I love the wine business.
It’s 5 years since I walked away from paid employment for the last time and started working on the masterplan for Curious Wines.
It was a slightly daunting task. Wine is everywhere and the market is dominated by a small number of big volume players, namely the supermarkets. In the UK they account for 7 bottles in every 10 sold, and most of that is through the four biggest players. In Ireland it’s something similar, but through only three major retailers.
The one thing I didn’t like about the business was the way consumers were misled through disingenuous price promotion. I could live with the market dominance and ruthless competitiveness of the supermarkets, but dirty tricks and deception on pricing always left a bad taste in my mouth.
Tim Atkin MW, the respected and it would appear fiercely independent UK wine journalist, summed it up in a recent article entitled, ‘Wine’s Whistle Blowers’, suggesting a few areas where the wine trade is “economical with the actualité”:
“1. Value and cheapness aren’t the same thing. Our industry is sustained by deals, offers and the notion that wine should be a ‘bargain’. Most of the time, people get what they pay for. Cheap wine is rarely good value. And when it is, it’s often because the people who made and imported it were exploited.
2. Half-price supermarket wine deals are generally a rip off. The notional, establishing price at which a wine is sold for a few weeks is over-inflated to facilitate the deal. This is deeply unethical [my emphasis].”
The most depressing thing is that many ‘independents’ – the smaller companies, like Curious Wines, that operate in the 3 bottles in 10 that the supermarkets don’t yet own – feel they have no choice but to follow the supermarkets’ lead and engage in similar folly.
In the few weeks since Tim Atkin’s article I’ve witnessed two respected Irish independent retailers engaging in questionable tactics.
The first, a national chain, promoted an “Excellent Chateau Wine” from Bordeaux at a special offer price of €12.99, discounted from €16.99 – on the face of it a generous 23.5% discount. They stacked this great deal high in-store, so they’d clearly bought a lot of it to get the great price from the supplier, right?
The problem was we knew the wine well. We’d been stocking it since January – same Chateau, same vintage, the same wine – and retailing it for €11.99, even going on sale earlier in the year at €9.59. It’s a tasty wine for €11.99 and, even if I do say so myself, very good value at €9.59 but the wine was never worth – and should never have been – €16.99.
The second incident, from an online retailer who’ve positioned themselves as being ‘above’ commercial wine production and refusing to join the ‘race to the bottom’ in terms of wine pricing, involved a “50% off” deal on a family-owned estate wine.
Now occasionally we get offered ridiculously good deals from existing and trusted suppliers who need to move on an old vintage or for any number of reasons have discontinued a wine and simply want to clear it out. My issue with this – and all other “half-price” deals, admittedly 99% of which occur every week in the supermarket aisles – is that the VAT and excise duty paid to Revenue does not change. 23% of the retail price and a fixed €2.78 per bottle in excise duty gets paid to the government, regardless of the price paid to the supplier.
In the example above, the actual discount wasn’t 50%, it was 64% after netting out duty and VAT – €6.37 had disappeared from the actual take by the retailer, between cost and profit, as they netted €3.58 on the reduced sale price. Not only is it not sustainable, it’s not credible.
(I suspect in the latter case they’ll come to regret the exercise but time will tell. Either way, it’s ultimately their business not mine.)
One thing I decided from the start is that Curious Wines would not be a follower. We would not engage in false promotions, inflated pricing and disingenuous discounting. We would not cheat customers with economical truths about the wine they were buying.
Last year we set about one of the most important, and fun, tasks since we started the business and created the Curious brand: defining our core values. We kind of knew them – Matt and I set about starting a business with the same basic moral code that most of us are brought up on: treat others how you like to be treated yourself – and anyone coming into the company has bought into the business reasons for strong ethics. But we felt it was important to define what it means to be Curious Wines, and set out our core values for everyone to see.
Core value #5 is, “Be open and honest. We believe in open, honest relationships and are committed to consistent and fair pricing that is sustainable for both our suppliers and us, and that delivers value to our customers.”
It’s the closest we got to saying we believe in total integrity when it comes to pricing.
In March 2011, I wrote a blog post entitled, ‘Lies, damn lies’ and I set out our position on pricing and price promotion very clearly. Simplified, these are our pricing values and the Curious Price Promise to all our customers:
1. We price honestly and fairly. We set our retail prices to reflect a strong price/quality ratio on every single wine we source. It is our modus operandi that we get judged on the quality of our wines at our full retail price.
2. We never, ever inflate a price to subsequently discount it. We use seasonal promotions to concentrate our buying for the period in question, encourage customers to try new wines from regions they wouldn’t normally go to, and to provide a strong and genuine value proposition to the consumer on every visit.
3. Every wine and every price is backed at all times by our 100% satisfaction guarantee: your complete delight or your money back.
So, sorry to break the bad news but, there’s no half-price wine here.