Friday, October 19, 2012

I can see right through you...

"It's hard to make money out of selling top Bordeaux to our Chinese customers; they know too much about what other people are asking for it". The comment from my friends in Hong Kong echoes those of a growing number of other merchants I've spoken to recently. Anyone who wants can check prices on and decide where to spend their money. Chinese buyers simply seem to be cannier about the way the do so.

But it cuts both ways. A buyer for a retail chain also admitted to me that she routinely goes onto winesearcher whenever she's offered a new wine to see who else is selling it and for how much. "A French producer recently proposed a wine with an ex-cellar price of €5.30. I liked the wine, but thought it too expensive. And I was even more certain when I saw that a Danish store was retailing it for €4.99. When I pointed this out to the producer, he slashed his price!"

Supermarket chains - especially in the UK - have their own kinds of x-ray specs. With the help of the winemakers they employ on their buying teams, they know, to the nearest 10c the real cost of a winemaker's grapes, his bottle, cork and capsule, not to mention the running costs of his winery. As an Australian joked to me, "they even know how much I pay for the coffee we drink in the office!"

Whether any of this is really healthy is another question. Do the same factors really apply to spirits, to clothes or restaurant meals? In all those cases, we are expected to spend our money irrationally: we pay what it takes to get something we want.


  1. More importantly: is any of this at all relevant?

    No, not really.

    It's more a question of if your retailer buyer acquaintance thinks she can sell the wine on offer for 8.99 or not. (But of course she should try and get the best Ts&Cs).

    There is far(faaaaar) too much talk, especially in the wine press, of what is "the real production cost" of a bottle of wine.


    The price of the bottle has very little to do with the production cost (if anything at all). It has to do with what the buyer is willing to pay for it. That's all.

  2. Per, thank you for your contribution. I agree 1000% re the irrelevance of the production cost. Or what should be its irrelevance. My point - possibly not as well made as I should have liked on reflection - is the same as yours. No-one gives any thought to the relative production cost of Hendricks and a budget gin, or of Coca Cola. Too few wines have built strong enough brand values to transcend these issues.