Has KLWM Lost Their Collective Minds?

[Mike_C1]

KLWM is doing the same stuff with Roulot. The retailers I know are disgusted by their shameless ploy to drastically reduce long time customers’ allocations until they start buying tons of other overpriced offerings they’re peddling. There’s smart, fair business and there’s slimy business and they have dived into the deep end.

Grand Cru distributes Roulot too, so KLWM is not the sole source and doesn’t have as much influence on those wines.

[Marshall_Manning]

Well, if you’re struggling to shell out $60,000 for a nice case (after case discount) I guess it’s time to admit you just can’t AFFORD Coche Corton Charlemagne !!

Yes, and you HAVE to buy a case or it’s not worth it .

[Marshall_Manning]

Why should Kermit Lynch subsidize your purchase of $5,000 wine below its market value? Why’s he greedy for asking market price, but you’re not greedy for wanting it below market price? Seems to me it was the old practice of selling it cheap and letting his customers make a quick buck flipping that belongs in the “losing his mind” category.

Why should Coche sell it to KL for 500 euros or less—seems they’re subsidizing KL’s greed. I have so much to say in response to this ridiculous post, but instead, I’m going to go scream into my pillow

I’m not one, as a consumer, who likes any large increases, especially those that don’t go to the winery (I have no idea what KLWM pays Coche). But, if you were selling a wine that could fetch $5K/bottle, would you say “Oh no, it only cost me $500, so I’ll sell it to you for $750?” If so, I’ll take all your old Coche, Clape, Verset, etc.

[Marshall_Manning]

Now, Kermit Lynch is firmly telling their historic, long-term customers, stores and restaurants they couldn’t care less about them. Kermit is deciding these wines should only be for the uber-wealthy…and again Kermit Lynch is doing that not Coche…and they don’t have to do this to still earn a ridiculous profit. Also, you keep mentioning Kermit directly, he isn’t the one driving these decisions and hasn’t been involved in these types of decisions for years (when I say Kermit I mean KLWM), same applies to Coche (where Raphael is driving the decisions now).

You’re exactly right here. I love many of KLWM’s wines (especially the older producers) and I consider KLWM the greatest American importer of my lifetime. But, I worked with them for about 8 years in distribution and they were doing the same thing to distributors at that time, and I imagine they still are. It’s too bad, because their continued price increases turned off a lot of customers.

A funny story from around 2009 or so. We had ordered a few pallets of wine to be sent up from their Berkeley warehouse, and one of the pallets was a mistake. It was the entire US allocation of Coche-Dury Corton-Charlemagne. I called them to let them know of their error, and said we’d be happy to hold it for as long as they needed. The next morning one of their employees was waiting in our parking lot in a van to pick it up and give us the proper pallet. He drove straight from Portland to the Berkeley warehouse. That’s how important those wines are to KLWM.

[alan_weinberg]

Now, Kermit Lynch is firmly telling their historic, long-term customers, stores and restaurants they couldn’t care less about them. Kermit is deciding these wines should only be for the uber-wealthy…and again Kermit Lynch is doing that not Coche…and they don’t have to do this to still earn a ridiculous profit. Also, you keep mentioning Kermit directly, he isn’t the one driving these decisions and hasn’t been involved in these types of decisions for years (when I say Kermit I mean KLWM), same applies to Coche (where Raphael is driving the decisions now).

You’re exactly right here. I love many of KLWM’s wines (especially the older producers) and I consider KLWM the greatest American importer of my lifetime. But, I worked with them for about 8 years in distribution and they were doing the same thing to distributors at that time, and I imagine they still are. It’s too bad, because their continued price increases turned off a lot of customers.

A funny story from around 2009 or so. We had ordered a few pallets of wine to be sent up from their Berkeley warehouse, and one of the pallets was a mistake. It was the entire US allocation of Coche-Dury Corton-Charlemagne. I called them to let them know of their error, and said we’d be happy to hold it for as long as they needed. The next morning one of their employees was waiting in our parking lot in a van to pick it up and give us the proper pallet. He drove straight from Portland to the Berkeley warehouse. That’s how important those wines are to KLWM.

more than $1,000,000 of wine at $2000/b. I’d call that important! I’d bring an armed guard.

[jbray23]

KLWM is doing the same stuff with Roulot. The retailers I know are disgusted by their shameless ploy to drastically reduce long time customers’ allocations until they start buying tons of other overpriced offerings they’re peddling. There’s smart, fair business and there’s slimy business and they have dived into the deep end.

Grand Cru distributes Roulot too, so KLWM is not the sole source and doesn’t have as much influence on those wines.

They only are allowed to sell 3 wines outside of NY state, Kermit has the rest.

[Eric_Lundblad]

Looks like I’m glad I got KLWM’s postcard that seemed to be offering Pizza (looks like a very good pizza!)…maybe all I could afford

[patrick_c_albright]

Perhaps I do not understand the business, but it seems to me that there is a difference between an internet or brick and mortar retailer wildly inflating the price to what the market will bear vs. the U.S. importer doing the same. The importer has been chosen to represent the producer and usually, as I understand it, has sole rights to bring that producer’s wines into the U.S. and determine what allocations are given to various distributors (or retailers, if they are also distributors) around the country. (In WA state, I believe, retailers cannot import directly and gets their allocation from a licensed distributor who in turn gets an allocation from the U.S. importer.)

If a retailer chooses to keep the cherries and auction them or sell them online at grossly inflated prices rather than allocate them to their long term valuable customers, and if the customers are unhappy with that, then the customer can shop elsewhere. If an importer/distributor marks wines up 1000%, it is not like the customer can shop elsewhere…at least in this country. It is my understanding that they hold a monopoly, of sorts, on selling those wines in the U.S.

Yes, I know, no one forces you to buy Coche or Raveneau (or Rousseau or DRC). And yes, I know, anyone can gouge pricing on any goods they distribute and make as much profit as they can get away with. But it does seem to me that there is a difference between retailers choosing between honoring their customers’ loyalty or gouging vs. the sole US. importer gouging.

But, ultimately, I am not losing sleep over it…screw Kermit.

Right, perhaps you don’t understand the business. If an importer is pricing wine too high, the grey market will take care of that. The Coche-Dury that I see coming in through the grey market are much more expensive wholesale than what Kermit offers. The prices to which the OP refers are those offered by Kermit Lynch direct from his Berkeley retail store. The wholesale prices that distributors and retailers to which Kermit sells wholesale direct in California are such that they can take even a generous margin and still be well below the prices offered by Kermit’s retail store, and easily sell the wines. There are no consumers being hurt here, only some complaining that they cannot afford or prefer not to pay market for what has become a luxury product.

Not really accurate.

Kermit’s complaints to Thierry Allemand regarding UK merchants selling to US client’s severely impacted the supply of Allemand that was making its way here.

What is CA wholesale for 2014 CC - $4000?
You can make a “generous margin” on that??
That is a big number when you can drink the wine at plenty of restaurants in France for probably close to half that.

[YacobovE]

I know a few folks have chimed in with the general gist of their comments being two fold: 1) stop your bitching, if you’re angry about the price, don’t buy the wine & 2) KLWM can charge whatever they want and the market will determine whether that is the right price.

I largely agree with what you’re all saying with one caveat. I agree that I don’t have to buy and I won’t at these prices. I also agree that KLWM can charge whatever they want. I disagree that those who are annoyed, like myself, should stop bitching. Just as KLWM has a right to price gouge (which I believe they’re doing if the ex-cellar price info that was privately shared with me is true), we all have a right to publicize our displeasure and Coche & Raveneau have a right to change importers if they’re intent in selling wine at a super low price to KLWM isn’t so KLWM can make 8-12x their cost. That’s why I posted in the first place…in hopes that if producers aren’t aware of extreme price gouging by their exclusive US importer, they may become aware now.

If anyone has the contact info for Coche or Raveneau I encourage you to share a link to this thread or feel free to send me their contact info and I’ll happily pass it along.

[Marc_Hauser]

I know a few folks have chimed in with the general gist of their comments being two fold: 1) stop your bitching, if you’re angry about the price, don’t buy the wine & 2) KLWM can charge whatever they want and the market will determine whether that is the right price.

I largely agree with what you’re all saying with one caveat. I agree that I don’t have to buy and I won’t at these prices. I also agree that KLWM can charge whatever they want. I disagree that those who are annoyed, like myself, should stop bitching. Just as KLWM has a right to price gouge (which I believe they’re doing if the ex-cellar price info that was privately shared with me is true), we all have a right to publicize our displeasure and Coche & Raveneau have a right to change importers if they’re intent in selling wine at a super low price to KLWM isn’t so KLWM can make 8-12x their cost. That’s why I posted in the first place…in hopes that if producers aren’t aware of extreme price gouging by their exclusive US importer, they may become aware now.

If anyone has the contact info for Coche or Raveneau I encourage you to share a link to this thread or feel free to send me their contact info and I’ll happily pass it along.

That’s fair to be angry, and it’s fair to try to use this platform to be alerting other non-US producers, but to be fair to the rest of us, that wasn’t exactly the tone of your headline or initial post…

[Mark_Golodetz]

While I agree Kermit Lynch can charge what he wants, and of course we can voice our displeasure, I am curious how you would actually make this work?

There is obviously a secondary market happy to pay $5k, so if Kermit isn’t getting the profits, who should?

[YacobovE]

While I agree Kermit Lynch can charge what he wants, and of course we can voice our displeasure, I am curious how you would actually make this work?

There is obviously a secondary market happy to pay $5k, so if Kermit isn’t getting the profits, who should?

Typically the profits were shared by KLWM, their distributors, and their retailers & restaurants. With room for everyone to make a good profit, and still allow long-term buyers to be given better than market prices. Now Kermit is stripping most of the profits from their business partners, and screwing over their long-term retail customers.

[Andrew_K]

There is obviously a secondary market happy to pay $5k, so if Kermit isn’t getting the profits, who should?

That’s the age old debate isn’t it? Sure, the speculators will always be around driving prices up on the secondary market, but they come and go. If the winery cares about producing wine for the customer who drinks the wine year in and year out, they don’t want to see the price gouging by the importer/distributor because that negatively impacts the ability for those customers to get the wine. Sure if you’re just looking at it in a business sense, who cares? But wine makers are typically more artist than business and they want to see people enjoy their hard work, not just greedy businesses profit on their backs.

[AndyK]

Haven’t read every single post, but I totally agree Kermit has lost their mind.

Besides this absurd Coche offer, they priced 2019 Tempier Rose at $56 (don’t even know pages you have to click through in wine-searcher to see that price, easy to find for $40) and 2018 Foillard wines at $50 (got mine for $35). They must think their customers are stupid and unable to use the internet… They even suggested to order Tempier quickly before it’s gone. Gone where?!?

[G_D_y_e_r]

The prices to which the OP refers are those offered by Kermit Lynch direct from his Berkeley retail store. The wholesale prices that distributors and retailers to which Kermit sells wholesale direct in California are such that they can take even a generous margin and still be well below the prices offered by Kermit’s retail store, and easily sell the wines. There are no consumers being hurt here, only some complaining that they cannot afford or prefer not to pay market for what has become a luxury product.

This.

I’ve viewed KLWM’s retail price structure much the same way I understand purchasing from a winery directly is often more expensive than buying the same wine in distribution.

Which is to say that they price their direct retail sales higher largely to protect their distribution channels.

Are there some aggressive tactics at the high end of the market? Sure, but that is life in the Veblen good world.

[Ethan_Abraham]

While I agree Kermit Lynch can charge what he wants, and of course we can voice our displeasure, I am curious how you would actually make this work?

There is obviously a secondary market happy to pay $5k, so if Kermit isn’t getting the profits, who should?

Well in many cases, nobody. Otherwise every bottle in Paris would on a plane to NYC.

[YacobovE]

I’ve viewed KLWM’s retail price structure much the same way I understand purchasing from a winery directly is often more expensive than buying the same wine in distribution.

Which is to say that they price their direct retail sales higher largely to protect their distribution channels.

Are there some aggressive tactics at the high end of the market? Sure, but that is life in the Veblen good world.

Greg this isn’t true. Prior to the new regime (the changeover occurred a few years ago), their retail prices were favorable. It was very difficult to get on the list. And they have more than tripled the prices to retailers recently. There seems to be near unanimity from retailers that Kermit has changed in a big way, and it’s hurting their business partners, and their retail consumers (a number of folks upthread corroborated that the gouging isn’t just to retail customers). It’s not benefiting the producers they represent either.

[Marc_Hauser]

Haven’t read every single post, but I totally agree Kermit has lost their mind.

Besides this absurd Coche offer, they priced 2019 Tempier Rose at $56 (don’t even know pages you have to click through in wine-searcher to see that price, easy to find for $40) and 2018 Foillard wines at $50 (got mine for $35). They must think their customers are stupid and unable to use the internet… They even suggested to order Tempier quickly before it’s gone. Gone where?!?

Yeah, but you could then say that about anyone who isn’t charging $40, which is everyone other than the 2 showing up at that price. Particularly the folks charging more than $56.

[Marc_Hauser]

There seems to be near unanimity from retailers that Kermit has changed in a big way, and it’s hurting their business partners, and their retail consumers (a number of folks upthread corroborated that the gouging isn’t just to retail customers). It’s not benefiting the producers they represent either.

“near unanimity”? Based on a handful of posts that you’ve read here of people saying they’ve heard things? I’m not suggesting those posters are lying, but c’mon.
There’s a pile of speculation about the economics and a lot of hyperbole with little actual evidence.

[Scott_Silton]

While I agree Kermit Lynch can charge what he wants, and of course we can voice our displeasure, I am curious how you would actually make this work?

There is obviously a secondary market happy to pay $5k, so if Kermit isn’t getting the profits, who should?

The customer.

In the past, pricing decisions were mostly made on a cost-plus basis, not an “ability and willingness to pay” basis. While luxury goods deserve to be thought of as a separate and special category, the overall shift in pricing strategies has meant that most of the gains from productivity growth in the overall economy are captured by the firms/owners/managers in the form of profit instead of being split to some degree between profit and consumer surplus. This trend is destabilizing society and making a mockery of the American dream.

If a random billionaire went to DRC and offered $5000/bottle for their entire production run for the next 20 years and that was going to double their profits, would it be a socially good outcome? No. But who should get the profits if not for the producer and the owner?

Us!

Getting priced out of the market for Coche is the same economic phenomenon that results in Americans paying twice as much for health care as people in other nations. If you think that’s a good thing, then you are standing on the side of structural racism. Not a place I care to be, but YMMV. So, crocodile tears for people losing access to Coche, but a dirty look towards the attitude that the capital class and its cultural norms about economics can’t be criticized.