Wine’s Toxic Price Point: The $30 Bottle Of Wine.

Published: 05th May 2010
Views: N/A

Is $30 the toxic price point for a bottle of wine?



BevMo sells thousands cases of wine under $15 a bottle, but probably less than 5% of that volume is for wine around $30 a bottle. Meanwhile, at the high end of the market, brand values tend to keep prices stable. That means vintners in the middle price range encounter sales resistance, finding themselves competing against $10 Argentine Malbec and the like.



After 2008 the wine market changed. $30 often thought the median price for a fine hand crafted northern California red wine, became a difficult price point to maintain. A vintner recently told me that $30 was the new price of a for $60 wine. But he was keeping his Merlot at $42 a bottle. Keeping it in his warehouse.



It's a tough market because competition has expanded beyond the 2,000 vintners in California to fine wines from Oregon, Washington, France, Itality, Argentina, Chile and Australia. And don't dismiss that $10 Malbec. It is perhaps easier to make a $30 bottle of wine today, than it is to sell it.



Price pressure could put a permanent dent in the market for fine wine, thus the importance of understanding price elasticity and the $30 bottle of wine. Especially if the $30 price point contains wines formerly marketed at $60; and BevMo ain't gonna put it on its shelf.



The $30 Price, Three Strikes, It's Out

The $30 price point has three strikes against it:

Strike One: In a recession, people are less prone to purchase high priced wine.

Strike Two: In a restaurant, a retail $30 bottle sells for north of $60, even with a deep restaurant discount.

Strike Three: Most wine retailers already have their $30 favorites and are hard pressed to find shelf space for a new contender.





Silver Lining

There are silver linings in the storm clouds for vintners. Yes, these are the times to lay the groundwork for future success.



Silver Lining, Acquire New Customers: The unstoppable reason for optimism here, according to the Wine Market Council, is the 49 million drinking-age members of the Millennial Generation, now between 21 and 32, who have taken to wine in record numbers. These people have discretionary income and are social-media savvy, making many of their buying decisions online from information gathered online. For more help in marketing directly to the Millennial Generation, call Doug at six five zero, eight six seven, thirty-seven hundred.



Silver Lining, Reduce Costs: "You know, with money tight, and French oak at $1,100 a barrel, we're gonna get a lot less oaky wine--and that's a good thing!"

'A trend away from over-oaked Chardonnay and toward crisper, place-driven versions is already under way. Many wineries can be expected to find hidden virtues in all those second- and third-fill barrels already on hand. Value brands will continue to move toward alternatives, but higher-end wineries will more likely choose to retain the many merits of barrel aging without fresh lumber.' From Tim Patterson's article on Ten Silver Linings For The Wine Industry, in Wines and Vines magazine.



Silver Lining, Build Brand: Brand is what your customer thinks and says about your wine. For example M&M candies have a tremendous brand due to product quality and a place the candies have carved out in memory and the company works at keeping those brand values. This is the opportunity to build a new wine brand. But vintners will have to think outside the box as creating a new wine brand is a long-term effort. Call the author at six five zero, eight six seven, thirty-seven hundred for a branding consultation.



Actions

Creating a To-Do List, there are several low cost activities for vintners. First contact the author at molitor42 at gmail. Second change the mindset, from making wine as the #1, to getting paid for your work. Adopt the priority of a "Survive And Grow Option", which begins with selling wine directly on the Internet, reducing inventory and generating revenue as the priority. Once the rootstock has been planted for the "Survive And Grow Option," the vintner can return to winemaking.



Reducing costs may mean fewer new barrels, but it also means skipping expensive Google Adword campaigns for more low cost online strategies. This includes strategies for online brand building and to introduce your wine to that Millennial Generation. Build brand by building a relationship with your customers, because in the end, your brand is what your customer thinks and says about your wine.





##30##






Report this article Ask About This Article


Loading...
More to Explore