This week’s wine news: Three-tier lawsuit over pricing reminds us that booze regulation isn’t gong away quickly. Plus, is organic the future of wine, and why does printer ink cost more than vintage Champagne?
• No discounting: Total Wine, the national liquor store chain, can’t discount wine lower than the state of Massachusetts says it can, ruled the state’s highest court. The decision overturned a lower court judgment in favor of Total, which said the chain could charge lower prices, and that they didn’t violate state law. There’s almost no way to summarize the judgment for anyone who doesn’t have a law degree and is familiar with alcohol wholesalers; it’s enough to know that the ruling (the pricing laws are “not arbitrary and capricious or otherwise unreasonable”) reminds us that three-tier isn’t going away quickly, despite what many people think.
• Organic wine: An Italian high-end producer says the future of quality wine is organic. “I think it’s important to go organic, because today, we need to be careful about what we eat and drink,” says Salvatore Ferragamo, whose family owns Tuscany’s Il Borro. Since the vines absorb what is found in the soil, and since that is transferred in varying amounts to the fruit and into the wine, organic makes the most sense.
• Very pricey: Those of us who have always wondered why printer ink was so expensive will not be surprised to learn that it’s 10 times more expensive than vintage Champagne, widely regarded as some of the best wine in the word. A British consumer advocacy group says printer ink costs around £1,890 per litre (about US$2,400), compared to £1,417.50 per liter (about US$1,756) for vintage Champagne from luxury producer Dom Perignon. The consumer group also reported that printer was more expensive than crude oil.
Photo: “Antinori Wines at Berkmann Grand Cafe Wine Tasting” by Dominic Lockyer is licensed under CC BY 2.0
Big Wine and Big Distributor will push for higher wine prices 2019, but may run into resistance from flat demand, an abundant grape supply, and a wobbly economy
We’re at a crossroads as we approach wine prices 2019. On the one hand, the worldwide grape supply is abundant, especially in California, while demand is flat in the U.S. and continues to decline in Europe. All of this, given the law of supply and demand, should lead to lower prices.
On the other hand, the oligopoly of producers and distributors that controls pricing in this country sees higher prices as part of the natural order of things, and the three-tier system gives them more control over pricing than they would have in a less regulated marketplace.
Further complicating the issue: the U.S. economy and the stock market, which is wobbling one day and then doing something different the next. What happens if we get a recession in late spring or early summer?
Given all of those contradictions, how do we approach wine prices 2019? My guess: Big Wine and its allies will try to push prices higher, but with the understanding that significant and regular discounting by retailers will be necessary as flat demand runs into higher prices. Hence, we need to buy when we can take advantage of all that discounting.
Consider the following:
• First, tremendous discrepancies in prices – not just between retailers (more about that in the next item), but between the same product in the same store. In other words, a wine could be $10 one day and $16 the next, and there is no way to tell what’s going to happen. I’ve paid four different prices for Spy Valley sauvignon blanc at Kroger in the past 12 months, ranging from $12 to $16.
• The price differences between big and small retailers will continue to grow, as Big Wine and Big Distributor give their biggest retail customers even better deals. Part of this isn’t new, since bigger customers have always received better prices; volume discounts and all of that. What’s different now is there are more huge companies. As one small Texas retailer has told me, he has to sell a $10 wine for $13 and $14 because he can’t get the same pricing that the big chains get.
• Even more indecipherable discounting. Look for more retailers to adapt grocery store-style pricing, where the same wine could have three or four prices depending on how much you buy, whether you’re a club member, and so forth. A Dallas Whole Foods sold something called Troublemaker Red (“velvety smooth”) for $14.99, but with a 10 percent discount for six bottles and a 20 percent discount for a case. This dovetails with the idea of higher prices, but then allows for discounting to move product that is stuck on the shelf because prices are too high.
• Finally, nothing will change with restaurant wine pricing, as the restaurant business sticks with its failing pricing model. Because, of course, if restaurateurs understood what was happening, they would have fixed the problem long ago.
These four suggestions can turn phony wine pricing into real savings
Wine pricing today is a jumble of fake discounts, inflated markups to make the fake discounts look good, and make-believe member and club prices. And let’s not forget all those bogus volume savings, where the multi-bottle price at one store is the one-bottle price at another store.
But there are ways to make phony wine pricing pay off. Yes, it’s a bit of work, and no, wine shopping isn’t supposed to be a bit of work. But the bit of work is the difference between getting the most value for your money, and paying too much for crummy bottles of wine.
Hence, these suggestions:
• Know the real retail price. The free version of wine-searcher.com does just that. If you start there, you’ll be able to tell immediately that the $18 grocery store wine marked down to $15 costs $13 elsewhere. And then you’ll know to buy it elsewhere.
• Plan your buying; don’t buy on a whim. If you need a bottle of wine for dinner, that’s one thing. But if you’re at Target or Walmart, don’t throw bottles into the basket just because. The next thing you know, you’ve paid $75 for five bottles of wine that might have cost $60 at another store.
• Know which stores offer which discounts – and which discounts matter. World Market’s four-bottle, club member discount is often a sham. But one Dallas specialty grocer offers 20 percent off six bottles every week, changing the discount from white to rose to red and so forth. That is almost always real savings. So don’t be afraid to ask how a store’s discount policy works.
• Use those discounts. I stock up at the Dallas specialty retailer depending on what’s on sale. That way, I can buy my $10 wines for $8, as well as splurge on $12 or $13 bottles (even if they cost $10 or $11 elsewhere). This approach will even work with grocery store pricing. In the spring, my Kroger was selling Wine Curmudgeon favorite Spy Valley sauvignon blanc for $16, which is more or less the real price. Thanks to the card discount, I was able to buy the wine for 10 percent off the real price. So I bought two.
Finally, remember that the independent retailer is your best friend. The independent retailer’s pricing is usually the most fair, and most will offer the standard 10 percent case discount. How can you go wrong with that?
More about phony wine pricing
• Wine pricing foolishness, and how one group stopped it
• Wine pricing skulduggery
• Transparency and grocery store wine prices
It’s time to bring on the lawyers when wine pricing reality gets out of hand
We’ve written many times about the foolishness of post-modern wine pricing – the phony suggested retail prices, the discounts that aren’t exactly discounts, and all the rest. In fact, in the past couple of weeks, I saw a $10 bottle of California rose that carried a “real” price of $20 at my local Kroger, while the Central Market chain sold a Texas white for $16 in Austin and $11 in Dallas.
What can be done about this? If you’re an attorney who likes wine, you can sue.
The Wine Industry Insight website and Wines & Vines magazine have the details: A group of law firms claimed that Wines ‘Til Sold Out, a California cyber-retailer, used deceptive pricing to confuse consumers about what they were buying. To this, they have apparently reached a settlement worth $12.6 million in cash and consumer credits.
Wine Industry Insight reports that “the defendant denies all wrongdoing. As part of the settlement, the attorneys involved have agreed to make no public comment.” And, since I don’t want to be sued, I make no claim I know exactly what happened.
But the attorneys’ complaint seems to address the sort of practice that’s common at too many retailers. For example, wrote Wines & Vines, the lawsuit alleged that Wines ‘Til Sold Out “created wine brands with private-label companies and then offered those wines with discounts not based on any actual retail value and offered other wines with exaggerated retail prices to make the discounts appear even larger.”
One example cited in the lawsuit: A California cabernet sauvignon, which was supposed to cost $35 and was discounted to $13.99. But those prices apparently didn’t exist anywhere other than the Wines ‘Til Sold Out website.
I see that practice – or something similar to it – frequently when I shop for wine, though more often at grocery stores and the largest chain retailers. It’s incredibly frustrating; how are we supposed to know if we’re paying a fair price?
Fortunately, there are a couple of things those of use who aren’t attorneys can do. First, know that any discount that seems to be that big, like the $20 rose marked down to $10, is too good to be true, and that the real price is probably closer to the “sale” price. Second, check Wine-Searcher.com for the wine. If it’s not listed, it may well be a private label described in the lawsuit, where the pricing is meaningless. Third, Wine-Searcher’s average price for wine in its database is usually dependable. If you see the same wine, including vintage, marked down, then it should be a fair value.
This week’s wine news: Wine retailers Walmart, Total Wine, BevMo are in the headlines
• Pricing dispute: BevMo, the West Coast liquor chain, has accused Total Wine of unfair advertising. It claimed that the latter’s ad campaign — “Don’t Paymo at BevMo” – that said BevMo’s prices were higher than Total’s wasn’t true. BevMo brought its complaint to the National Advertising Division, a self-regulatory group set up by the ad business. Total declined to participate in the process, which it is allowed to do. What’s interesting here is that Total, which seems to spend as much time courtrooms as Perry Mason, wasn’t worried by the challenge, which was made by one of the biggest regional chains in the country.
• Pricing dispute II: Total has also run afoul of the Massachusetts liquor cops, who have accused it of violating the state’s minimum pricing laws. The chain has sued the Alcoholic Beverages Control Commission for briefly suspending the licenses of two Total stores for allegedly selling vodka, rum, and other booze for $1 to $6 below cost. In the Total suit, the company said it assumes that local retailers turned the chain in to the state because they didn’t want to compete on price.
• Election dispute: How deep are Walmart’s pockets? The retailer spent more than $4.8 million that helped pass a ballot measure to allow wine sales in Oklahoma grocery stores. That was some 90 percent of the money raised by the group supporting grocery store wine sales. And, because this is about booze sales, the results of the election have ended up in federal court. The state’s retail liquor trade group claims the measure is unconstitutional and wants it voided.
? One person’s inexpensive: One more example of how restaurants are out of touch with their customers when it comes to restaurant wine prices. This new Dallas restaurant is boasting about its reasonably-priced list, because, said a restaurant official, “We have a low mark up on our wines, so we ?re priced fantastic.” That would be a wine list with most wines supposedly costing less than $100 (no website for the restaurant yet, so I couldn’t check). What would the official have said if there had been really expensive wines on the list? Is it any wonder, unless there’s a special reason to go, that the Wine Curmudgeon has all but abandoned Dallas’ restaurants? Besides, it’s more fun eating at home.
? Bigger and bigger: It’s not just wine companies that are getting bigger, but distributors as well. Wine Industry Insight reports that the 10 biggest distributors in the country control more than two-thirds of the wholesale business, which makes the group more or less as dominant as Big Wine. Why does that matter to consumers? Because, thanks to three-tier, every wine sold to a retailer or a restaurant in the U.S. has to pass through a distributor, which tacks on as much as 25 percent to the cost of the bottle for their effort. Fewer and bigger distributors means less competition, which means that percentage won’t get any smaller any time soon.
? Best practices: Want to know how to help your wine survive shipment, whether it comes directly from the winery or from an online or local retailer? This list, from Entrepreneur magazine, hits the highlights nicely, emphasizing how little wine likes heat, vibrations, and being left on a delivery truck all day. One overlooked point: Give the wine, particularly the pricier bottles, a chance to recover from the trip. The bottles need to rest after being bumped across the country, and letting them sit in a cool, dark room for a week or so isn’t a bad idea.