Shrinking Wine Bottles

Did you hear the recent news? Cereal makers such as General Mills, Post, and Quaker are shrinking their packaging to soften the blow on higher prices. So even though they’re putting less Wheaties in each box, we’re supposed to feel good about our purchases and not resent the increased costs.

I wonder if this is something we could get away with? Shrink our bottles to make wine drinkers think they’re getting just as much for the same amount of money. I’m just kidding of course, but it did get me to thinking about the profitability issue for smaller wineries.

Whenever we talk about pricing around here, hairs are raised, hackles go up, and blood pressure becomes elevated. We have got to be the last winery in California to finally take some price increases. These have been done very modestly and very very slowly (see chart). To be truthful, it is costing us way more to produce the quality of wines we are making today than in the past. Hundred year old vines, fancy French oak barrels, and pedigreed winemaking teams don’t come cheap. But, we know we need to wow people with our quality in order to keep them excited.  If we don’t, there are another 987 wineries just down the road all vying for a piece of the action. Thankfully, our strategy is working. We’re selling out of everything we make. We’re getting great reviews and tons of accolades. And the tasting room is filled with folks from all walks of life who want to taste the new releases.  But, somehow we need to become more profitable so we don’t end up in the headlines like Chateau Montelena, Stags Leap and Rosenblum Cellars.

It’s a baffling question and something we think about quite often.

Suggestions anyone?

By Kim on July 25, 2008 8:43 AM | | Comments (4) | TrackBacks (0)

0 TrackBacks

Listed below are links to blogs that reference this entry:
Shrinking Wine Bottles.

TrackBack URL for this entry: http://www.wilmaswineworld.com/cgi/www2007/mt4/mt-tb.cgi/49

4 Comments


Mike McCracken Author Profile Page said:
July 25, 2008 11:54 AM

The price of Fume Blanc has lagged behind the consumer price index since its introduction in 1972. Over the entire period from 1972 through 2007, the CPI increased by 396% while the price of fume blanc rose by 222%. It is not surprising that profits have been squeezed since costs are more closely linked to CPI than the price of wine.

The price of fume blanc in 2007, if fully indexed to the CPI would be $4.50 * 4.96 = $22.32

Would you be able to make money at that rate? How about $19.00, which would still be a bargain?

McCracken@informetrica.com


dcvprguy said:
July 25, 2008 1:59 PM

Wow, Mike - that's a great point and well researched. I'm not sure we've ever thought about our pricing on that level of detail before. I for one agree that our Fume is woefully underpriced. I'd like to see the price be in the $17 - $18 range priced in the same category as other high end Sauvignon Blancs. Thanks for this info!


Jack at F&B said:
July 25, 2008 8:16 PM

Perhaps $14.50 sauvignon blanc doesn't need to be made in fancy French oak barrels?

Also, if you're always selling out, doesn't that say your price is too low?

I have to say, too, that if you're sauvignon blanc is as good as you say, why the heck are you selling it for under $20?


Kim (aka Wilma) Author Profile Page said:
July 26, 2008 2:30 PM

Oh, how I'd love to sell it for $20! But, with so MANY Sauvignon Blancs out there these days, (from all corners of the globe) it would be hard to raise the price without risking a dip in sales. And that is something we can't afford to do. (Frankly, it was a lot easier when we were the only game in town!!!)

As for barrels, ours is 100% stainless steel fermented. So barrels are not a factor in the production costs, which helps. Still, the wine is a steal, especially when you can find it in CA for even less. Here's a depressing fact. One retailer we know raised the price $1. That's right, $1. Sales came to a near halt. So, it seems we have an perception problem more than anything else 'cause the quality is definitely top notch.

Leave a comment

About this Entry

This page contains a single entry by Kim published on July 25, 2008 8:43 AM.

Wild Boar Pigout was the previous entry in this blog.

Meritage Madness is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

welcome!

This is a blog about what it's really like to be in the wine industry...so sit back, take a sip and enjoy!


about me


our wines

our winery

our events

whatisfume.com

contact me

privacy statement



monthly archives

All monthly archives


subscribe