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How Do Restaurants Price Old Wines?

Why are older wines priced the way they are? Megan Krigbaum talks to sommeliers helming the nation's top vintage lists and discovers that the process is far more complicated than a simple mark-up.

Some people get their kicks from compulsively hunting for deals on shoes and mid-century modern furniture on eBay. I get mine by stalking old wines on restaurant lists.

Why old wines? Current release vintages offer far less intrigue. Largely, prices for these bottles are based on the wholesale cost that the restaurants paid for the bottles, marked up three times. Sure, this exact equation varies depending on the market and brand recognition of the wine itself—Veuve Clicquot’s “Yellow Label” Champagne, for example, shows up on lists priced anywhere from $80 up to an egregious $250 dollars (thank you, club kids). But most lists show current vintages at nearly the same price.

By contrast, a recent old-wine trolling spree turned up two restaurants in different cities—both high-end, both Italian in focus—with the same prized wine, Bartolo Mascarello’s Barolo from the heralded 1967 vintage. On the San Francisco list, the price was $975. On the New York list, the price was $1750. Meanwhile, I found the same wine from the 1996 vintage on another New York list at $975. On that first New York list, the 1996 clocked in at $1175. I poked around to find 2012, the most recent release. It tends to turn up right around $250, which means, on the low end, the 1996 is valued at nearly four times the current release.

How to make sense of this? To an outsider, the assumption is that there’s a certain premium placed on any wine with age, but all sommeliers will avow that that is not the case. So, I talked to a number of wine buyers in charge of extensive lists, and a few distinct categories of wine programs built around older wines emerged: those that have been collected for years and can keep markups relatively low for guests; those that are keen on giving deals to guests at the higher-end and rely on current release wines to make up the difference; and those that relentlessly track the market and price their wines in accordance with their current perceived value.

Here, a look at how each sommelier approaches the sourcing and valuation of vintage wine.

Acquerello and 1760 | San Francisco

When Gianpaolo Paterlini became wine director at Acquerello eight years ago, he took the reins from his father, Giancarlo, who had been running the program since the restaurant opened, 20 years ago. Building on Ginacarlo’s collection, Gianpaolo has grown the number of bottles in the restaurant’s four cellars from around 650 to nearly 2000. Over time, he’s identified which producers he feels strongly about and buys some of everything that they make every year. These wines go directly into a cellar to age before they even appear on the list—a luxury that many newer restaurants can’t afford. This strategy doesn’t always make the most sense, though. Certain cult producers’ prices have become so inflated that it’s actually less expensive for him to to purchase older vintages on the grey market than to buy current releases from the winery.

“The Gaja Barbaresco prices have just skyrocketed,” says Paterlini. “They’ve started charging so much that I don’t buy them from the winery much anymore.”

This predicament is clear enough on the wine list: 1995 Gaja Barbaresco is priced at $320, while the current vintage, 2011, is $415. Paterlini is constantly reevaluating prices; he looks to auction catalogs to establish the market. With verticals, when he brings on a new vintage, he’ll add $10 or $20 to older ones, to account for cellaring. At his more casual restaurant, 1760, he simply adds between $40 and $60 to the price he paid for the wines, regardless of its base price, to encourage guests to spring for pricier bottles.

The Morris | San Francisco

In October, Paul Einbund, one of San Francisco’s long-tenured sommeliers, opened The Morris in Potrero Hill with a cellar full of wines—primarily from the Loire, Burgundy and California—he’d been stashing away for seven years. All of the prices on his list are based on what he paid for them, and they fit into three different price structures. For older wines that he’s had on hand, he’ll charge a two-and-a-half times mark-up and then add around $3 for the storage. So, for example, a bottle of 2006 Allemand Cornas Reynard, which he bought for $100, appears on his list for $253. For older wines that he bought with age direct from the producer, like the 2004 Peay La Bruma Syrah from Sonoma, those see the same mark-up, but without any storage fee. (That wine is $102 on his list.) And finally, in the case of, say, grand cru Burgundy, he looks to the market, pricing them slightly under the average going price in order to move them off the list.

“Say I pay $300 for the bottle. I’ll charge $495,” he says, “which means I’ll make less, but have a larger cash flow.”

The Little Nell | Aspen

The cellar at The Little Nell is so vast that the hotel brings in PricewaterhouseCoopers to audit its inventory, which includes a comparative evaluation of the older bottles with others in the market. Here, wine director Carlton McCoy runs the 20,000-bottle collection, all of which is stored onsite at the hotel in a cellar kept at 50 degrees and 50 percent humidity. McCoy prefers to buy direct from producers, not quite trusting the auction or grey market, and he’s particularly attuned to market pricing, knowing that his savvy clientele are aware of the going price for many high-end wines.

“I’ve got a ton of old vintage [Giacomo Conterno] Monfortino [Barolo], which is really expensive now, so I had to increase them a little bit or it’s just bad business,” he says. “If I have ‘67 Monfortino on for $500, I’d look like I’m not aware of what’s going on in the market.”

Publican Anker and Nico Osteria | Chicago

Sommelier Bret Heiar has an unorthodox way of handling older vintages. “Vintage is subjective,” he says. Whereas 2000 Barolos saw broad acclaim in the wine media, Heiar found that they’re not really holding up. He’s more interested in the overlooked vintages, like 1999, which are drinking well right now and are much less expensive.

“I do like having multiple vintages for variety,” says Heiar, who has also made it a point to seek out non-blue chip wines with age, like Chinon and California zinfandel. “Some people like warmer vintages, some cooler, but if a wine tastes exactly the same in every vintage, I do not want that wine.”

To prove that he’s not into simply placing a premium on wines with age, Heiar will often charge the same amount across the board for several vintages, regardless of what he paid for them.

Momofuku | New York City

Wine director Jordan Salcito built Momofuku Ko’s wine list on an impressive base of aged wine—particularly Burgundy—procured from private collections. “I think it’s important to not look at it like a formula, because this not mass-produced pinot grigio that you always get for this price and then mark it up four times and you’re on your way,” says Salcito. “A lot of it is just gut and feel, thinking about how those wines are priced in the market, as well.”

Should she buy a big stash of bottles that a collector’s simply looking to move out of his or her cellar, for example, the prices she paid for individual bottles might not correspond to their actual value. By contrast, if she’s able to get ahold of a particularly legendary bottle, say a Côte-Rôtie from Marius Gentaz (who retired and sold his vineyards in 1993), then she’s likely to offer it at the best price she can, as a gift of sorts to knowing diners.

Salcito’s also not a believer in the idea that older wine necessitates higher prices. She points to Bordeaux as a great example; it’s often easier to find bottles from excellent vintages from the ‘80s, like 1982, priced less expensively than current vintages. The tricky part is finding balance in pricing these bottles, so as to not incentivize customers to only buy the older bottles (which are tough to replace), while vintages like 2005, which is more costly but drinking exceptionally now, languish.

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