Wednesday, February 4, 2009

IT'S A WTF WEDNESDAY


It’s a WTF Wednesday! And what do I mean by that? Well, today is just another reminder of how volatile and confusing the spirits business is. The other day, I received a phone call from one of my sales reps (name withheld to protect the innocent) and the rep informed me that one of the local wine bloggers had written about a certain wine, and that said blogger had it listed at a price that the winery was not pleased to see. (Are ya with me so far?)


It seems that wineries, like most other businesses, have a certain price in mind for retailers, and they ABSOLUTELY HATE seeing it less than the desired price. Say a winery, let’s call it Chateau X, wants to sell their 2006 Cabernet Sauvignon for $18. But let’s say that the distributor who sells Chateau X in your state can sell it to the retailer for $10. Using the Ohio Mandatory Markup practice (Ohio is a control state), that product would be sold in ALL retail stores for $14.98ish. Now, in Kentucky, the rules are different, and after the wholesaler tax is factored in, the bottle cost would be $11.10, and most retailers here in the state would probably be around $15. Not much difference in price, right? At Liquor Direct, we would work on a smaller margin, so we would probably sell it for a buck less.


Well, so let’s now say that the distributor has a special buy-in, putting the Chateau X Cab at a bottle cost that would be DRASTICALLY less, and we could potentially sell it for $6.99. Crazy right? An $18 bottle that we could sell for $11 off. Our customers would love that. Yet, God forbid, the retailer has the stones to ADVERTISE that price. It would bastardize the brand.
The laugh factor here is that, given the state of our economy, a winery would even have the audacity to bitch that their product is getting SOLD, yet along at what price. While I can understand the cheapening of a particular brand, what I do not understand is that brands that are obviously overpriced and not selling, fight to keep their product at an unsellable price when they could lower the retail, and move more product.


I don’t have an MBA, but doesn’t it make better sense to move product than jack up prices and sit on inventory? Call me crazy. All I can say is "Are you kidding me?" and move on with my day.

3 comments:

jseeds said...

Preposterous. Wineries should be thanking their lucky stars for a healthy blogging community that gives them free exposure and press - not complaining about sale pricing?!

And why is LD involved???

...seems like this is between the winery and the blogger. If the winery insists on referencing MSRP, they need to talk to the press/blogger - then it's the blogger's choice to comply, not comply, or illuminate the whole clusterflub - as above article does.

k2 said...

J -

It's our pricing that raised the red flag as it were. The blogger knows nothing. And doesn't need to. You're right though, they should just be happy their product is being sold - and getting free publicity. It's just the whole "have your cake and eat it too" thing.

Organic Meatbag said...

By chance do you carry Fred Sanford's best Ripple??