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.