The existential question

If a tree falls in a deserted wood, does it… yada yada.

If a premium wine, with a generally accepted RRP of $60 a bottle is advertised through any outlet at $30, is it still a $60 bottle of wine?  Well, probably not.

Due to the internet, and the rise of the smart phone, anyone can run a search: “Wine X discount” would usually do it. And people do. I have watched people in cellar doors try the wines, and then search for the best possible deal. And once that information – Wine X at $30 – is out there, you can probably kiss goodbye your $60 RRP.

Will the consumer pay $60, or $80, or $100 while there is so much perceived discounting in the market place? Well, for some wines, yes. But they may buy more, and a more diverse range of wines than previously. And for some, no. Some are merely bargain hunters. But you know what? They generally would not be buying at $60, $80, or $100 anyway. Who knows what vagaries live within the heart of man? (Apologies for the poetic turn. Waiting for caffeine to kick in…) Will the buyer see such joy in the wine that they will return at any price? Will they revisit the brand, and try other wines in the range? Will they simply move on, and chase the next deal?

This obviously all carries on from the last post – and is about assessing the risk of using a certain channel, and weighing up the reward. And for some it is simple – sell all at $30, or sit on stock dribbling through at $60. Risk versus reward. And for each producer, that consideration has different imperatives attached.

And then we have the other side: if a brand does not discount, or conduct some kind of deal, ever, is that wine not more valued because of it? Suddenly a $60 wine becomes more valuable on the auction market, because the brand has chosen its position, and stood its ground. This is my $60 wine, I will sell it at $60. Respect. Because if you choose that position, and stand by it, then that shows an utter faith in your chosen price point, and in what the wine delivers for that investment. It possibly also says that there are no cash flow issues, or sudden need for whatever reason to clear space in the cellar.

But will the customer, with such (perceived) discounted choice before them, ever spend the $60 again? The existential question, part two. It is a piece-of-string question, and one which presumes a knowledge of the predilections of people. All people. And everyone is different. Some will see $30 as a great deal, and a way to find something new, which may well set them on a journey to bigger, better, and more expensive things. Bargain (perceived) wine as a gateway drug to, well, more fun wines. Some will take the bargain, and think nothing more of it. Nice deal, back to buying my stock standard now, thanks. Some will use it as an opportunity to try something new, or different. And that can never be a bad thing. And some will keep bargain hunting – at which point the wine itself almost becomes irrelevant. It is all about the deal.

And the deal. Think about your existing customers as you weigh your options. Think about the restaurant that just spent $15 wholesale on the wine now advertised at $12.50. About the long-term customer who regularly spends hundreds on full priced wine at your cellar door, or direct sales. Think about the retailer now having to explain their perfectly reasonable price point to customers. Now weigh up your risk versus reward.

Yes – the deal has a slightly lesser impact at the higher prices. A $30 investment per bottle is already in the narrow end of proceedings. The people spending that, are interested in wine. Willing to spend. A $60 bottle advertised at $18? Different story, and brand suicide.

So, yes. I would love people to dig deep and spend on my reserve wines, and they often do. I would love people to take a chance, and try something different. I would like people to appreciate that they often spend north of forty dollars on a wine at a restaurant – why not do the same in retail every now and again?  But I do also see these channels – chains, online, (insert new innovation here) – as a great way for the punter to extend their scope. To get excited. To try something new.

But at the end of the day, that tree is no longer falling in a deserted wood. Because now, the world is watching. And tweeting. And searching.  And a $60 bottle becomes a $30 bottle at a click of a button.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s