Why Wineries Should Charge Their Highest Retail Price in the Tasting Room

By. Neil Williamson, Grumpy Marketing Guy

Over the past couple of years there has been a great discussion about where wines in tasting rooms should be priced.  There are some who believe the tasting room is like a “factory outlet” store and should have the lowest prices anywhere.  Based on the title of this post you can see that I fall in a different camp.

If you have your wines in distribution, whether you are distributing them yourself or not, the retailers are a primary sales channel.  The retailers are your partners.  Why would you undercut your partners?

Please let me explain.

The shop owner perspective – When you, or your distributor attempt to place the wine with a wine shop (or grocery chain) price will be a key issue.  If you are a local winery you may have a leg up on getting attention but one of the first questions will be “What do you sell it for at the winery”.  In the shop owner discussion you are competing with every other wine that is available in distribution.  If you are 5 miles away and selling the wine $3 cheaper than he/she can, why should you get a placement in the shop?

The customer perspective – In the retail shop, your wine must compete with all the other wine in the establishment.  If  a customer has been a guest at your winery and purchased your Chardonnay for $21 and sees it at their “regular” wine shop at $17.99, they perceive increased value, as they enjoyed the Chardonnay at $21.

The Grumpy Marketing Guy perspective –  Wine purchased at the winery provides the winery three profit margins (producer, distributor, retail).  If we accept that guests that visit the winery like wine (not a big leap) and regularly shop for wine somewhere other than the winery, then capturing all three profit margins maintains your pricing integrity in all channels.  In addition, it helps build credibility with your retail partners.

It is important to recognizing winery guests are wine lovers who have a variety of only your wines to choose from during their visit but its all your wine.

Important exceptions

  • Multiple bottle/Case discounts – just as your retail partners have such discounts you should as well usually at 3, 6 and 12 bottle increments.
  • Inventory Issues – there are times when a wine does not move in the market and you have a significant inventory, creating a special price for such wines as needed is a great idea.
  • Festival Pricing – I encourage wineries to play with their pricing at festivals.  If you are sold out of a wine at the last festival, bump it up a $1 a bottle see if it still sells out.  If something was a slow mover drop the price $2 as a festival special.

Wine prices at the winery should be designed to recognize the significant capital costs you have in the winery and to capture the maximum revenue the market will bear.

Respectfully Submitted,

Neil Williamson, GMG

Photo Credit: Winecountry.it

 

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