+- WineBoard (https://www.wines.com/wineboard)
+-- Forum: GENERAL (https://www.wines.com/wineboard/forum-100.html)
+--- Forum: For the Novice (https://www.wines.com/wineboard/forum-2.html)
+--- Thread: Who Determines The Price of A Bottle of Wine (/thread-18827.html)
- texlady - 09-20-2004
I live in a dry, dry county in East Texas. There are no package stores within the county borders, grocery stores do not sell beer or wine and in order to have any alcoholic beverage in a restaurant one must buy a "membership" card. The closest package store to me is about 15 miles away just "across the line" in the next county. This store has a selection of wine, mainly domestic, quite a few from the Texas wineries. I don't know if their prices are good or not. They have hardly any competition if that enters into it. Who actually determines the price of a bottle of wine? Is there a "manufacturers suggested retail price" by the winery? Does the distributor push a price limit? Or, does the store price the product at whatever they feel the shopper will pay?
- Thomas - 09-20-2004
Good question. There was a time when states set the price of alcohol, but many states have had to stop doing that after challenges to their constitutions.
Generally, retailers work off a margin of about 33% over wholesale cost (that's a 50% mark-up)--before applying discounts. But a retailer without competition is free to go wild or mild with pricing.
- californiagirl - 09-20-2004
texlady- Outside of the Texas wineries that are offered, what other states/wineries are they carrying?
hotwine, may have some good purchasing advice for you.
- Zinner - 09-21-2004
The wineries do have suggested retail prices but mostly stores don't charge as much as that for the wine. Not unless it's rare or collectable.
A lot of factors enter into pricing and one thing that happens is that a store may get a better deal from the distributor if they buy a lot(or if they buy something the distributor needs to move), so the store that gets a deal can choose to pass it on to the customer. Your little store may not be overcharging if their prices are in the right range--they might not have buying power to get the best bargain themselves. But they shouldn't have prices extremely different than those at a bigger store.
But don't assume that the massive discount stores always have the best prices either. I noticed that our local Sam's Clubs(Walmart's membership discount stores) were charging more for some wines than our local wine stores. I asked one of the distributor guys why. He said it was because Sam's sets the prices in Arkansas and didn't have any idea what the wines were selling for here.
In my city, the wines stores compete a lot. Also we have some grocery stores with very nice wine departments. Typically, here, the grocery stores with wine consultants on staff have better prices than those that don't have anyone staffing the department.
Do you have any larger towns or cities that are close enough for you to make an occasional buying trip?
Most wine stores will give you a discount if you buy a case--12 bottles-- at one time. Some will give you a discount on six bottles. You don't have to buy all the same wine--you can buy a mixed case and pick and choose.
- texlady - 09-21-2004
Thanks for the replies.
In answer to the questions you posed, the store I mentioned carries wines from many vineyards but not all varieties. I suppose they carry what the public will buy which seems to be merlots, zins, cabernets. Currently, they seem to be featuring Australian wines, especially Yellowtail. They also have a fair selection of what I call "national" or widely distributed wines such as Sutter Home, Berringer, Kendall-Jackson, Gallo, Reunite, and many more, mostly from the West Coast. I recall seeing GB Beaujolais Villages, a couple of Bonny Doon varieties, some from Columbia Crest. I prefer the sweeter wines and that variety seems to be where the selection is lacking. I did find the recommended Schmitt-Sohne QbA riesling for $6.99, Hogue Late Harvest riesling for $7.99, a Texas muscat canelli (Llano Estacado) for $7.99 and the Reunite Lambrusco for $3.99. After looking at prices on some websites, maybe my store is not out of line.
I'll do some comparison shopping when I travel to a nearby city (about 40 miles) next week.
- Drew - 09-21-2004
Those seem to be very fair prices for the wines listed. I would also suspect that this store would handle wines made in mass quantity which are the ones you cited.
Drew
- californiagirl - 09-21-2004
What is available from Bonny Doon? I would not exactly call them a national winery. Quite good, in fact.
- Kcwhippet - 09-22-2004
Why would you say Bonny Doon isn't a national winery? We have access here to anything they make.
- Innkeeper - 09-22-2004
Well yes and no KC. Most wineries have one or two wines in their tasting room that are not distributed outside it. The last time I was in a Bonny Doon TR there were about half a dozen such bottlings.
- texlady - 09-22-2004
californiagirl,
With regard to the Bonny Doon wines, I recall seeing their Big House Red and the Big House White. I was looking for a riesling (The Heart Has Its Riesling) and the store did not have that variety. Next time I am there I think I'll ask them about ordering it.
- Kcwhippet - 09-22-2004
Bonny Doon makes a nice Riesling for the money called Pacific Rim.
- newsguy - 09-22-2004
bottom line on pricing is supply and demand, with wine being the same as other goods. here's an article on wine pricing that i for the St. Petersburg Times:
Copyright Times Publishing Co. May 26, 2004
You're cruising the wine aisles of your local supermarket or wine shop, looking for a bottle to take home for dinner. On the labels, you see names of wineries that are familiar (Sutter Home) and most likely obscure (Chateau Canon La Gaffeliere).
Then you see the prices.
$5 - Okay, you say.
$25 - Hmmm, that's a little high.
$125 - Come on! Why so much for a bottle of fermented grape juice?
And why such a huge difference in prices?
Quality plays a part in pricing, which is determined by factors such as crop yields, land prices, volume and demand.
A lot goes into putting that bottle of wine on your table. Everyone along the way who handles it gets a cut.
The process starts at the vineyard.
Anderson's Conn Valley Vineyards in St. Helena, Calif., makes wines typically found at high-end retailers and restaurants. Winemaker Todd Anderson says that, as with any other business, quite a few factors go into pricing.
"We started 23 years ago and had to buy land. We bought our own vines, built our own vineyards," he said. There is the cost of building and equipping a winemaking facility. And then there's the price of labels, corks and bottles, and a bottle alone can cost $2.
There are labor costs for making the wine and producing the grapes. "It can cost over $5,000 an acre to farm grapes," Anderson said.
There are many reasons for the wide range in pricing, and it starts with "terroir - the land, the location," said Carmen Castorina, director of communications for Gallo of Sonoma. That well- known winery sells wines at bargain, midlevel and top-end prices.
The better juice a grape yields, the more expensive the land on which those grapes grow. "As individual blocks of land are proven to produce the best quality grapes, that's when supply and demand takes over," Castorina said.
What the grower does on that land affects what the winemaker can charge. Older vines and lower yields produce more concentrated flavors in the grapes, which is a good thing. Harvesting grapes at their optimal ripeness must be done by hand, Castorina said.
These factors affect - mostly increase - the cost of the wine. Lower grape yields mean less wine can be produced from a particular plot. The smaller the production, the more a winery must charge per bottle for that land to be profitable.
Many wines get barrel-aged. "We use new French oak, which is the most expensive," Castorina said of Gallo. One of Gallo's top-end wines would go into the barrel first, with the barrel being used subsequently for less expensive wines.
To allow them to mature and gain complexity, the better wines are then aged in the bottle, from a few months to several years. That means warehousing is needed.
All these factors combine to produce a higher quality wine. And quality is a big factor in pricing.
In determining a price for a debut vintage, Anderson said, "You go out and see what the wine compares to in terms of the characteristics of the wine," and price it accordingly. In other words, if your wine compares favorably with Chateau Lafite Rothschild, you're not going to price it along the lines of Mogen David.
If that bottle on your table came from abroad, it was handled by an importer. Stacole Fine Wines of Boca Raton is an importer that also distributes in Florida. The company sold about 130,000 cases of wine last year, according to Michael Rugers, Stacole's product development and educational manager.
"There are certain margins you have to make. Usually, that's around 30 percent," Rugers said. "You have to pay commissions to salespeople, administrative costs and shipping costs."
The last stop is the retailer, who has the final say on pricing. Leading the way nationally in sales are monster membership warehouses such as Costco and Sam's Club. Their combined wine sales in the United States last year was about $1-billion, according to Wine Enthusiast magazine. Grocery store chains such as Publix also sell a lot of wine.
But independent shops operate differently.
"Generally, dealing with fine wine, grocery stores deal with set margins and wines that are made in the hundreds of thousands of cases. That's big business, that's bulk business," said Bob Sprentall, owner of B-21 in Tarpon Springs, which stocks more than 3,500 wines.
At B-21, "There's not a standard margin," Sprentall said of his pricing. "It's all about supply and demand.
"The marketplace dictates what you can sell wine for. Simple supply and demand."
Demand can be hugely affected by what wine critics say about a bottle or an entire vintage. "Scoring by the Wine Spectator and (Robert) Parker affects pricing," Sprentall said.
Parker, a Maryland lawyer and wine lover, is now the mostfamous American wine author and critic, known for his love of Bordeaux, iconoclasm and tough judgments of wine on a 100 point scale published in his influential newsletter, the Wine Advocate.
Winemaker Anderson said educating consumers on what it actually takes to produce wine can only help the industry. He mentioned a program where consumers were invited to Conn Valley Vineyards to observe and participate in making wine. Anderson recalled that after being exposed to the process, one participant passed along what surely had to be magic words to the winemaker's ears:
"He said, 'I'll never complain about the price of a bottle of wine again.' "
- winoweenie - 09-22-2004
Great article Newsie! WW
- newsguy - 09-23-2004
thank u sir!
- wondersofwine - 09-24-2004
I agree with WW's assessment. Great article.
- Drew - 09-25-2004
I heard Dan Rather and ex New York Times reporter Jayson Blair contributed to this article...I'm not buying any of it. [img]http://wines.com/ubb2/biggrin.gif[/img]
Drew
- buradayam - 09-25-2004
I dunno... there is the other way to do it via outofstate shipments. I have found that I can get wines not available here at my snowbird retreat via UPS with no problem. Mixed case prices are best.
- hotwine - 09-26-2004
I agree, that's a great article uoted by Newsie.
TL, your best bet is to shop in the larger markets. Sounds like you're in the Tyler/Marshall area; if so, Dallas is where you'll find the best selection. If you're further south, go to Spec's in Houston (see www.specsonline.com). Try checking the phone books in those cities and calling wine shops and asking if they host tastings; you can then time your visits to coincide with those to obtain free tastes of wines the shops are featuring at those times (usually at discounted prices).
Living in a dry county, you'll need to work at it to find a supply of wines to suit your tastes. You might also consider getting into local politics to work for a change in the "local option".
We had that phony "club membership" drill here in the San Antonio area when I came of age back in the early 60's.... in fact, it was used throughout the state. Fortunately, the residents of most Texas counties have long since voted to go "wet" if only for the revenue alcohol generates.
- texlady - 10-01-2004
Again, thanks to all you guys for your comments and education regarding the pricing of wine. I made a trek to a nearby city to do some cost comparisons and found my wine "mecca/s". I was able to find quite a few of the wines you guys have recommended. I even splurgged and bought a bottle of Quady Electra for $13.49. Next most expensive was GB Beaujolais Villages ($9.50). Hotwine, you have my location pegged exactly. Tyler has been "dry" since prohibition I think. Groups, mainly restaurant owners, circulate petitions and get the subject up for vote every 10-15 years but this is such an ultra conservative city I doubt it will ever be passed. Rather hypocritical as those who speak most stridently against it are the same ones who crowd the county line package stores every week. Just my own opinion. Can't wait to sample some of my new purchases.
[This message has been edited by texlady (edited 10-01-2004).]