Mon 11 Nov 2013

The Wine Society, Pricing and Discounts

By

Robin McMillanUnusually, two separate stories have put wine in the mainstream UK headlines recently.

Although the first story, concerning a supposed forthcoming global wine shortage, was somewhat specious (see Jancis Robinson’s excellent rebuttal), anything to remind us that it is not an endlessly available commodity is arguably welcome: the remarkable effort, expense and complexity involved in making good-quality wine is something we are always in danger of undervaluing.

The second story, hot on the heels of a recent investigation from BBC’s Watchdog, concerns a study by mysupermarket and Guardian Money into the pricing on some of the major wine brands sold by the supermarkets over the past year, leading to accusations of ‘manufactured discounts’: putting an item on the shelf at an inflated price before advertising a perfectly legal yet somewhat too-good-to-be-true ‘50% off’ deal.

I therefore wanted to clarify and reassure members that artificially inflated prices, loss-leaders and the like are not devices used by The Wine Society.

Our objective, unchanged since our foundation in 1874, is to source ‘the best wines at the best possible price’.

As members will notice, we do occasionally offer savings on wines. These are always clearly marked alongside a transparent explanation of how and why they are being employed. By far the most common are:

1) Modest savings to encourage exploration
Quite simply, we want members to try different wines. Incentives to do so, whether for ‘one bottle only’ or for pre-mixed cases seem appropriate ways to encourage a sense of discovering new wines and areas, and continue to prove popular.

2) Supplier-supported savings
The producers (and, occasionally, regional bodies) with whom we work want you to try their wines, and sometimes offer their support for temporary price reductions as an incentive to do so.

3) Clearance and bin ends
Warehouse space is finite and we occasionally ask for your help in order to clear the decks, making way for new vintages and new wines.

For more information, please refer to The Society’s Value Charter, introduced this year to explain how and why The Society’s unique model can provide members with the best of the world’s vineyards at competitive prices with good service, without the short-term distractions of shareholder dividends and growth purely for growth’s sake.

Robin McMillan
Chief Executive

Categories : Miscellaneous

Comments

  1. Kelvin Hard says:

    I think the Society’s position on this is absolutely correct. I am surprised it has taken so long for the press to cotton on to this. I do buy some wine from supermarkets from time to time. I have noticed that sometimes a wine I regularly buy will be increased in price to a completely uncompetitive level for just long enough to fulfil the price regulations before being offered at “half price”. That is obviously when I stock up. But anyone who buys at the inflated price (not many I dare say!) really are getting a bad deal.

  2. I also agree that the Wine Society’s position is absolutely correct and is why I am proud to be a member and join in the great tradition of joining other members in enjoying good wine at a fair price.

    I have also noted the trends described by Kelvin Hard at some supermarkets. Wines offered at ridiculous prices are suddenly discounted for a quick sale and not just at the lower end of the market. In one case I noted a mid range claret received this treatment. Originally the bottles appeared on the shelves priced at £26 but were subsequently discounted en bloc to £16. On checking the average prices online the new prices actually reflect the true value of the wine as offered at a range of outlets. This “discounting” practice may not be illegal but I do consider it to be “sharp business practice” and does not credit to the outlets that practice it.

    Many thanks to the Wine Society for maintaining its tenets and steering clear of this kind of nonsense!

  3. K Rankin says:

    I worked for a well known supermarket for a number of years and the process was called ‘price establishment’. At that time, all one had to do was get a few cases into a minimum number of stores and put items on sale at a high price. After 28days the price could be “slashed” to the “real” price, all the stock brought in and distributed to all stores, so that this ‘Discount’ offer would be widely available with no real promotional benefit to customers. Legal but very unethical. The truth is that you pay for what you get, if the deal looks to good to be true, then that’s exactly what it is, untrue. Special buys, items not normally stocked and bulk buys……..beware!

  4. Nigel Coulthard says:

    I value the Society’s pricing of wine because you know exactly where you are and what you are getting. It is not necessary to work out if a reduction is a loss leader, or based on an artificial original high price set in Slough for 28 days or it is a duff wine they want to get rid of. The small reductions the Society gives on mixed cases makes practical sense in reducing selection time and labour costs and does indeed allow one to experiment a little.
    Oh, and very often Society set prices are lower than discounted prices in supermarkets or other on line dealers.

  5. Asa Joseph says:

    This is one of the reasons I’ve almost stopped buying wine from Supermarkets altogether (unless there’s a specific ‘Fine Wine’ section, and I have at l have a reasonable knowledge of the region from which I’m buying).

    Due to the dozens of brands and producers you simply don’t see anywhere else, it’s often hard to tell whether or not you’re buying at the right price point, or buying at a ‘price establishment’ price (as K Rankin says above). I once bought a case of a certain Rioja for about £12 / bottle, only to find it discounted to £6 a few weeks later, and on regular occasions thereafter.

    That’s why I stick to the Wine Society, and other specialist wine merchants – after a while, you get to know what sort of price you have to pay for a certain level of quality, and can more or less work from there. I know what to expect from a £7 bottle, a £12 bottle and a £20 bottle, and can pick my wine with a degree of confidence in its consistency.

  6. Jim Hart says:

    The supermarkets’ position on this can be quite counterproductive too: my default assumption is that the ‘real’ cost of any wine retailing at more than a fiver is either approximately £5 or 50% of the marked price. Therefore reluctant to spend more than a fiver on a wine I don’t know.

  7. Peter Brennan says:

    In essence I agree with Mr McMillan’s article, but it would also be fair to acknowledge that supermarkets sometimes offer genuinely better deals than the Society on genuine wine that the Society ignores. For instance, I recently took delivery of a good 1996 Madiran (yes, at half price), with free delivery, from a leading supermarket. This is a classic – but decidedly old-fashioned – style that the Society chooses not to follow. The regular price for this wine is £12, which seems to me eminently reasonable for an authentic, 17-year-old bottle. The price I paid – after taking advantage of an additional 15% discount – was £4.74 per bottle. I was left wondering why the Society cannot offer such wine at any price…

    • Marcel Orford-Williams says:

      It is difficult to comment without knowing more about the wine in question, but the majority of wines at such prices come from a co-operative which is always overstocked and, in my view, rarely exciting. Their style is indeed old fashioned, rather extracted and rustic, and I think that Madiran should be better than that. This is why we have chosen to work with estates such as Château d’Aydie and Montus. The co-op is part of the Plaimont group which has the near monopoly over the wines of Saint Mont. Essentially similar to Madiran and using the same grape varieties, Saint Mont wines represents even better value.

      Marcel Orford-Williams
      Society Buyer

      • Peter Brennan says:

        I appreciate Mr Orford-Williams’ response. This is, inevitably, a matter of taste. Personally, I am sad to see the word ‘rustic’ used negatively about wine. I cannot imagine this happening in the case of cheese, for instance. So often I am disappointed by the sleek, samey, ‘international’ takes on traditional styles that the Society now seems to prefer. For me, Madiran should indeed be ‘rather extracted’ – thus enabling it to mature into the wines that I have long enjoyed. Chateau d’Aydie used to produce wonderfully supple wines, but now they are, for me, over alcoholic and densely fruity in a way that is untrue to the splendid dryness of the tannat grape. Those who want such wines can find them in abundance elsewhere -so why abandon the uniqueness of Madiran? It seems that only in Rioja is the Society specifically concerned to help members chart a clear path through different styles. By all means sell d’Aydie if members enjoy it, but why not offer older styles as well?

  8. Graham Ross says:

    My memory may be playing tricks on me, but I think when I joined The Wine Society in 1998, the wines tended to be priced at more than I was used to paying in the supermarkets. But now I can’t understand why everyone doesn’t join, because there are quality wines at bargain prices – all the time – and more expensive ones if we want to try them. We know that they are sourced by people who seek quality and care about what they sell and drink, not simply seeking a profit; and they are delivered to our door for no charge. It’s a wonderful organisation, and we own it. Something I think we should be very proud of.

  9. David Muldtew says:

    I do wonder how hard nosed the Societies’ buyers actually are in comparison to the other big UK buyers are. I cite some of the standard French reds in comparison, much cheaper in Tesco & Sainsbury but I still like the WS catalogue.
    I hope this is viewed as constructive criticism, I’ve been a supporter for 30 years..

    • Tim Sykes says:

      Thanks for your comment. We admit that, due to our size, we don’t have the buying power of Tesco et al, but I assure you that the buyers do negotiate hard. Above all we look for quality and value for our membership. However, we also take a much longer-term view with suppliers than most of our competitors. Buying successfully over the long term is about give and take, understanding the suppliers’ perspective as well as our own and building long-term relations. Whilst our primary focus remains on sourcing the best wines at the best prices, we believe that a fundamentally sustainable approach is vital to the integrity and the continued success of The Society.

      Tim Sykes
      Head of Buying

  10. Neville Rigby says:

    Does any WS member really stock up on bogus cut price offers on heated brightly lit supermarket shelves? The value of being a member lies in the reassurance not only of careful selection but careful handling on the member’s behalf with no dubious malpractices – and excellent service.

  11. John Stobart says:

    I was looking at the special offers from Waitrose. I believe they have integrity and do not inflate prices in order to give a false discount. There was just one wine under special offer also sold by The WS, and that had a reduction from £13.99 to £10.79. The Wine Society’s price (no reduction) was £10.99. Therefore even on special offer it only came in at a 20P less.

    This is an example of how the WS consistently gives good value.

  12. Whilst you clearly have many loyal supporters and on the question of service I am most certainly one I also agree with the comments of Messrs Muldtew and Brennan.I suggest that the Supermakets have far greater purchasing power than that of the WS enabling them to play games with the consumer which they undoubtedly do;however we cannot ignore the fact that it also,in some cases, enables them to offer under their own labels very drinkable wines for daily drinking equivalent in quality to those you are offering but 20-25% cheaper.For those of us who partake on a daily basis with finer quality wines at weekends and on special occasions this nakes for a large budgetary difference.The WS must be wary of appearing to go too far down the Marketing route just to get volume;not every “find” by Society buyers can be quite extraordinary nor is it necessary to price wines at £5.95 just to make people feel they are not spending £6.00 on a bottle of wine.Finally promoting the idea of mutuality is just a myth;we paid an entrance fee and we know that the value of our share will not play an important part in HMRC’s calculations on our departure.In many areas the WS is doing a great job;however the overheads and admin costs of the organisation ,in relation to the sales, are just too great hence in may area prices are too high.Let the supermarkets do what they do;keep examining what the Society is doing and improve wherever possible..

  13. Derek Fancett says:

    I am very pleased that the Society continues to try to offer good wines at good prices to members, and not just at the lowest prices. The reason for this is that I feel the price should be fair to the grower as well. It is not widely known just how much pressure big supermarket chains (around the World) put on producers to get their wines onto the shelves. Many wines appear in supermarkets that have given their producers no profit whatsoever, they just hope that this ‘loss leader’ approach will buy them market share in future; if not, they go bust.
    I live in France and know that many of the small/medium producers are really struggling, many are just one hailstorm away from giving up. A firm buy from the Society, and its support through good and bad years, may make all the difference to a young winemaker trying to make a living.
    I hope, and judging by the Society’s list it works, that newly emerging growers will display similar loyalty to the Society when their wine comes into demand and allocations are made to purchasers. In France loyalty to small businesses is highly prized and reciprocated over time.

  14. John Eustace says:

    I have stopped buying wine from supermarkets other than Waitrose and occasionally Aldi (yes Aldi) due to these pricing tricks making it impossible to know what you are buying.

    Keep up the good work at the society and trust that it will continue to be recognised by your members.

    Now, it must be time for my Christmas order….

  15. John Holm says:

    Not only do the supermarkets have underhand pricing for their wines but also Spirits. Famous grouse whisky priced at around £25 per litre and then dramatically reduced to around £14 just before Christmas.

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