Monday, April 16, 2012

The Luxury of Distribution

Spot the odd man out: Château Latour, McDonalds, Nespresso and Hermes. All of these are luxuries (yes, even the burgers and the coffee if you use the dictionary definition of luxury as something that is "inessential but conducive to pleasure"), but three of the brand owners share a philosophy of how and where they like to distribute their products that is alien to the fourth. If you want to buy some more prettily-coloured pods for your shiny Nespresso machine, the only place you are going to get them is directly from the Nespresso shop or from their website. The same applies to McDonalds - a Big Mac can only be found beneath the golden arches - and it is true of most of the more premium items that carry the iconic Hermes logo. The perfumes may be on offer in Duty Free shops across the globe, but you're hard put to it to find the scarves, bags and belts outside the brand's own shops. Over 75% of Hermes's turnover is rung through Hermes tills.

Château Latour, like almost every other super-premium chateau in Bordeaux effectively prefers to distance itself from the end-user. The initial sale might be to a merchant known to the producer, but from there on, the wine is likely to make its own way, quite possibly across oceans and time zones, before it finally settles in the cellar of the person who is eventually going to drink it. Hermes knows who is wearing its scarves; the chateaux have little idea or apparent interest in learning who is sipping their wines or where they are doing so.

What makes this picture interesting is the fact that Château Latour belongs to a company with a highly sophisticated understanding of how to handle luxury goods, as can be seen from a glance at this 2008 report prepared for Latour’s stablemate Chanel on the dangers of internet distribution.

Of course, for many observers, Latour is not a luxury good, it’s a wine and as such has to be distributed as such – by superior folk called wine people. But just consider the way wine sales developed in Japan: through department stores. And look at the way premium wine is often used throughout Asia: as a gift.

Chateau Latour is no longer being sold through the mad system of en primeur. Apparently, it will continue to be distributed through the arcane system of la Place de Bordeaux, but even if this is the case, I’ll bet that a significant and growing proportion will follow other paths. Just as I’ll bet that one or two other big names, possibly in Sauternes and St Emilion, will join Latour in turning their backs on en primeur.

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1 comment:

  1. only if could get such a dead set cert at the races ........

    La Tour and others must resent the fact that such a large amount of money is made off their brand without adding significant benefits to equal the value of the margin being created.

    Can you imagine if they held the 2010 back for 10 years and then put it on ebay or an auction.....

    The Chateau are somewhat restricted in their volumes and therefore the only way to increase £££ is to maximise their margin and not the merchants.