Will Release Offers ever move to Negotiated Pricing?

All these posts about Peak Fine Wine/ Napa, the potential secular decline of wine sales due to demographics, exorbitant pricing etc, got me to thinking… Will the market for pricing ever move towards a true negotiated, supply and demand type of dynamic structure? Now I’m not talking about pricing in the secondary market of course, but more about the pricing that wineries put out during release and initial offers.

Currently, as we all know, the wineries dictate the price per bottle and the allocation to be offered. And its up to us whether we bite based on their setting of the terms. We have no influence, and its “take it or leave it”. Do you think the business will ever transition towards a negotiated market, one where we have the ability to counteroffer the wineries? Not necessarily the size of the allocation, but the price that we are willing to pay per bottle? For example, instead of “here’s your six bottle offer at $150/per”, its “I am willing to by these six bottles from your winery at $100/per”. From there, its a true negotiation, and if terms are agreed upon, great. If not, the winery keeps their bottles and you keep your money. Sure, the wineries would resist at first, but this sort of disruption would need time to become common, and over time could potentially become an acceptable means of negotiating the terms of this sort of sale.

Personally, I do not see this as a possibility presently, or for the next couple years. But as the economy softens and buy side demand weakens, and as the Boomers begin to consume less, I think the pendulum may swing to our advantage as consumers. I know there are many wineries who peruse these boards, so would love to hear from them as well. And I understand that even broaching this topic may land me at the bottom of their allocation lists, but rocking the boat a bit has never stopped me before…

Thoughts? What say you…

I personally believe the vast majority of consumers would hate to negotiate and haggle down prices every time they’re offered wine.

In this scenario I think the winery would have to offer its members the same price or very close to it. A big distributor was busted recently for offering special pricing to certain accounts and now must offer everyone the same price with the only exception being by volume.

Imagine this board when somebody haggles down XYZ winery a 33% discount but another person didn’t get a discount.

Heck no. Makes zero sense.

Not as long as they sellout at their price.

wholesalers would rebel. They get about 50% of private price to consumers on list. No way the wineries would alienate distribution contracts. (I suppose some ultra hot winery might be different, but they would never haggle with consumers anyway.) The outlet for this sort of thing is Last Bottle or WTSO. You get your discount randomly from a volume reducing tool.

Good points. But what if wineries can’t sell out at their stated offer price? How many wineries actually do that? 25%? 75%? Would at least some be willing to allocate a portion of their yield to this sort of market if it ensured them being able to sell out? Of course it would need to make financial sense for them, but that’s a micro concern for each participant.

And I think it makes some sense. In that it reduces the captive market we are all in and levels the playing field a bit. Great point on distribution networks being upset but like all industries that are disrupted, there is always going to be opposition (see Uber for taxis, AirBnB for hotels, Turo for car rentals).

Start a winery and try it. I’ll look for the bankruptcy notice.

Brian, Thats what places like the restaurant /wine shop near me (I think you know which one) are for. They have huge email customer lists and can sell 50 to 100 cases of a great deal in a weekend for someone looking to clear out inventory without it ever showing up on wine-searcher degrading their brand. Deals like 2010 BV GDLT for about $40 while selling for $125 release price or 2012 Mollydooker Carnival of Love for $35 (several months after it was named #2 WOTY by WS and selling for $75 elsewhere but with 4700 cases they needed to clear a bunch out quietly). When they really need or want to clear inventory out there are plenty of places that can do it for them quietly under the radar

  1. They become “library wines” sold at an even higher price at a later date.
  2. Last Bottle Wines, WTSO
  3. Dumped into third world countries with their label blacked out with a Sharpie

Good point David B.

And David Bucker, you seem to be slightly upset by this thread. Maybe I’m misreading, but if I’m not, why? No clue who you are, or whether you may have a link to the business. Sure it may be a silly/idiotic/ unrealistic hypothetical, but I’m simply trying to get some dialogue going. And instead of snarky comments like ‘makes no sense’ and ‘start a winery and I’ll look for the BK notice’, you should elaborate. Absent doing so, I perceive you as potentially just another member of the jaded at life WB club (of which unfortunately, there seems to be a growing population on this board).

Good point on library wines, but what if a winery doesn’t want to sit on the inventory for 3-5-10 years. And they are willing to forgo the higher potential price point down the road. And it is potential because wineries come in and out of vogue all the time. Simply adding 10% per year to the bottle and extrapolating that out five years doesn’t guarantee they can sell the wine at the level. Could be less. Maybe the winery wants to risk manage that possibility.

Again, just trying to strike up dialogue here.

He’s the only one on here I have blocked. It’s his nature.

That would be point #2 in my post.

I dont check Last Bottle often, but every time I get a random email it’s some $15 zin or $25 $hitty Napa blend, not say a $150 bottle from a respected producer. I could be wrong, I am allll the time…

We’re going in a circle here…
The ones that sellout, sellout.

Ok, call me dense or stubborn or both ( I can handle it- my GF calls me worse when I don’t call her during a weekend in Vegas), but I still see the feasibility of this.

And I still adhere to the thought that the reason quality and well respected brands don’t end up on LB is because they don’t want to take the reputational hit.

In my first release I actually considered a Dutch Auction. Part of me still wonders it it might guarantee a sellout for the first winery that tries it every single year.

Everyone on the mailing list bids for the release. The lowest bid to sell out the last allocated bottle becomes the price for everyone, even those who bid higher.

So if you have 200 cases and 1500 people on your mail list, everyone puts in the price (plus a pre-authorization to run the card if successful) at the highest price they would pay for that vintage and how many bottles.

Let’s say the average order is 6 bottles and the 400th lowest bid price is $134 (which sells out the last bottle, because all other bids are above that price.) $134 becomes everyone’s price who bid above that price. Everyone who bid $134 or more gets their allocation. All those who bid below $134 get nothing. Does not matter if they bought before. Loyalty means nothing in a Dutch Auction.

This would cause those who want the vintage to bid something reasonable otherwise they get nothing. Everyone on the list bids because there is nothing to lose. Prices rise and fall based on the vintage quality. It could work. The winery would have to survive the swings in price from one vintage to the next. But you would always sell out on day one, which has certain economic benefits.

Imagine if Screagle announced they would sell via Dutch Auction. Yes, you, a hedge fund manager who signed up the day before the release can buy as much of you want of Screagle if your price makes the cut. For places like Screagle and MacD and Harlan, suddenly their release price would approach their aftermarket. No need for tastings or anything else. Instant sellout, go on vacation.

For wineries like me, it would be more up and down, with more nail biting. For middling producers, it could be a real big problem.

I find the idea intriguing. I hope someone ELSE tries it someday. [snort.gif]

It seems as though it may come across as desperate and a race to the bottom. Why would a winery bid against themselves? It would also alienate everyone who wanted the wine but didn’t want to play the game. If the economy tanks, then they either need to lower prices or lower production, or as discussed elsewhere on this thread, find a way to dump the wine through other means to preserve its long-term market position.

Damn cat lovers. neener [stirthepothal.gif] [berserker.gif]

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