costs and your financial expenses?
    • What about cash flow forecasts?

To answer these questions we require a measurement system.

  • The system must measure the cost per bottle and the gross profit on each bottle.
  • The system must identify the direct production costs as well as the overhead.
    • It must gather together the costs of labour, packaging, labelling, bottling etc. and then appropriately cost them for each bottle.
    • The system must differentiate among the various products and allocate overhead correctly.
    • The system must also correctly cost the inventory, and distinguish between raw materials, work in process and finished goods.


An accurate costing system allows the business to decide which wines to focus on, which to drop and which to expand. If you are losing on each bottle then increasing volume will ruin you that much quicker.

Giving life to a business and making great wine require passion. Keeping the dream alive requires understanding the customer, pricing the wine correctly, marketing and selling skills. It always requires having a measurement system to know whether you’re making money on the great wine you produce.