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Wine By The Glass is Profitable, If the Price is Right

Between 2013 and 2018, an average of 23.15 million litres of wine was sold within the confines our Kenyan borders (Euromonitor Int., 2019). These astonishing facts translate to even more profound figures when we get to the money talk – by 2013, we sold Kes. 50.7 billion worth of wine and an astounding Kes. 85.2 billion by the end of 2018. The majority of the high sales figures were attributed to on-trade (bars/restaurants/clubs/lounges) as compared to off-trade (supermarkets & liquor shops).

Source: Euromonitor International Wine in Kenya 2019 report

For a start, there seems to be a general consensus among industry professionals that wine should be offered by the glass to help people introduce their palates to wines they may not be familiar with. If you consider that a wine glass in Kenya will range anywhere from Ksh 300 to ksh 600 (and the thirsty ones will probably quaff at least 3 glasses in one sitting) there is a pretty hefty profit to be realised in the market. Sommelier Business magazine defines the industry standard as 200-300% mark up on each bottle over its retail sales price. 

The marginal differences are evident if the on-trade premise is owned by an importer or by a re-seller. Usually the direct importer will not need to add exorbitant markups unlike their counterparts in the service industry who need to make their profits first as they buy from importers. Therefore, when you have to first realise profit margins above all, logically there is less emphasis placed on the quality of service.

Kenyan Sales volumes (millions of litres) and where we are placed as a country.

In a recent visit at the swanky Wine Shop Kenya located in Nairobi’s Loresho suburbs we got an exclusive interview with the restaurant’s Managing Director, Soraiya Ladak who shared her thoughts on the current state of the industry. She pointed out that it is important to appreciate and enjoy wine in its surrounding i.e., pairing with food and good company. “As you sell wine, it is important that you add that personal touch to the service delivery, that is why we only have one branch as the moment… we recommend the best wines in person and follow up with the customer on how they like it,” the sommelier said.

The restaurant is known for its wide variety of imported wines and is frequented by many of Kenya’s elite. Talking about the ambience, the establishment is well-manicured and has a luxury scenic setting making it ideal for individuals wishing to wine down after a long day at work – less of a place to see revellers. The family owned business stresses on the importance of setting the right prices on wines sold over the counter. “It is worth setting affordable prices that make business sustainable making it possible for people to enjoy different wines over and over rather than outpricing,” Soraiya added. Because wine is more experiential, the customer can easily switch from one to another if the price is set right with minimal damage to the purse.

An image of the ‘Wine Flight’ – a unique wine tasting offered at The Wine Shop to experience a snippet of wines from all around the world.

The Kenyan wine consumers in 2021 have evolved. In the Information Age, wine lovers are becoming more educated, open-minded, opinionated, and extravagant. Notwithstanding that we a still dealing with a pandemic and all its effects on the economy, the only substantial impact we saw last year was on the supply chains; the channels that make it possible for wine importers to avail the products in their respective outlets. Besides Kenyans prompting their favorite sommeliers to host tasting classes, a majority of local orders also tend to be shifting online with the advent of reliable mobile applications such as Glovo party, Jumia, Mobar.

An image of The Screaming Eagle Cabernet Sauvignon which is the most expensive wine ever sold at a price of $500,000 (Kes. 50,000,000).

Wine pricing needs to be a dynamic, not a static, process and since wines provide more profit than any food items on your food menu, you want to make absolutely certain that you are optimizing the profit potential. More attention should also be placed on getting the best deals and discounts in the supply chain making appropriate adjustments along the way depending on your business model.

If you liked this article, you may like this one: Kenyans Only Drink Sweet Wines – A Myth?


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