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What The Market Says
Wine Prices, Point Scores and Retailing
Thursday, 2nd August, 2007  - David Farmer

If you buy an aspirational wine brand such as Chateau Latour or Chateau Petrus you accept that the very high price bears only a passing relationship to the wine quality, as good as that may be. When money is no object only the most coveted labels will do. We have discussed the issue of quality and the relationship to price a number of times, most recently at Ah! To Make a Wine with Aspirational Status - The linkage is indeed a mysterious one.

The rest of us are very focussed on the price. We all love a bargain and have been trained by retailers to react to the word, SALE, so we often wait until the item of desire is marked down. With a great number of products this is good business. The quality of for example ‘white goods’ or electronics is a known factor and the only measure of shopping success is the price paid.

When the quality of the item is much more subjective such as with art and indeed wine it is much easier for the seller to manipulate the sale and for the customer to be fooled. For wine this is no great loss as the product bought is mostly of minor value. You win some you lose some.

For as long as I have been selling wine, customers have been strongly influenced by the price and rightly buy a lot more when their favourite is marked down. It also helps to promote sales by quoting the opinion of an authority or the retailer may offer one or emphasise the show medals the wine may have won. These opinions about wine quality can be summarising as a number often out of twenty or more commonly now out of 100, and is a very powerful way of imparting information quickly. How much you should be influenced by these numbers is another favourite Glug topic.

To create a price saving a retailer may refer to the previous price at which they sold the wine; or they may quote a saving off the ‘recommended retail price’ which is a notional selling price suggested by many wholesalers. The recommended price or RRP is the price you may pay in a pub bottle shop when you duck into buy a single bottle or perhaps the price in the local near your holiday resort.

What influences the wine buying public is then a balance between prices and third party endorsements and as mentioned these are often expressed as a point score representing quality. Here is how some of our retailers approach their advertising-marketing. It is full of interesting differences.

Liquorland, BWS, Woolworths Liquor

Big retailers such as Coles and Woolworths are very sensitive to quoting savings that they cannot substantiate and never relate a saving back to the price the supplier suggested it was worth, the so called RRP. Thus they will only show a saving off the last price at which they sold the product. This is a very fair way of not misleading the consumer. As these savings are quite low they resort to discount sales, such as 20% of wine, or a discount if you buy six bottles, or gimmicks such as buy any two for this much. Currently they do not use endorsements such as wine scores.

Big Box Stores - Dan Murphy, 1st Choice

The two ‘big-box’ operators Dan Murphy (Woolworths) and 1st Choice (Coles) both state they will match any advertised price. Not being able to quote savings from previous prices or the RRP they use the clever method that they are always cheaper than anyone else. This was pioneered by Dan Murphy over 20 years ago and the slogan, ‘No body beats Dan Murphy’ is justly famous. Anther slogan they regularly repeat is ‘You would be mad buying liquor elsewhere’. The effectiveness of these slogans has not yet dawned upon 1st Choice who are having great difficulty working out how to market and run big-box liquor stores. Neither chain uses wine reviews or wine scores very often. Mostly they adhere to a cheap every day price policy.

Vintage Cellars

Vintage Cellars is an upmarket wine specialist with about 100 stores that is owned by Coles. As such they are very careful about the savings shown. They may use wine writer comments and wine scores though currently this is only done infrequently. A major point of difference has been to emphasise members Cellar Shares that accumulate as you purchase, though currently this is also down-played.

Kemenys

This single shop and large mail house makes extensive use of the RRP to create savings. The interesting own brand ‘Hidden Label’ concept creates savings by a reference back to what the wine would sell for under the makers own label. The purchaser must trust that this is correct. They also use wine writer endorsements, wine scores and medals won, extensively. In their monthly bulletin almost all the wines on sale score greater than 90/100 and these scores are taken from wine writers or are the scores of their own judging panel.

The Wine Society Cooperative

They make strong use of member benefits and the cooperative nature of the society. They emphasize savings which are calculated off the RRP price. At times will use a wine writer endorsement but are more likely to post a staff tasting note or a tasting note made by one of the wine tasting panel who oversee all wine purchases. Interestingly they use the point scores of wines only occasionally.

Cellarmasters

One of the most interesting wine selling models developed as it largely involves selling products that they make or are made for them under brands they own. This cleverly removes them from having prices that can be compared to other retailers.

Get Wines Direct

Over the last year or so very strong advertisements have been placed in The Australian by the Melbourne wine retailer Get Wines Direct that show high price savings often with good wine scores on numerous wines. They offer a welcome change to the steady diet of boring wine advertisements that do little to induce customers to purchase. Plus many of the wines on offer are real bargains and show what a poor job their competitors are doing in finding similar wines for their customers. Their novel answer to creating the saving is to refer to them as Don’t Pay $X, Our Price $Y. Don’t pay this price can presumably be any price they set. With that said in most cases the Don’t Pay prices seem to relate to the RRP although on some wines it does seemed to be stretched. And some wines bound for export have no price from which you can discount.

We would urge consumers to be a bit more wary than they are about so called savings as the old adage ‘you get what you pay for’ about sums it up. It is not too hard to manipulate a saving. As for being influenced by point scores as an easy reference to wine quality we also suggest caution. This currency has also been devalued as most wines I now see reviewed leave me breathless with their scores.

If you do not find this advice very helpful at least you can take comfort wondering about those buyers of ‘aspirational’ fine wine for whom the highest price and the rarest label is all that makes them happy.

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