This winemaker
- Thread starter Guilhaume gerard
- Start date
Tom Glasgow
Thomas W Glasgow
Population density
Tom Glasgow
Thomas W Glasgow
Major citites are usually the exception. Are there retailers outside London or Paris in the UK or France that can match what's on offer in the respective city? NYC, San Francisco, DC, etc. offer much greater selection.
If you have customers for "boutique" wines in an area a shop should be able to do well. There's a small cluster of shops in Princeton and Southern NJ with decent selections. In Chapel Hill you have an expansion with the addition of Cave Taureau.
Even in PA you have wine from Rosenthal and KL, with the recent return of LDM (still haven't seen the allocation of Overnoy).
While things have improved elsewhere, Northern NJ does seem to compete on price which possibly is a function of proximity to NYC.
If you have customers for "boutique" wines in an area a shop should be able to do well. There's a small cluster of shops in Princeton and Southern NJ with decent selections. In Chapel Hill you have an expansion with the addition of Cave Taureau.
Even in PA you have wine from Rosenthal and KL, with the recent return of LDM (still haven't seen the allocation of Overnoy).
While things have improved elsewhere, Northern NJ does seem to compete on price which possibly is a function of proximity to NYC.
Tom Glasgow
Thomas W Glasgow
I was going to volunteer you to go meet him in person Sunday.
Bill Lundstrom
Bill Lundstrom
Ha!
Marc Hanes
Marc Hanes
Actually Yixin and Tom are both correct in many regards. Population density has a lot to do with it, curiously in places like NYC people are less apt to travel for stuff yet certain retailers can also establish themselves as an intra-city destination and increase market share.
One quick anecdote, yesterday a distributor of high end Georgian wines (don't laugh) came to pour samples. Some of these Saperavi wines would retail in the low to mid $20's, which is way above what most of the stock of Eastern bloc wines go for. The wines were really good. But we were unsure they would sell and that our Russian and related country customers were declining in number, and we expressed this to the rep.
As an aside, the store where I work made its rep on low, low pricing and high volume. Sales are way off the past year but we still have big foot traffic for basically a brick and mortar store (internet sales are horrible). Our standard markup on wine and spirits is 1.2 which is way below the more standard Manhattan markup of 1.5. Hell, on special orders we only charge 1.1 and make 10% over what it cost us. If customers haggle on price we always capitulate and knock money off to near 1.1 -- and they do haggle. The point I am making is that we are very competitive on price. We sell many items *at* cost.
So, the rep says there are a couple of new big stores in Brooklyn catering to the Russian crowd and they are selling the wines at even lower prices than we would. These stores are draining off sales from us and other pre-existing places. How does this place stay in business? Their model is volume (same as us). The rep said the population density is so deep the new store is growing and there's stores in the Bronx too doing the same thing. A lot of people in Brooklyn have cars so they can drive intra-Brooklyn but why not schlep out to Elizabeth, NJ when you don't have to? (Especially with rising tolls and gas.)
Dense urban areas are different because you can make more of a volume play. In suburbia where things are spread out you have to incentivize people to travel with low pricing plus. You don't have a captive audience. Factor in increasing customer comfort with internet purchasing and a lot of businesses are suffering, having to "stay in the game" by lowering prices again and again to remain competitive until something goes tilt and there's not enough income to remain open.
In New Jersey the odious Retail Incentive Program (RIP) allows big players an advantage in keeping market share. The state law which says you cannot sell below wholesale cost favors the big retailers -- the little or new guy can't create market share with loss leaders. But the big guy can purchase from wholesalers at quantity levels to get RIP checks from the wholesalers and make money there, on the back end, not on the actual sale itself.
An example, Santa Margherita Pinot Grigio. Virtually every retailer in New Jersey sells it at or near cost and hopes to eke on a profit on the RIPs. If you don't play along and try to sell it at a fair margin to rationally run a sustainable business you will hear all day long from the customers how Store X and Store Y have it for $19.09 a bottle. All day long and all night, the customers KNOW what everyone else is charging and they want you to match or beat it. If a store can't afford to stock quantities of product that come with big RIPs they won't be able to stay competitive on pricing and will look like gougers or simply bleed customers. You HAVE to play along, unless you happen to be in a small "cosmopolitan" town (cf. Princeton) that enjoys the warm fuzzies of customer relationships and store physical appeal over pricing. There really are not that many situations like that in New Jersey.
But there appear to be in NYC. I am always puzzled by the ever growing number of stores in NYC opening, even in the last year or two. All "boutiquey" and oriented to natural wines and going after the exact same target market. Either there is a lot of disposable wealth left in NYC (not mine, that's why I left) or wine stores have evolved to the level of pizza shops or dry cleaners where there literally has to be one every five blocks, people won't go further than that for the service/product.
Legally mandated wholesale pricing differences state to state have a lot to do with how successful wine retailing is going to be going forward. The reason you don't see a lot of boutique wines in New Jersey is maybe because there's no clientele for them (my experience) but also because small wholesalers don't do RIPs so the stores would have to charge 1.3 or 1.4 to make money on the actual sale whereas in New York there is no minimum pricing laws and a store can negotiate pricing on say a 30 case drop and actually come in below what would be cost in New Jersey. The game is "rigged" inside New Jersey to favor the big, deep pocket stores but not so much rigged when New Jersey stores have to compete against stores outside the state. Hence, all the money which still flows to politicians regarding regulation of the sale of alcohol.
Thus, the "race to the bottom." Everyone must match the lowest price out there, eroding profit. This is a huge trend in the industry and it is amazing anyone makes a profit anymore. I have had this discussion numerous times with many wholesale and supplier reps and most agree wholeheartedly. We are living in a historical period in wine retailing but maybe can't see it because we are too close at the moment. In any event, the last thing I would ever do is open a retail store in New Jersey, freaking suicide.
On that note, off to work for my usual Saturday 12 hour shift of selling Barefoot Moscato and Ruffino Chianti Classico.
One quick anecdote, yesterday a distributor of high end Georgian wines (don't laugh) came to pour samples. Some of these Saperavi wines would retail in the low to mid $20's, which is way above what most of the stock of Eastern bloc wines go for. The wines were really good. But we were unsure they would sell and that our Russian and related country customers were declining in number, and we expressed this to the rep.
As an aside, the store where I work made its rep on low, low pricing and high volume. Sales are way off the past year but we still have big foot traffic for basically a brick and mortar store (internet sales are horrible). Our standard markup on wine and spirits is 1.2 which is way below the more standard Manhattan markup of 1.5. Hell, on special orders we only charge 1.1 and make 10% over what it cost us. If customers haggle on price we always capitulate and knock money off to near 1.1 -- and they do haggle. The point I am making is that we are very competitive on price. We sell many items *at* cost.
So, the rep says there are a couple of new big stores in Brooklyn catering to the Russian crowd and they are selling the wines at even lower prices than we would. These stores are draining off sales from us and other pre-existing places. How does this place stay in business? Their model is volume (same as us). The rep said the population density is so deep the new store is growing and there's stores in the Bronx too doing the same thing. A lot of people in Brooklyn have cars so they can drive intra-Brooklyn but why not schlep out to Elizabeth, NJ when you don't have to? (Especially with rising tolls and gas.)
Dense urban areas are different because you can make more of a volume play. In suburbia where things are spread out you have to incentivize people to travel with low pricing plus. You don't have a captive audience. Factor in increasing customer comfort with internet purchasing and a lot of businesses are suffering, having to "stay in the game" by lowering prices again and again to remain competitive until something goes tilt and there's not enough income to remain open.
In New Jersey the odious Retail Incentive Program (RIP) allows big players an advantage in keeping market share. The state law which says you cannot sell below wholesale cost favors the big retailers -- the little or new guy can't create market share with loss leaders. But the big guy can purchase from wholesalers at quantity levels to get RIP checks from the wholesalers and make money there, on the back end, not on the actual sale itself.
An example, Santa Margherita Pinot Grigio. Virtually every retailer in New Jersey sells it at or near cost and hopes to eke on a profit on the RIPs. If you don't play along and try to sell it at a fair margin to rationally run a sustainable business you will hear all day long from the customers how Store X and Store Y have it for $19.09 a bottle. All day long and all night, the customers KNOW what everyone else is charging and they want you to match or beat it. If a store can't afford to stock quantities of product that come with big RIPs they won't be able to stay competitive on pricing and will look like gougers or simply bleed customers. You HAVE to play along, unless you happen to be in a small "cosmopolitan" town (cf. Princeton) that enjoys the warm fuzzies of customer relationships and store physical appeal over pricing. There really are not that many situations like that in New Jersey.
But there appear to be in NYC. I am always puzzled by the ever growing number of stores in NYC opening, even in the last year or two. All "boutiquey" and oriented to natural wines and going after the exact same target market. Either there is a lot of disposable wealth left in NYC (not mine, that's why I left) or wine stores have evolved to the level of pizza shops or dry cleaners where there literally has to be one every five blocks, people won't go further than that for the service/product.
Legally mandated wholesale pricing differences state to state have a lot to do with how successful wine retailing is going to be going forward. The reason you don't see a lot of boutique wines in New Jersey is maybe because there's no clientele for them (my experience) but also because small wholesalers don't do RIPs so the stores would have to charge 1.3 or 1.4 to make money on the actual sale whereas in New York there is no minimum pricing laws and a store can negotiate pricing on say a 30 case drop and actually come in below what would be cost in New Jersey. The game is "rigged" inside New Jersey to favor the big, deep pocket stores but not so much rigged when New Jersey stores have to compete against stores outside the state. Hence, all the money which still flows to politicians regarding regulation of the sale of alcohol.
Thus, the "race to the bottom." Everyone must match the lowest price out there, eroding profit. This is a huge trend in the industry and it is amazing anyone makes a profit anymore. I have had this discussion numerous times with many wholesale and supplier reps and most agree wholeheartedly. We are living in a historical period in wine retailing but maybe can't see it because we are too close at the moment. In any event, the last thing I would ever do is open a retail store in New Jersey, freaking suicide.
On that note, off to work for my usual Saturday 12 hour shift of selling Barefoot Moscato and Ruffino Chianti Classico.
kirk wallace
kirk wallace
This is getting closer to what I find mysterious. Why does the "bomber's" behavior make the other retailer want to avoid that wine? Especially if they know that the bomber has very little to sell at the artificially low price?
John Ritchie
John Ritchie
Strict licensing laws have an effect as well (no chains).
kirk wallace
kirk wallace
Thanks for this; i was unaware of this RIP thing; sounds absurdly distortive and an invitation for bad behavior.
Sharon Bowman
Sharon Bowman
Yes.
scottreiner
scott reiner
oh, the stories i could tell...
Tom Glasgow
Thomas W Glasgow
Examples?
Sharon Bowman
Sharon Bowman
Tom, there are many, many, many. Regional wine stores in France often have the benefit, as well, of being situated in an actual wine region. There are also stores (consider: because nothing is online) that have stocks of older wines—and not only from the region in which they are located.
There are also newer, more "hip" wine stores in towns like Tours or Reims or Troyes or Dôle that are of the sort that good Paris stores like Augé or Caves du Panthéon are. And well-priced. And with a wide-ranging, great selection.
These stores can buy directly from the winemakers, including back vintages, and pricing is gentler.
There are also newer, more "hip" wine stores in towns like Tours or Reims or Troyes or Dôle that are of the sort that good Paris stores like Augé or Caves du Panthéon are. And well-priced. And with a wide-ranging, great selection.
These stores can buy directly from the winemakers, including back vintages, and pricing is gentler.
Who would laugh? I would think those would be a geek sale, not a recent immigrant sale. Thierry Puzelat imports them all into France (where they apparently sell like hotcrêpes).
So if you are selling total commodities with zero differentiation, I would expect it all to come down to price. Why would I care whether I buy my SMPG from a wine genius or a robot? I don't get anything from the store except stocking.
Some of which don't even have decent A/C for their no-SO2 stock. I share your puzzlement. Though it is easier to hop in your car in NJ, and wine is heavy if you are just buying a bottle for dinner and not having a case delivered.
Amen, Brother Hanes.
Undifferentiated products=competition on price, no?
Sharon Bowman
Sharon Bowman
Or this picture (via Justin Chearno) from a pizza place in Mâcon.
