When a Wine is Cheaper At Retail, Where Do You Buy?

[John_Morris]

@Greg D

Aside from close outs or club prices, you should always expect same or lower prices at retail. The winery really needs to charge SRP to not risk undercutting and PO’ing their retail suppliers. You will almost always see that. Sure, exceptions are out there, but that’s the general rule.

+1

@GregT

I don’t get the question at all. I assume that the OP drinks exclusively US wines?

A basic principle in sales and marketing is that the original manufacturer not undercut their retailers unless they don’t need the retail channel and can sell everything themselves. If I’m a retailer and I know that my customers are passing me by and going to the producer who’s underselling me, I drop that manufacturer/producer and deal with someone else.

In addition, retailers need to turn inventory and if they can’t they discount it to the point at which it will move. If it’s a good deal, I’m happy to take it.

If a product is something that you want to buy, why not buy it as cheaply as you can?

Bingo!

I don’t think a winery will resent you buying the wine more cheaply at retail, or feel it’s disloyal. I’m sure they’d also be happy to sell to you at the higher price, and without having to give a cut to the middleman.

[Anton_D]

For the wineries I buy from I still try to buy from the winery.

[Tom_Moore]

If I was a small winery with limited production and had a choice of selling for SRP at winery and/or wholesaling it for half to the 3 tier where it would eventually sell for same or a bit lower I would opt to drop the price to my direct sales to make it a win win.

Example - the SRP of my wine is $50 and the wholesalers get it for $25. Say you sell 1000 bottles direct for $50,000 and 1000 bottles wholesale for $25,000 totaling $75,000.
Now lets say you drop your price to the direct buyers 20% so 2000 bottles nets you $80,000. I would think this would be a viable strategy but on the other hand cash flow is king and wholesalers will take big chunks of inventory off your hands and potentially turn it quickly.

As for the original post I try to support the good guys but I have my limits…

[J_a_y_H_a_c_k]

@Dennis Kanagie

Arrowood 2012 Sonoma County Cab (not the Reserve Speciale) is $35 directly from Arrowood, but I can get it for $22 at Wine Works.

However, Bedrock Old Vine Zin is about $20 direct but $30 or more in local shops.

Conclusion: I buy where it benefits my wallet.

But Arrowood is another Jackson Family wine conglomerate wine. I see no reason to buy that direct. You have to compare apples with apples, not apples with rotten apples.

[Sebastian_C]

Moment I see the wine widely available at retail and at below direct pricing, Ill go retail.

[Jeremy_C]

Is it just a universal standard that wholesale price is 50% of SRP? What known exceptions are there?

[David_Glasser]

Premier Cru. (Too soon?)

I act in my own self-interest. If the wine is widely available I buy where the deal is best. It’s not my job to research or second-guess the winery’s business plan and I have no interest in doing so. That’s not to say that attitude and customer service have no role, they do. That’s part of the “deal” even if it is intangible.

If availability varies from year to year but buying direct insures an annual allocation, I may consider it in my best interest to buy direct.

[Craig_G]

@Robert Alfert

@David J

Ridge geyserville is 38 from the ridge mailing list and 31 at my grocery store.

Yea that one cracks me up. I’ve been buying Ridge Zins for 20 years. The retail price difference compared to the winery price, coupled with the fact that I save in shipping on the cross-country hassle, makes retail a major no-brainer.

There’s no mystery here. Ridge is mostly sold through distribution, not at the winery. In that situation the winery has to avoid undercutting their channel. MB futures and ATP are good reasons to buy direct. Otherwise if the wine is available in your market you should always buy it there.

[Phil_M]

I purchase from the winery first and then from a retailer if the price is lower - but the price from the retailer has to be low enough to persuade me to buy more of a particular wine then I had planned to. I will also use retailers to backfill a recent vintage - for example Gary’s recently offered some 2012 Pott wines at good prices and I don’t believe these wines are currently offered on Pott’s site. I don’t feel “disloyal” about these purchases, just as I don’t get mad at the winery when I see wines I buy directly from them offered on retail sites for quite a bit less than what I paid.

[Scott_Jameson]

I primarily buy direct from the winery for many of the reasons previously cited - obtain wines not available locally, support the producer and maintain a regular allocation. When I do buy from retailers, for imported wines, for example, I strongly prefer to buy from out-of-state sources. I realize it’s peeing in the ocean, but I go out of my way not to give my money to the 3 tier system here in Texas.

[Dennis_Kanagie]

@Scott Jameson

When I do buy from retailers, for imported wines, for example, I strongly prefer to buy from out-of-state sources. I realize it’s peeing in the ocean, but I go out of my way not to give my money to the 3 tier system here in Texas.

Scott, you do realize that you’re only supporting a different state’s system then, don’t you? If you dislike Texas so much, why live there? Pretty soon you won’t even be able to avoid sales tax as the government is trying to force retailers to charge the tax based on where the customer lives. Many states already have a line on their state income tax form for reporting out of state purchases, and many retailers / wineries are already charging sales tax commensurate with the area the buyer lives in.

[Thomas_Keim]

@Greg D

Aside from close outs or club prices, you should always expect same or lower prices at retail. The winery really needs to charge SRP to not risk undercutting and PO’ing their retail suppliers. You will almost always see that. Sure, exceptions are out there, but that’s the general rule.

This is totally ‘it’ in a nutshell. The wineries have to protect the retailers by sticking to their suggested retail pricing. Otherwise, nobody would be purchasing wines retail. The ONLY exception are the wineries that sell most of their products direct. To grow, wineries need those outstate markets to survive, and want to support their wholesaler partners in each market. In other words, the winery’s WANT you to purchase their wines at retail if at all possible.

[Thomas_Keim]

@Jeremy C

Is it just a universal standard that wholesale price is 50% of SRP? What known exceptions are there?

This is standard. If a wine has a suggested retail price of $20.00, the FOB price to the wholesaler is $10 a bottle. Figuring that the wholesaler takes $5 and the retailer takes $5.

[Dennis_Kanagie]

@Thomas Keim

@Jeremy C

Is it just a universal standard that wholesale price is 50% of SRP? What known exceptions are there?

This is standard. If a wine has a suggested retail price of $20.00, the FOB price to the wholesaler is $10 a bottle. Figuring that the wholesaler takes $5 and the retailer takes $5.

[Scott_Jameson]

@Dennis Kanagie

@Scott Jameson

When I do buy from retailers, for imported wines, for example, I strongly prefer to buy from out-of-state sources. I realize it’s peeing in the ocean, but I go out of my way not to give my money to the 3 tier system here in Texas.

Scott, you do realize that you’re only supporting a different state’s system then, don’t you? If you dislike Texas so much, why live there? Pretty soon you won’t even be able to avoid sales tax as the government is trying to force retailers to charge the tax based on where the customer lives. Many states already have a line on their state income tax form for reporting out of state purchases, and many retailers / wineries are already charging sales tax commensurate with the area the buyer lives in.

Dennis, of course I realize I’m supporting a system in a different jurisdiction. What I’m not doing is supporting the wholesalers, distributors and large retailers who contribute to, or perhaps bribe is more accurate, our state officials to maintain and add to the anti-consumer, anti-free market laws regarding wine in this state. I’d be happy to pay sales tax on out of state wine purchases, but unless the purchase is from a winery who has obtained a permit from the state, it’s against the law.

[John_Morris]

@Dennis Kanagie

@Scott Jameson

When I do buy from retailers, for imported wines, for example, I strongly prefer to buy from out-of-state sources. I realize it’s peeing in the ocean, but I go out of my way not to give my money to the 3 tier system here in Texas.

Scott, you do realize that you’re only supporting a different state’s system then, don’t you?

Not necessarily the same kind of system. In California, retailers can import directly and some NY retailers have achieved more or less the same result nothwithstanding a three-tier system.

[larry_schaffer]

This is always such an interesting conversation to read. Thomas has outlined pricing pretty well - if you sell to a distributor, you normally sell it at 50% of srp. There are exceptions to this, with larger brands sometimes selling at higher percentages and smaller at lower.

Here’s always been my take - if you are finding a small brand’s wines at retail cheaper than release pricing, but just barely, say within 10% or so, the retailer is simply cutting their own margins. If you are able to find it cheaper than that, I would contact the winery and ask what’s up. This should not be happening and as a wine club member, I would reason to be suspicious or even pissed.

Just my $.02 . . .

[John_Morris]

@larry schaffer

Here’s always been my take - if you are finding a small brand’s wines at retail cheaper than release pricing, but just barely, say within 10% or so, the retailer is simply cutting their own margins. If you are able to find it cheaper than that, I would contact the winery and ask what’s up. This should not be happening and as a wine club member, I would reason to be suspicious or even pissed.

If it’s a winery that normally sells almost exclusively to a list, then it is definitely a different story if you see it cheaper at retail, and I’d be pissed if I were on the list.

But I’ve sometimes seen cheaper prices here in NYC for small California producers that do not rely exclusively on lists.

[Thomas_Keim]

@Dennis Kanagie

@Thomas Keim

@Jeremy C

Is it just a universal standard that wholesale price is 50% of SRP? What known exceptions are there?

This is standard. If a wine has a suggested retail price of $20.00, the FOB price to the wholesaler is $10 a bottle. Figuring that the wholesaler takes $5 and the retailer takes $5.

I’ll break it down to a middle school level for you Dennis:

Cost is $10.00 a bottle from the winery - wholesaler sells it for $15.00 a bottle - retailer sells it for $20.00 a bottle.

That easier for you?

[Dennis_Kanagie]

Thomas, I was confused how the retailer makes any money at that kind of margin. If they’re selling a product with that low of a profit percentage, they might actually be losing money after all costs are loaded in (payroll, utilities, weekly ads in the newspaper, etc). It certainly doesn’t leave much, if anything, for total retained profit.

But thank you for the 5th grade math refresher.