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posted: 8/13/2014 7:01 PM

When studying retail prices, don't forget they're just suggestions

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By Dave McIntyre
Special to The Washington Post

The price was high -- enough to prompt an email from a reader. Her husband had gone to the Wine Bin in Ellicott City, Maryland, to purchase a rosé I had recommended: the Pigoudet Premiere 2013 from Aix en Provence. I had rated this lovely wine three stars and a "great value" at $13, but the Wine Bin listed it at $15. After much discussion -- and pointing to a copy of The Post Food section -- her spouse bought a single bottle at $14, though he'd walked into the store intending to buy several. He left unhappy.

Dave Carney, the store's managing partner, told me about the conversation. He said the wine had been mispriced, and that he'd quickly agreed to sell it for $14, with further discounts for the purchase of six or 12 bottles. "With a 5 percent discount on six bottles, he would have paid $13.30, and I would have been happy to sell it to him for $13," Carney said. "Unfortunately, he never asked me to lower it to $13 for six, and I wasn't being perceptive enough to read more into the interaction. I screwed up."

That exchange raises interesting questions about how much wines cost at retail, especially in small specialty stores. The prices I list in my weekly recommendations are suggested retail, provided to me by the distributors. They are not advertised prices, and the stores are under no obligation to honor those prices. Stores typically do not receive advance notice that they are going to be listed as carrying a particular wine.

Prices differ from store to store. The conventional retail markup is 1½ times wholesale, or 50 percent; a wine that costs the store $10 a bottle from the distributor might retail for $15. But if you buy a case at a 10 percent discount, that's $13.50 a bottle. The store then pays credit card fees, including your "cash back" incentives (plus a portion of the profits if you use an American Express card). Those costs eat further into the profit margin. Many small stores today mark up their wines more than 50 percent to help cover the cost of doing business: rent, electricity, employee salaries and benefits. The profit margin can be extremely tight.

That's why small specialty retailers do not typically carry national brands. "This is a very corporate-dominated industry," Carney says. "It's difficult to make a profit on those national brands."

For example, a national brand such as Woodbridge or Barefoot might sell at wholesale for $6.66 a bottle. But if a store buys 25 or more cases, the price could drop to $4.66, allowing the store to sell it for $6.99 retail. Grocery stores and big-box retailers have the capacity to buy large lots and sell them at low prices, and if they advertise in The Post or elsewhere, they might even shave a little more off the price. Meanwhile, the specialty retailer who can purchase only a few cases at a time is stuck trying to justify charging $10 a bottle.

Competition has increased in recent years, for example, where Trader Joe's and Costco have joined other grocery stores in selling wines. Their selections might not be great, but they offer one-stop convenience that wine stores cannot match.

Small stores therefore favor small importers and distributors, such as Oslo Enterprises, which imports the Pigoudet rose. They also put a lot of care into their selections.

"I taste every wine before I buy them, and I reject 80 percent of the wines I taste," Carney says. Other retailers are just as picky about what they put on their shelves or into your shopping carts. Some travel to wine regions to select wines or welcome visiting winemakers to their stores to meet with customers. Supporting a local wine retailer is like buying coffee from a local roaster or produce from a local farmer. We might pay a little more, but the quality and experience are worth it.

• Dave McIntyre blogs at Follow him on Twitter @dmwine.

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