Saturday, April 4, 2009

Ancient Chinese Secret (guest blog!)

Remember that 70's TV commercial?

Well, not Chinese, per se, but a retail trade secret is: wineries move from distributor to distributor often. And when that happens the previous distributor has a decision to make: sell off wines at a discount to move out the old product that they will never have again, or, keep pricing the same and potentially sit on the stock for a while, since they will not be actively promoting it.

Distributors always choose the former so that they can generate cash flow. This is good for retailers and consumers alike but it also creates a situation where the brand can be damaged. But I feel that in most cases consumers' short-term-memory mitigates that risk. So finding a discount one day and not the next will not kill the brand, but instead, potentially expose people to a new wine. In this way, the temporary lower price can ultimately build the brand, long term.

Case in point, Arcadian. This Rio Vista single vineyard Pinot Noir has a suggested retail price of around $65. But because of an innocent switch in distribution we were able to buy it and offer a price of $49.99.

Now $50 is expensive for a bottle of wine but with a this kind of discount, maybe someone will try an Arcadian wine for the first time and become a convert. We have been fans since the late 90's. Joe Davis, winemaker of Arcadian, has been making wine under his own Arcadian label since 1996. His wines are distinctive and ethereal.

This six-year-old wine, the 2003 Arcadian Pinot Noir Rio Vista Vineyard, is a fantastic bottle of wine. The first thing you notice is the translucent color. You can see through it. One would guess that there is no fining or filtration as the brickish color remains a bit cloudy. Upon first sniff there are rich aromas of red fruits like raspberry, cherry and some spice notes. On the exceedingly silky palate there are loads of ripe red fruit that is sweet but balanced by lavish tannins and a good bit of acid. It is this acid that makes these wines great partners with food. On the finish you have layered notes of cola and earth. A really great bottle that I am happy to pimp to the nearest Pinot buyer.

It is a good time to enjoy wine...

Jeff Zimmitti
Rosso Wine Shop


Travis Bickle said...

I shouldn't think Joe Davis is a big fan of brand-dumping. & the only portion of the average wine consumer's memory that is not short-term is the part marked price.

Ian Johnson said...

I distributed Arcadian in South Carolina and know Joe quite well. Travis is quite correct Joe does not like "brand dumping" but it is sometimes a necessary evil. The consequences of staying with a distributor that does a poor job promoting your brand due to a lack of understanding or interest make it impossible to avoid the damage done by price cutting.
Joe is a great guy and I genuinely like his wines.

Jeff Zimmitti said...

Of course no one likes brand-dumping. I was merely trying to put a positive spin on an unavoidable in the wine business.

Who knows? After the dust settles we may be better off for the "reset."


Amy said...

Yep - lowering prices sucks, but I don't even consider this brand dumping. I think many producers are in the same position now and the truth is, whether we want to accept it or not, the market just can't handle SO MANY $60 California Pinot.

We've lowered many prices at Veritas this year - even on wines like Liger-Belair and Michel Lafarge - taking a smaller margin so that the wines will sell. Peter and I lowered the price for the Chianti. It's simply about supply and demand. And if the demand is low and the supply is high, well... there's little more to be done than to lower prices. You have to move through one vintage before you release another and it can be a vicious cycle, but that's just the way it goes in situations like this. We all need cash flow, even if its a smaller margin than we hoped for.

Henderson the Rain King said...

That's completely different. Veritas - & you & Hunkenstein - aren't losing the brand per your choice or the brand's, you're merely conforming to the ebb & flow of the marketplace. As Mr Bagadogfood pointed out, when a brand moves on - again, whether the choice is yours or theirs - the question is: should I dump & devalue (of course, if the parting wasn't amicable), or should I continue to sell what I own at the same price, not confuse the witless wine-consuming public, & still receive the Xmas card at the end of the year? The fact that Arcadian was "dumped" in So Cal tends to suggest that there was little love lost between producer & distrib bc dem wines, tho sometimes pricey, should be a relatively easy sell.

Jeff Zimmitti said...

but Rain King,

"should be a relatively easy sell"

Therein lies the unrelated but still partially valid point of Amy Winehouse that following the ebb and flow happens in all cases.

It is no longer an easy sell, whether or not it haz bin dumped.

Amy Outhouse said...

"A relatively easy sell" for "a single-vineyard Pinot Noir with a suggested retail price of around $65" as opposed to the 99 Porto Rocha Touriga Nacional on the Regal close-out list for $2, ergo $3 retail, which would be considered a very easy sell.