Why does wine cost more at the winery?

A question for those who work at wineries- assuming your wine is available through retail channels, do you charge more for your wine in the tasting room than retailers charge for the same bottles? If so, is there a specific logic behind that decision? As a consumer, it makes sense (to me, anyway) that since there are no distributors or retailers getting a cut when you sell directly to the public, you should have a much higher profit margin to begin with and offer more competitive pricing. I rarely buy more than a bottle or two in tasting rooms because I know I can usually buy the wines for less elsewhere.

I am not ITB (anymore/currently/but I SHALL RETURN), but I think the reason wineries charge retail is a specific effort not to undercut retailers - i.e. if I know I can buy from a winery direct for less, I have no incentive to buy from a retailer. I’m guessing this would piss off the retailer, who would then stop selling the wine. Same with distributors.

Bingo.
Also, remember that when the winery sells FOB, its at 50% of full retail. When they sell wholesale, its at 60-75% of full retail. If they want to stay in busines, they had best make “full retail” a concrete concept.
Best, Jim

Ditto what everyone else said. The winery establishes the retail price, and must generally adhere to that. Wholesalers/retailers may choose to sell the wine at their full margin, or a lesser margin if they want to move the wine quickly, creating lower end costs to the consumers. Wineries, however, may offer quantity discounts without offending anyone, so even if you don’t see a discount offered on the list, you can always ask if there is a discount for mixed case or half-case sales.

exactamundo.

I think this thread is really ironic considering the crap I got for complaining about a retailer selling a wine for MORE than the winery price.

Bob,

A couple of our distributors hang on to great vintages or jack the price to retailers because of the “limited” amount available. One example: There was a specific wine we wanted that was only available to “Wine Club Members.” After 4 years of asking, one day it became available, one bottle to a retailer for $350. We said we would take it. The day after it arrived, a thread started on ebob about the new high cost of the wine by one of the people who had been on their mailing list for years. His complaint, the cost had gone up to $275 from $225 the year before. Carrie had them pick up the wine the next day. [1928_middle_finger.gif]

Bob, I was in the “outskirts” of Denver a few weeks back and one retailer said our wine would be $8 above what we sell it for at the winery. I responded with “Well, I guess that’s not really gonna work then, is it?” and left with a helpless shrug.

Retailers do their own mark-ups for whatever reason, however the smart ones do their homework first and are generally a few bucks below what it’s sold at the winery for. Wholesale pricing is the same for retailers.


That is all.

According to my recent personal experience, while the price you Fiddlechicks charge is the same regardless of wholesaler, what they charge the retailers indeed varies.

Totally not true. Many wineries (especially large ones) tweak the FOB pricing to try to keep similar retails across the market.

As a consumer I really like how things are in Australia. No where is the price cheaper than the cellar door. It’s the “FOB” price, or at least “distributor” price, compared to what the bottle might cost in a Sydney or Melbourne shop. You get something extra for going all the way to the cellar. I’m sure they don’t have our BS system, but how do bottle shops put up with it when we assume no one would go for it here in the US?

That said, as someone working on a start up winery plan, I LOVE the full or nearly full retail price of direct sales. It truly is a life saver, and I’m not sure how the Aussies do it they way they do.

From most Wholesalers selling to retailers in their states, the pricing is the same as it is listed, except for BTG programming as an unpublished.
I did not say from winery direct pricing. Sorry if that was confusing.

I think many wineries do the best they can to keep prices around what retail prices are out in the market. Having said that, it isn’t like there is a standard retail mark up formula. For instance, I know of two retailers, within 30 minutes of each other, one with a 17% markup and the other with a 70% markup.

Adam Lee
Siduri Wines

Welcome to the board Adam!

Most wineries and distributors price their wines to retailers such that the “retail” price would be the same as the winery-direct price IF (and this is a big if) the retailer uses the standard markup of 1.5 times their cost. Many retailers work on a slimmer margin, perhaps 1.4x or 1.33x. Also, the price that would yield the winery direct price at 1.5x is based on the “frontline” (1 case) purchase price. Many (but not all) wines are discounted by wineries and distributors if 3, 5 or more cases are purchased by the retailer at once, theoretically yielding a larger profit for the retailer, but more often than not resulting in a lower price to the consumer, one that will be, in some cases, significantly lower than the winery-direct retail price. Note that I’m talking here about the kinds of wines people on this board would buy, not “supermarket brands” or mass market wines that are purchased by big box retailers by the pallet.

For some tightly allocated wines, a distributor or winery will insist that the retailer maintain a minimum retail price, usually equal to the winery-direct or mailing list price. That’s difficult to enforce except by refusing to sell the wine in the future to retailers that won’t play ball, but that’s usually enough for the really hard-to-get stuff. Besides, retailers don’t need to discount the Saxums and Scarecrows of the wine world to move the bottles.

In a recent trip to St. Emillion I noted that almost every bottle and case I priced, with volume discounts applied, at wine shops, was readily available in the states at a significantly lower price. Despite the fact that wine shops stated they were marking up the goods at five to ten percent only.

Is that with VAT included? I believe it is 20 percent in France.

Yes incl VAT