WHERE EVERYONE GETS A BARGAIN

I bought a couple of cases of pretty good Pinot Noir this week off a wine-selling website I use. I am always on the hunt for good Pinot Noir and Chardonnay on this site where winemakers with surplus wines sell them off cheap.

I bought Muddy Water Pinot Noir for $21 a bottle not long ago and have seen it in Glengarry recently for $87.00 a bottle. The wine was superb - the price even better.




The wine I bought this week was also from Waipara (in my mind the source of New Zealand's best Pinot Noir and Riesling). The recommended retail price is $39.99. The special price is $14.99. This is a whopping $25 off per bottle. The wine is bloody good and I am happy.

The winery gives 10% commission to the website owner. Are they happy? They obviously would like to sell it for a higher price. If it was retailed at $39.99 then after a retailer mark-up of 45% say then they could theoretically wholesale it for $24.50 (GST included). They are then giving away at least $10 per bottle by selling it through this clearance site. Why? Because it is a 2009 vintage wine. They obviously have 2010 vintage in bottle. 2011 vintage in barrel and tank. There is the 2012 vintage looming. Pressure on stocks vs low sales volume in depressed markets. Entry into New Zealand retail outlets is becoming increasingly difficult as supermarkets gain market share and want cheaper sell-in prices so that they can discount heavily. All these reasons add up to a winery having to let wine go at a crazily low price.

Are they losing money though? They are certainly not making the money that they most likely forecast some years ago. If that forecast was to a lending bank and not to themselves and supporting friends and family then they are in trouble as we have seen with some wine companies that have gone to the wall recently. These though, to be fair, have bought in high at the top of the market with expectations that the industry was going to continue to boom. It is not unlike the property market or pyramid schemes.

Here is a rough (very rough) production costing for a bottle of wine. This is a very broad average but is fair when considering an expensive quality bottle of wine. Big companies, mass producing big brands have much lower costs but this will suffice for this exercise.

	$
Wine	3.00
Winery overheads	0.10
Bottle	0.80
Labels	0.70
Carton (share)	0.20
Bottling cost	0.15
Excise and ALAC	2.10
Total, say	$7.05 per bottle.

With a RRP of $39.99 even with retailer mark-up of 45% and a decent wholesale margin there is still a whopping great brand/marketing/image component. This is called the Hype. Now there's nothing wrong with the hype - Champagne producers have got away with this for years. Their per bottle costs given the volumes they make is probably not too different and yet they command RRP's of $60 to $160 per bottle.
I would always caution buyers though when buying the fairly standard wines that want $40 plus off you. Is that Chardonnay really worth $60? Does that Waiheke or Hawkes Bay Bordeaux blend or Syrah deserve a price tag of $80? Probably not but hey! If you want it then buy it, but always check out the discount websites first.

By the way. I'm not immune to hype myself. For Christmas I am getting a bottle of Martinborough Vineyards Marie Zelie Pinot Noir 2003 out of the cellar. I paid $170 a bottle for this a few years back. Apart from the outrageously expensive packaging the bottle of wine couldn't have cost more than $10 or $12 to make. Hype? yes. Good drinking? It has been for the other bottles I've had and I'm looking forward to this next one.