How do retailers make money from the Penfolds release ?

[Croquet King]

After hearing and reading some comments from independent retailers, I am wondering how they can make any money from selling wines such as the new release penfolds.

I'm not sure how much a retailer can buy these wines for but for example the Bin 128 and 28 where sold on the weekend for $15.90.
I saw an ad in the paper from DM who also had it at this price. First Estate (where I was) said they wanted to match the DM price.

This seemed excellent value for the consumer but made me think that Southcorp must be selling these very cheaply to Woolies and Coles or someone is making a loss.

I know this simplifies the whole thing but the weekend prices did make me wonder.

Is $15.90 the real street price or just as they say a "new release special"

[Red Bigot]

The independents selling it at prices like the chains would probably be making very little compared to their normal margins, but they seldom indulge in loss-making sales. It's better to sell a fair bit of wine to loyal customers at a low margin than see them all go to the chains. They may also have got a slightly better deal than usual to make up for all the other recent Fosters marketing stuff-ups.

Don't forget that the normal margin from cost to RRP is 30-40%, sometimes more, sometimes a little less, if you can't get 20% off RRP on many wines you aren't really trying.

It was interesting this time to see the independents initially undercutting the chain release prices on the Penfolds, forcing the chains to react and lower their prices substantially.

Go taste at the chains and buy from the independents, even if you pay 50 cents or $1 a bottle more.

[Gavin Trott]

After hearing and reading some comments from independent retailers, I am wondering how they can make any money from selling wines such as the new release penfolds.

I'm not sure how much a retailer can buy these wines for but for example the Bin 128 and 28 where sold on the weekend for $15.90.
I saw an ad in the paper from DM who also had it at this price. First Estate (where I was) said they wanted to match the DM price.

This seemed excellent value for the consumer but made me think that Southcorp must be selling these very cheaply to Woolies and Coles or someone is making a loss.

I know this simplifies the whole thing but the weekend prices did make me wonder.

Is $15.90 the real street price or just as they say a "new release special"

Hello

The answer is, from my perspective at the least, many independent retailers make no money at all.

At that sale price, I would make a loss, not even a small profit. Even at the price I've seen around the place of $20 a bottle, I would make so little as to make it not worth doing.

In short, the deals being made between the very big retail groups and Fosters, make these wines no longer viable for the independent retailers, and many of them like me simply don't stock or promote them.

Some will because many of their long-term customers expect them to, and these retailers will try to match some of the prices around the place, and hence make no profit at all.

What is happening slowly and surely is that many of the independent retailers, even some larger ones, are getting to the point of not stocking Foster's products at all to do this very reason.

Naturally these are generalisations, and this is from my perspective, and other independent retailers may feel quite differently.

However, it's one thing being competitive, and quite another thing selling wines at a loss or even a minuscule profit ... it makes no business sense, and at times can make you seem like you're profiteering when compared to the prices the big guys show.

For this reason I'm not stocking or selling the new Bin series, nor things like Wynns Black label that again regularly sell below my purchase price.

Just my perspective

[Red Bigot]

In short, the deals being made between the very big retail groups and Fosters, make these wines no longer viable for the independent retailers, and many of them like me simply don't stock or promote them.

No probs, makes more room for some of the other 2000 wineries to get a look in.

[GraemeG]

My opinion from outside the world of wine is that Penfolds release of the bin series is extremely well marketed, has a lot of bottles to move and retailers know customers shop around. By having the 'lowest' or 'very low' price on the release (even if as a loss) it means sales for the retailer. This 'loss leading' practice is very common in all sorts of businesses. Get the customer in to buy bread (at or below cost) knowing they'll leave with plenty of other stuff (at decent profit magins) - if not now, later.

And, apart from that, it will be almost impossible to work out what the 'cost' to the retailer (the supermarket) of these individual wines actually is. With the new line fees, the restocking fees, the co-operative advertising, the maker's desire to use bulk pricing (perhaps including slower-moving lines in the Fosters portfolio) to shift stock; actually establishing what price Fosters charge Woolies for Bin 28 will have as many answers as there are accountants in each organisation...
cheers,
Graeme

[Craig(NZ)]

Answering with my Trade Marketing Analyst hat on, grab an invoice and they are making a loss. However suppliers fund retailers beyond that with over and above promotional funds, performance/ volume based scan rebates, paying for space, and trading terms. After accounting for this a large retailer will still turn a profit

[rwatkins]

Here in Canada all the Bin wines are the same price. 389 $36.00 Canadian, 407 $35.00, 28 $34.00. I am always amazed at the differences in Aussieland. Does this mean I should stock up on 389 as it is a bargain? Or is it that the others are way overpriced? For example Majella Cab is
$39.00, St Jakobi Shiraz is $36.00. Thanks - Rick

[Croquet King]

Currently on the spot markets AUDCAD is ~0.92. Meaning your CAD$39 for Majella is about AUD$42.
I think Gavin has it for sale for under AUD$30.

The 389 over here is say about AUD $34 and for you it is CAD$36 or AUD$39.

What does this mean? I'm not sure but the 389 seems the best value compared to Australian prices.

[Craig(NZ)]

in NZ this week you can get 389 as low as $30NZ peso which equals approx $5.50 Australian

[Danny]

in NZ this week you can get 389 as low as $30NZ peso which equals approx $5.50 Australian

Which off-topic reminds me of the old joke "What's the capital of NZ?" --- "About $10"

[Craig(NZ)]

actually just bought some for NZ $27 (AU $4 ish???). bloody good wine at that price

looks like a certain supermarket is selling their soul to buy lost market share