Price increases—would you rather…

Would you rather wineries had…

  • Larger price increases farther apart?
  • Smaller price increases more frequently?

0 voters

Seeing the thread about Saxum’s price increase got me thinking.

Would you rather a winery keep their prices flat for five years and then have a 30% increase, or would you rather they increase 5% every year (or whatever the number is that makes these roughly equal over time)?

Of course there are a lot of variations on this, so it’s really about more frequent price increases or larger price increases?

Flat and then big increase if they will be roughly the same cost over x amount of time.

It’s 5.39%. But yes, I’d take that small increase over a one time price hike. And I’m fully aware this doesn’t make a lot of economical sense (i.e. I’d be paying more overall assuming I buy the wine every year).

I’m guessing this is solely about mailing list purchases, as for retail, it really ought to be as simple as whether the bottle offers value or not.

Ian–yes, I was asking it based on the context of mailing lists. I think the dynamic is slightly different with retail. Although, to be fair, it would an interesting exercise there as well. What if BDX producers set their prices for 5-year periods of time? Although even as I type that I start to think that this becomes a question about economics and pricing, so taking it back–I’m just curious how people who buy from mailing lists feel. Especially for those that just made lists after a large price increase.

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Saxum’s increase was a kick in the cork. Yes, we likely would have eventually ended up at the same point, but the pain along the way is less.

Better than a kick in the clam.

Was that too much?

You left out the equally valid Burgundian model of charging high-high prices on great vintages and discounting the off ones.
Much of France, Germany, and Italy seem to follow that strategy. I don’t think any price increases are good, but life doesn’t always give you what you want.

Indeed

Hike them when the vintage is reckoned to be good to great, drop them a little when it isn’t. Given we get a vintage of the century every 2-3 years [dontknow.gif] , it’s proved a very effective way to get price increases well above inflation.

Mailing lists do though have an advantage to wineries, where members are expected to buy in every vintage or drop off the list. Not good for those that only seek the ‘best’ vintages, but fine for those that enjoy the different styles that vintage variation brings, and dismiss the concept of ‘best’

Flawed poll.

I’d rather the winery hold the price for 10-15 years so everyone comments on how great the value is.

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I put smaller but I think the poll is flawed. We complain about price raises all the time (myself included), but the market sets the price, not really the seller. If a seller or producer constantly sells things too low, they go out of business, whether directly from losses, or indirectly from advancements made by competitors due to the higher profits. The time they take to raise a price to meet the current market is a mixture of a few things, but mainly their ability to read the market and their ability to keep the consumer’s trust/ relationship.

If a seller undersells something, they are also limiting the chance that many of those who want it most will have a chance to get it, as it sells too fast at a much lower price point than they would have been willing to pay, but maybe higher than many other customers. An extreme example of this is in bourbon and rye. No secondary market would exist if not for the underselling of those whiskeys by the producers, and many more whiskey “drinkers” rather than “collectors/ investors” would actually own Pappy and the like.

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I’m surprised that no one has pumped for the obvious answer. I’d rather they kept them flat for five years and I’d continue to buy. When they increased the price by 30% and it was too rich for my blood, I’d stop buying. But I’d have five more years of the wine.

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Makes the most sense mathematically. The only issue is people often stop buying a bottle because the price is jump is significant even though it may still be amazing qpr at the new price. The big jump is just psychologically triggering, and humans are rarely rational.

Most of my mailing list experience is in California where the vintages perform in much narrower bands relative to European regions. In other words, less vintage variation. Gross generalization, with obvious exceptions (eg. smoke years) but still this is my experience of the last 20 years. Maybe Oregon has more variation (not sure)? But this variation has some economic implications.

For the California/mailing list model one feels much less need to skip vintages because the pain of getting removed from the list is greater than the displeasure of buying/drinking the slightly varying lesser vintages. So I’m happy to buy every vintage. But this lower variation also means pricing can be more consistent. When the quality varies very widely, it makes more sense for price and volume to also vary. Bordeaux, Piedmont, Champagne really show this dynamic well. I guess in Burgundy there are never price declines, just more or less price increases.

Of course there are many other differences between Europe and the US that make mailing lists more or less attractive. Deserves a whole different thread.

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My rational preference? Flat pricing for 5 yrs then a larger increase. I say this realizing the yearly increase is more “palatable.”

This is where I’m at. I know Jonathan’s answer is the “right” one, but if the increases are small and gradual over time, I’m less likely to stop buying a wine I actually do want at the new, higher, price, than if the increase is large, and not gradual (even if actually cheaper in the aggregate, over time). The large increase is jarring, and harder to justify on an emotional basis than are small, incremental, increases over time.

I think it’s important for folks to keep in mind: presumably, this question is geared towards a wine one actually wants to buy.

I like the idea of a price jump rather than consistent increases. It wears me down and makes me question value vs producers taking the market for all they can. I would assume most have consistent fruit contracts and would attempt to make long term contracts with some adjustments along the way. I do get it (to some extent) in today’s market but it wears me down. I tend to think a price jump is a real result of fruit and economic conditions changing.