Saratoga Wine Exchange PVW offering. Fair or Bad?

WINE TALK
1

So, I got an email offering from Saratoga Wines. Bought some stuff from them over the years, email asked if I wanted some of their Pappy Van Winkle allocation. I clicked ‘yes’ and received the below email. I hate this. It’s a store, so why are they asking me to set the price? You’re the store, you choose the price. If you want to be an auction house, become an auction house! I say “Bad”. They’re using a ‘stalking horse’ auction strategy, where they ask people to bid, and then reveal the high bid to allow people to bid again and top the previous high bid. Very advanced game theory stuff, usually used to sell companies, used here to sell 6 bottles of 15, 20, 23yo Pappy (and a case of the 10/12yo). Again, I say “Bad”.

Thank you for the interest. We currently have the following 18 bottles available and currently have 100’s of request for them. Please read the instructions very carefully if you would like to make an offer on what is available. Please do not call the store we will only accept emails responses on Pappy.

23 year old - 2 Bottles. 20 year old - 2 Bottles. 15 year old - 2 Bottles. 12 year old - 8 Bottles. 10 year old - 4 Bottles

Please submit what bottling you are interested in and how many you would like to purchase. You will also need to include what you are willing to purchase them for. IF you do not know what they are worth you can find some prices from around the country here - Where to buy Pappy Van Winkle | prices & local stores in USA or by doing a google search for them. Please ONLY SUBMIT REASONABLE OFFERS! Low ball offers will be ignored. We are collecting all the offers and will let everyone know what the high offer for each bottling is before we sell them to give as many people as possible a chance at some since it is so limited this year.

Thanks, Joshua Hiebel - Owner

2

I did the same thing and got the same response. Pissed me off.

3

I got the email too.
I agree–it’s BS
I like Pappy but don’t get the hysteria. There are plenty of other great Bourbons for a fraction of the price.

4

So they are running a auction? Don’t they need a special license for that?

5

now they do since they have been “outed” [wink.gif]

6

I think it’s sad what these retailers do.

7

I actually think it is pretty clever.

They only have 18 bottles of the product. Those 18 bottles are going to go to the customers who want them the most. Makes sense.

8

At least they are transparent with their intentions. When I initially read the email it did evoke a kind of annoyance but as I thought more about it it seems perfectly reasonable.

9

FIFY.

Not that there’s anything wrong with that.

10

Matt. How about the stalking horse strategy, which makes them more bothersome than any other auction house? You bid. You’re the winning bid. They tell everyone your bid and use your bid to try to get others to bid more. Thoughts?

11

So I don’t really agree with that move, total pain in the ass. If you’re gonna do it, just give the bottles to the highest bidder. But it starts to get so complicated. The guy bids a high number but doesn’t want them all, but then you go to the next guy - does he pay what the high bidder did? Does he want to? Lots of issues with this…maybe not so clever after all :slight_smile:

Much easier to set the price - even if it’s high - make your money and move on.

12

I doubt Buffalo Trace will think it is clever.

A better idea would be a raffle for their customers who spent x ( say $500 or something ) amount of dollars with them in the past year. Give those that supported you a chance and a reason to do so again next year.

I wasn’t expecting to receive any, but I must say this system makes me not want to buy wine from them either. Are they going to start doing this with the next hot wine too?

This is really two auctions back to back. First a silent auction, then the auctioneer chimes in … " I have a starting bid of 500, thank you sir who will give me 600, now 700, how long will this go on via email? Crazy if you ask me. Your right just name the price if they are going this route. They have already told us they are expecting winesearcher bids, don’t see the point in the whole exercise I guess.

13

+1. I wonder if Buffalo Trace would cut their allocation if they found out. Someone should email BT and ask them if what Saratoga is doing is ok with them.

14

I read a year or so ago that Van Winkle wanted to move towards a bar/restaurant only (or primarily) model. This has to encourage them.

I’m wondering if the cult bourbon craze will ever wane.

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I know some say that in our capitalist society the wine (and spirit) retailers are justified in making as much money as they can by raising prices to whatever the market will bear. I say that that certainly may be true for those who import grey market wines already elevated in price. However, I do think it stinks when retailers use their allocations through regular distribution channels at prices that are “controlled” along the distribution chain to raise the prices astronomically and gouge their customers. The people who make the product do not benefit, and the customers who may have supported the store for years do not benefit. Better to reward your loyal customers with a treasured bottle or two than to put them up for sale to the highest bidder. I am sure the same retailers would be unhappy if each middleman along the way tripled their prices. I will again quote Eric Rousseau (whose interview was quoted in another thread here), who was asked why he didn’t raise prices at the domaine when his Chambertin is fetching several times that at auction (and, for that matter, through the “gougiste” retailers I am referring to):

“La RVF : But why sell your bottles €170 if they are worth €800 on the market?
É. R. : To preserve our faithful clients. For instance, our importer to the US has been working with us since 1934, our English importer since the 1960’s. That creates links. Same thing with our private clients. Every year, they buy everything we offer them. We do increase our prices a little every year, but I don’t see myself multiplying them by 3 or 4 à la bordelaiseand tell them one bottle is no longer worth 100 but 500 Euros. We only sell wine!”

Refreshing, I think.
I think I am less likely to buy anything rom Saratoga in the future, as well as from those retailers happily offering Rousseau Chambertin at $1,500 per bottle.

17

Well said, Robert. I agree and I say bad practice. The double auction is absurd.

18

Totally lame.

19

I don’t sell liquor, so I don’t know about margins in that business. That said, I can tell you the margins in wine retail are RAZOR thin. To compete online, and with grocery stores, and with Total Wine, it is a race to the bottom.

I agree that rewarding your best customers with the bottles would be the way to go - it’s what I would probably do in that situation, but I am not going to fault someone for trying to make some extra coin.

MOST people shop price. A lot of people chit chat about supporting small business, and how much they love the local guys, and then go grab their wine Costco and their Diapers from Amazon.com. You either compete or you go out of business. You have every right not to direct your dollars towards people charging $1,500 for Rousseau Chambertin - but I certainly would not fault the people charging that price if that is the market price.

Also, who is to say the other people in the supply chain are not raising prices? Happens all the time. Nobody sees those transactions go down though…It may not just be the retailer moving the prices northward.

I have sold 100pt wines to people on these boards at a very low prices only to see them turn around and flip them to other people on the board. Should I fault them for trying to make an extra buck if someone is willing to give it to them?

20

Actually, their plan mimics a true auction without requiring the software setup that allows bidders to see the current high bid. Instead, you wait until a high bidder is determined and then bid again. The net result will probably mean a slightly lower top bid, as long as they only have two rounds, than a traditional auction but not require the cost of installing auction software. I think that this practice is an underhanded way for a retail outlet to get some of the benefits of an auction house without some of the costs and while making use of the benefit of access to the distribution network. Bad Karma baby! [smileyvault-ban.gif]