Predictions on new release pricing?

With restaurants all but shut down for the next 12 months, should we be anticipating substantial price drops for the kinds of low supply wines that are generally scooped up by the better restaurants?

I highly highly doubt it. More likely that producers will hold back stock in an effort to maintain pricing.

I doubt lower pricing, but my hope is that additional allocations will be given to retail stores.

My logic is producers and importers can only hold back so much without substantial risk on their part. Who knows when high end restaurants will reopen for true dine-in service, which ones will not make it, how volumes will compare to pre-COVID levels? What if the restaurant demand is less than 50% for a year? 25%? Two years? Their revenue would plummet, which makes no sense when there’s still high demand for those wines on the retail market.

That’s my hope anyway. Fingers crossed my local stores see a boost of DRC allocation over years past.

No. They will need to protect the integrity of the rate.

Is that RATE OR RAPE ??

Agree. I would like to see the financial data, which would be very producer specific, and whether there might be a small/medium shift in the channel.

theory: small producer sells 3000-5000 cases a year. They have a decent direct to consumer program via membership and sell at a small discount to “retail list price” and then sell the rest/majority via distributors for retail/restaurants at, what, 50%+ discount?

Why are they “protecting” the retail price when they’re actually selling so much of it at a big discount to the distributor.

Might it make sense to say screw it and offer everything at 25% direct, take it or leave it.

I look at guys in the Quarantine Relief forum and think a few of them have to be looking at this and thinking “why am I messing around with distributors, fighting for shelf space, etc, etc”. Just blow it out direct and be done with it and possible make more money and control the brand better.

Question for you Ryan, typically, if a bottle “retails” for $50 what is the winery selling it for if it ends up in a restaurant/store shelf?

Americans are so loathe to lower the perceived value of their labor. I suspect much will be sold off in bulk, probably some nice Two-Buck coming up!

Think about it this way, they need to sell wine at a discount to retail and restaurants for the restaurants and retail to mark them up and make a profit. If the wineries can sell the wine right at or slightly below the winery direct list price, they are probably making more profit dollars than if they sold through their distribution channels. I think this is where some of the 10-20% sales I have seen in my emails make some quick cash for the wineries.

I fully expect them to hold the line on their winery direct pricing. When they have inventory issues and need to bring in some cash, I think you’ll see them dump these later in the year but we have no idea how this virus is going to play out when it gets warm. We think it is going to magically go away, yet in Singapore where its warm daily they are having another wave of infections.

Probably see a little bit of all that is being discussed. Everyone’s situation is different. Loring offering a discount plus free ship on 3. Just got an offer from Pride, holding price but offering free ship on 3 bottles and they don’t normally have real friendly ship rates. Let’s face it, some need the cash and can’t hold back and will be creative in what ever manner they think works for them. Tough times.

RAPE …

Everything I’ve seen is that people are drinking more–just not at restaurants and bars. I’m sure Constellation Brands (and other grocery store wines) are making a fortune. More than anything, I expect to see those mega brands try to further consolidate and go on buying sprees of smaller distressed companies. I also signed up for Cameron Hughes new project.

Pride upped their Reserve Cab pricing $5 a bottle this year. I decided to pass on buying and the last day the offer was open they sent another email saying they would allow single bottle purchases so I got one Reserve cab and Claret to preserve my vertical I’ve got going.

I’m surprised everyone is so bullish. But I guess it depends on how much of a given wine typically channels to high end restaurants versus retail and consumer direct. If it’s a low percentage that goes to restaurants, than maybe retail and direct to consumer can pick up the slack, at least for domestic producers.

For imports, there aren’t direct sales to consumers, at least not for what is heading to the US. In that case, the importer and/or distributor has to either sit on inventory or sell most everything to retail now. If restaurant sales are typically more than 50%, that’s lot that needs to be made up in retail.

And for both domestic and import, while people might be drinking as much (or more) than before, I expect most people will be looking to spend less now in all categories, including high end wine.

It will be interesting to see how it plays out.

Here are some numbers that (very generally) apply to my market:

-Retailers mark up between 20-40%, but usually closer to 40% for specialty shops
-Restaurants by the glass are usually 3-5x retail
-Restaurant bottles under $40-50 are usually around 3x retail
-Restaurant bottles $40-50 to about $80-100 are around 2x retail
-Restaurant bottles above that varies
-All these numbers are rough and some restaurants will gouge the hell out of you

OK, let’s play fill in the blanks.

Winery states a “retail value” of $50 for a nice Pinot
Winery sells bottle to distributor for $X
Distributor sells bottle to restaurant for $X + Y%
Restaurant sells bottle for $100 (2x $50 retail value - but mark up is really = $100 / ($X + Y%)

Part 1. Solve for X and Y

Part 2. What is Restaurants true markup?

Show your work for full credit

$432.87 - did I do it right?

That made me laugh

These are rough numbers (and vary by winery, state, taxes, freight costs, margins, etc.), but wineries generally sell to distributors at approximately 50% of the retail price. So in your example, a $50 retail wine would sell to the distributor for $25. They would add freight and tax, and then make approximately 25-30% margin, and wholesale the wine around $34-37. Restaurants are all over the place, but it seems most are 3-4 times cost for bottle pricing, so this would put it around $100-140 on the bottle list. Glass pours are usually priced around the cost of one bottle wholesale.

I think what you are already seeing is some wineries releasing wines to consumers that normally only go to the restaurants / wine shops and perhaps to limited wine club members only. I noticed that Turley did this recently and I expect many others to do so as well.

Cheers

I got an email from Rochioli out of the blue yesterday with my “offering”. I guess maybe I signed up on their email list during a trip back to Sonoma many years ago, but don’t remember? Haven’t heard from them since. Certainly appears that they are trying to drum up some sales.

Well, it worked, I did decide to pick up 3 bottles of their Rachael’s Vineyard.