What all wine dealers need to know about falling wine prices

Falling Retail Wine Prices Have Reached Two “Sweet Spots”, according to research in the February 2010 issue of Wine Business Monthly. Wineries and wine retailers would be wise to take note of these ranges so that they might adjust their sales strategies accordingly. Figure 1, below, shows the 2009 sales volume changes of wine within certain price ranges. The largest amount of growth was in two ranges:

• $3.00 - $6.00: Increase of 9.7%
• $9.00 - $12.00: Increase of 5.8%

Sales of wines in the $20+ range dropped 6.4%.


Figure 2, below, shows the value % change in wine prices from 2007 – 2009. The difference is stunning: in 2007, wines priced $15+ were in the growing category. Now they’re shrinking rapidly.




What this means to wine dealers:
The obvious: Wine is still selling, but people have traded down into the lower price ranges. How do you deal with it? That’s a tough call. You’d like more people buying your wine, but you don’t want to price-cut your profitability out of existence.

Two techniques:
Speaking as an ex-marketing manager (here's my LinkedIn profile), I’d like to suggest two tactics:

1. Consider slightly lowering the prices of your premium wines and let people know (through shelf-tags) that it’s on sale.
   
2. Consider raising the prices of your wines that are below the ‘sweet spot’…but don’t announce it (!). People judge wine by its price. If it’s too cheap, they’ll think it has all the bouquet and flavor of a good quality drain-opener. If you bump your $8.00 wine up to $10.00 or $11.00, they’ll think that they’re serving “quality wine” to their friends, and it’s still within their price range. What a bargain! It’s psychological, true, but it works (as long as your wine is not a high-quality drain-opener).

When employing those methods, take the time to calculate how you can compensate the losses of dropping the price of your premium wines by boosting the price of your not-quite-as-premium wine.

Best technique: Add value.
Adding value to your wines is a much more effective tactic than just lowering your prices. Why? Because people like value. “Value” is defined (simply) as “How much stuff I get for the price”. When people think they’re getting more “stuff” for the same price, they’ll buy what you’re offering. AND, they’ll come back to you. Rather than hunting for “The same wine at a cheaper price”, it’ll be “I’m going to visit Bob’s Wine Store because I got more stuff!”

The concept of value (and how to add it inexpensively) is a longer topic than a single blog post, so I’m going to save that for the next post. Watch for the next blog post when I go into selling more by adding value. I’ll have some great examples that you can steal and put into your own business.

Watch for the blog post titled: “How to Use an Online Marketer’s Technique to Sell More Wine”. It’s all about adding value and how to use it to get more long-term customers.