I'm curious how many of you would agree/ disagree with the pricing model below for a wine/ liquor distributor. The pricing listed below are for customers.
Would anyone else categorize the wines in a different price bracket? Please list your pricing if so?
That's a lot of variation between price points. There have been various brackets made like this with different terms depending on which company / model you use. For me, I just like to assess a price point as opposed to "naming a category". My idea of a luxury or premium wine may be at a far different price point than someone else's. Here's an article about pricing tier categories: https://wineindustryadvisor.com/2018/07/05/placing-wines-category-price and here's another: https://winefolly.com/update/reality-of-wine-prices-what-you-get-for-what-you-spend/ which the first article is referencing...
Another entity defining categories is Silicon Valley Bank. Premium is anything above $9 or 10. Super Premium starts around $20 if I remember correctly. You can check out their documents online for verification. I see a lot of domestic wineries that sell wines in that $20-39 bracket refer to themselves as "super-premium" especially when recruiting staff.
Thank you for the articles. Great help!
All great feedback! Being in the PA market where the government run PLCB increases prices by 30-40% just to enter the market I think it’s notable that the ranges differ here. The funny thing is the consumer doesn’t necessarily see that so they assume the same aforementioned pricing models of other states.
Oh and of course, as I’m sure you know, pricing is not very indicative of quality. I have seen wines that are represented by a portfolio in Europe that are then imported through a distributor here and the price is $5-$10 more per bottle than it would be if the importer/distributor here bought it directly from the winery.
Nothing funny about it. Just basic Economics 101. People have dollars to spend and can't be concerned with the channels that make up the prices. In rare cases, we will see brand loyalty change what a person is willing to spend, but that is almost always at the cost of something else (i.e. buy fewer hamburgers to drink Rombauer in Pennsylvania). For the most part, unless earnings are 30-40% higher in PA, someone selling wine there shouldn't try to push the same brands as someone in another state. The brackets only adjust to earnings, but the products within those brackets will vary based on cost of those products in each market.
Funny was a poor word choice to keep it light. I absolutely hear you Jeremy.
I would note that the same brands are still 100% relevant yet the margins may be different and a sliding scale is absolutely necessary. As with anywhere, make your margins on depletion SKUs be it BTG or BTB and make sure the math checks out. There will always be people that can afford it and will pay the money, but it is key to try and make the prices relatively consistent with elsewhere. For instance no PA program should have a cost driver in Dom Perignon, yet maybe that Mer Soleil Chard or Kendall Jackson (the ‘call brands’ that will move regardless and in great quantity) glass pour gets an extra dollar per glass in the price to help balance more interesting and lower quantity sales SKUs.
It is a special thing, that we all work to do, to find quality at bargain basement prices and to utilize that to leverage the rest of the program. As some winemakers say, “We make our BTG wines so that we can have the funds to make the top stuff”. Ok probably not those exact words but the messaging remains!
Excluding wines from an entire state due to governmental regulations would be limiting the industry and I will never be for that. With personal experience running successful programs (and now on the sales side assisting with placements) in PA it is absolutely possible to make any wine work in its relevant atmosphere (no DRC at Taco Bell unless it’s BYOB). The creativity to make it all work, to still provide the guest with value at every price point in relation to quality, to not necessarily set a firm cost:list price ratio, and to still move the chains in terms of diversity of wines and broadening people’s horizons is part of what makes it all so exciting. No?
Sorry, I think my message was poorly stated. I'm just meaning substitution theory is in full effect (as you demonstrated in your message and in your excellent work daily to turn margins into bottom line profits- I have no envy for that situation at all and commend the people there highly). The same brands are not 100% relevant if you are finding value brands to make those margins. Sure, you get to keep selling Clape and Dom, but you're not selling the same BTG wines as other markets, or you'd be going broke, especially for restaurants outside of the wealthy Philly market. You're adjusting to other brands in different price points, and if you're selling more of them to make the top end work, then the majority of your program volume ends up being a substitution. That was my point, I guess.
No apologies needed - so easy to not be on the same page if you’re not having a face to face conversation!
You’re spot on for sure about BTG. When I moved home to PA from CA it was a shock to the system and not a single BTG wine I used in CA could be used in PA. For sure nothing to Clape about... (sorry Dad puns/jokes are my thing)
After the initial shock I realize there’s so much change that needs to happen here and so many more unadventurous and/or uneducated people here that I am excited to hopefully see, and assist with, the change over the next decade or so.