The Grapevine

Retail Wine Industry News – Amazon Discounts, Bordeaux Futures Pricing

June 24th, 2013

This week we look at Amazon’s latest discount program and some thoughts on Bordeaux futures pricing and how these might affect independent wine retailers. [level-members]

First, we have Amazon who, in an email offer last week, was discounting orders of 6 bottles or more by 30%. Ouch. As with all their offers, restrictions apply, so this can’t be compared to the across-the-board 15% (for example) case discount you might offer. Still, your customers will be aware of this and may try to use it as leverage for a bigger break.

How can we compete against this? Is it time to ditch the standard 15% case discount that so many of us offer? And if so, how? Many retailers – beyond wine – experienced the Groupon pain. Rampant discounting can increase volume but at a tremendous cost.

  1. Training customers to shop only when coupons are available.
  2. Penalizing – and therefore alienating – your best customers.
Clearly, that’s not the answer. I’d love to hear your thoughts on what you’ve tried and how well it has worked. Comment away below. Let’s keep it civil …
Then, we have the opinions of some larger retailers (courtesy of Shanken News’ 6/21 email bulletin) as they weigh in on Bordeaux futures pricing. In a nutshell, there may be good news for smaller retailers. As Gary Fisch of Gary’s Wine & Marketplace in New Jersey put it,

“The lack of demand suggests that many of these wines will continue to be available, making it unnecessary to commit resources at this time … Now, en primeur pricing isn’t significantly lower than the pricing offered two years later on delivery. Given the value of money, it’s questionable whether buying early saves any money. If buyers are still expected to assume the economic risk but are given no financial incentive for doing so, buying en primeur will cease to be a viable business model.”

So perhaps the little guys aren’t at as big a disadvantage any more and do not need to tie up big chunks of working capital to secure tough-to-get wines. My favorite quote from the piece is from Ed Sands, of  Calvert Woodley in Washington, DC: “Pricing should be consistent with quality, and producers must be more aware of the entire wine market. They have a great deal of competition today.”

As do we. Making sure we are clear in the value we bring to our customers has to be our top priority, same as it is for the Bordeaux producers he’s referring to above.