Don't call it price fixing...

Curious to hear some thoughts from folks in and out of the wine business…I have a retail store in NY and carry a high end Napa wine that has a suggested retail price of $125 (give or take), my price is dramatically lower. The distributor rep called to request I raise the price, and I refused; now they want pick up the balance of this wine because of my low price. Not price fixing…but is it price bullying? Are they in the right?

Thanks for the move…I have paid for them. Thinking of lowering the price even more just to needle them…generally, my distributors will tell me at time of purchase if they are price sensitive.

2 points:

  1. You paid for them, so the wine is yours. If the distributor wants them back, you should sell it to him…at retail (presumably at the price that he’d like you to sell it for).

  2. You likely won’t be getting these wines again.

They can not pick them up if you have paid for them. Make them buy them back if they want it back. As for the pricing do not expect that you will get this wine again but you may not want it. I will work with my suppliers if they approach it well, if not well then to each his own.

Jinx

Welcome Samuel

We’ve had a few phone calls from distributors & also wineries strongly requesting we raise prices on wines if they aren’t what the winery feels is in line with what it should be and basically say if we don’t raise it we don’t get anymore but have not had anyone threaten they would pick it up, I don’t believe that is possible if we’ve paid for it or not, once the wine is in our possession . I usually tell them check Wine Searcher, there’s discounting all over the place . What sends me over the edge is when I hear consumers talk about seeing a wine in Costco after getting a phone call and the distributor has allocated us a couple cases, when I request more they give me the schtick “oh we only got 20 cases for the whole state and we’re lucky to be able to get you this” .
I’ve actually had a winemaker show up and purchase the balance of bottles that he was unhappy what we had them listed for.

If I were a retailer, I’m not so sure I’d want to continue doing business with wineries like that anyhow.

Are you selling at your cost? Below it? I can see a reason for them to be upset if you were blowing it out below cost as a loss leader etc… but if not… they need to deal.

From the point of view of the winery, you’re both undercutting every other one of their clients and damaging their brand image.
From the point of view of the distributor, you’re not upholding your side of a mutually beneficial relationship.
From the point of view of the customer, you’re a hero, today. Sorry about tomorrow.

Keep your exceedingly low price and…
Don’t expect to be offered this wine ever again.
Don’t expect to be offered other opportunities from the distributor to make a little extra coin.

Is it so bad to make a ~little~ more money on this wine? You could probably be lowest on wine-searcher by a few bucks and still be a hero, still get next year’s wine, and still be offered exceptional deals.
Or, you can the attitude of “it’s mine and mine alone” to the bank. Once.

Peter +1. Fortunately as a small winery we do not have to use distributors to move our wine. We use brokers who are paid a commission on what they sell when they sell it. Since brokers do not buy our wine they have no incentive to undercut our retail price to move the wine and the commission as a % of the sale price is an incentive to maitain the retail price. When they sell our wine to wine shops they let the retailer know that if they substantially undercut our retail price, I will not sell to them again. [stirthepothal.gif]

Peter,
When you say “both”, if we’re one you’re referring to, I will say when it comes to high end harder to come by wines & small production wines we follow a wineries request so we will be able to continue to get their wines. The requests that are hard to abide by are when it’s a winery that has raised their price & production and we’re told what price we must not list it below and then see everyone in the country selling the same wine for an average of $15.00 less.

Don’t buy their wine. Sell something else.

Wow. So much for a free market economy. Peter, how long would you sit on a wine that won’t sell at or near the “suggested” retail price?

I’m defining a free market economy. In a free market, choice is paramount. OP chooses to low ball the price. Winery and distribution choose to not sell to him again. Someone else will buy the wine and sell within the parameters of the relationship.
That’s how a free market works. Money and goods flow in a way most beneficial to the active parties. If its balance is skewed, a free market will correct itself.
Leave “right” and “wrong” out of it.

It’s not just wineries. We carry a number of wine accessories that the manufacturer requests we sell at a particular price point [wink.gif]

No kidding? The nerve!
hahahahah
[cheers.gif]

I forgot to answer your question:
Don’t buy a wine that won’t sell.

If you do, don’t list it on wine-searcher, but blow it out in-store.


Moar answerz to your retailing questionz here!
http://www.amazon.com/Complete-Idiots-Starting-Running-Retail/dp/1592577261/ref=sr_1_2?s=books&ie=UTF8&qid=1315699867&sr=1-2
(I haven’t read it, but, seriously, this topic is Econ 101)

Peter - it is not the lowest price by any means - SRP - $125, my price $115, lowest price on wine-searcher $90 (about $2 above cost). No wine retailer on wine searcher was above $120…I have no interest in being the bottom of the barrel wine retailer, nor am I looking to apply an attitude of mine alone - the thought process here is of equitable balance and full disclosure – the distributor never mentioned any kind of pricing expectation. My pricing was based on what I saw online and a goal of land somewhere in the middle price wise and win out on service.

That wasn’t clear from your original post, but now I understand. I had the impression your price was a cellar dweller. The winery is clearly not asking for this upward price movement or the w-s results wouldn’t be so low.

My advice:
Sell it for the price you want.
Tell the distributor you won’t adjust upwards until every wine-searcher result is within 5% of your own.
If the wholesaler insists, sell the wine back at full mark-up, no discount; for your trouble. Why should you “lower it more to needle them” and take the loss in your margins?

  1. I wouldn’t call $10 off a wine in that price range ‘dramatic’, especially when you look at the price differences in the Cinderella Wines banners to the right of these pages (unless you’re a donor, then you’ll just have to trust me), where there are $10 off wines at $30 or less.

  2. If they think your $10 discount is damaging their brand, I’d suggest to them to yank their heads out of their collective asses and take a brief look around at the world we’re in these days. Months from now when they are closing out the brand for 1/2 the wholesale price you can swoop in and make a killing.

  3. If it’s a brand you like/respect and want to get again, or its something that sells very well anyway, there ARE worse things that could happen than making an extra $10 on a wine. Some wineries just don’t like seeing their brands used in price wars and having stores undercut each other by a few bucks just to say ‘Lowest Price on Wine X In The Area!’ in their ad. May be worth your energy to let it go and try the same approach on some thing else