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Wine farm restaurant mark-ups

The debate rages on as two major players join the conversation.

by: Cathy Marston | 11 Nov 2010

Neil Grant is the sommelier at Rust en Vrede restaurant in Stellenbosch. Wholly-owned by farm owner, Jean Engelbrecht, the restaurant has always had a policy of marking up its own wines by a very modest amount. The rest of their wine list is also surprisingly affordable by fine dining standards and offers a huge choice of local and international wines.

CM: Why did you decide not to mark-up your own wines to normal restaurant levels?

NG: “We’ve always seen the restaurant as a way of promoting the entire Rust en Vrede brand and South African wines as a whole. Obviously it is easy for us to cut out the middleman as the wines are here on the estate, but we feel we have a responsibility to pass that value onto the customer which is what we do. Also our menu items are more expensive than average given the quality of products we use, so keeping the wine prices down does compensate a bit for this.”

CM: Why do you think other wine farm restaurants don’t have the same approach as you do?

NG: “Look, it’s very difficult for me to comment on other people’s scenarios without knowing exactly what their set-up is, particularly when the restaurant isn’t owned directly by the farm. If restaurant-owners didn’t negotiate better rates from the wine farm when they set up their business, then it is very hard for them to change that later and obviously a restaurant must charge whatever it has to in order to survive. All I know is that if I was setting up a restaurant on a wine farm now, I would make very sure that I got better prices on that farm’s wines so that I could hold my margins down accordingly!”

CM: Do the prices of wines affect your choice of restaurant when you dine out?

NG: “Yes they do. Not just a wine farm’s restaurant, but any restaurant because I know the trade prices and also all the associated costs. If you’re using really good glasses like we do (imported Riedel glasses), train the staff well and offer some added value, then I don’t mind paying mark-ups. But if people just double or triple the trade price and bring nothing else to the party, then I’d rather BYO and pay corkage than get ripped off. I am not a fan of BYO, I would rather stay away from wine and drink a beer for the evening.” ”

Hein Koegelenberg is the CEO of La Motte which has recently opened its new restaurant Pierneef a la Motte on the estate. All the La Motte wines are available at cellar door prices in the restaurant and all are also available by the glass.

CM: Why did you decide not to add a mark-up to your wines in your restaurant?

“I think it is unfair of any restaurant – whether on a wine farm or not – to take 200-300% mark-up on a wine. The margin we make in the tasting room covers the costs of the staff in there and by offering it at the same margin in the restaurant means we can cover the costs of the waiters so we have no need to charge more.”

CM: Do you think it has been worthwhile for La Motte to take this stand?

“Absolutely! We see this pricing policy as a marketing tool and La Motte as offering a whole experience to the customer. We have had a lot of positive comments about our restaurant wine prices and customers appreciate the fact that it is so affordable. Our wine sales have increased three-fold since we opened the restaurant, and many of those sales are from the tasting room after people have enjoyed a meal with us, which indicates to me that there is a lot of brand loyalty and love on behalf of our customers.”

CM: You don’t make any extra margin on your wines by the glass either. Why not?

“It’s very important that we know what concerns our customers and that they see that we care about those concerns. So we make it easy for them to stick within the drink-drive limits and still be able to match different wines with different dishes by ordering a glass of wine without it penalising them money-wise. It’s about being fair to the customers and – almost more importantly – being seen to be fair as well.” 

Who else keeps it to a minimum?

Following on from last week’s article about restaurants which do mark-up their wines excessively, here is a short list of some more of our favourites which do the ‘decent thing’ and keep their mark-ups to a bare minimum, if at all:

Fairview, Backsberg, Rickety Bridge, Noble Hill, Middelvlei, Clos Malverne, Warwick, Haskell, Delheim

Do you know of any other wine farms with similar pricing policies? Or any which are OTT in marking up their own farm’s wines? Tell us below.

Read more on: la motte  |  cathy marston  |  rust en vrede

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