Wednesday, November 26, 2008

Price differences from state to state

I received an email from the website www.corksavvy.com this week titled: "Be Smart About the Price You Pay for Wine at Restaurants" - you can read the entire article at
http://www.corksavvy.com/savvy-reporter/articles/be-smart-about-the-price-you-pay-for-wine-at-restaurants

I have a bit of in-sight into this "phenomenon" being in the wholesale end of things as well as someone who travels from states to state fairly regularly. Essentially all you need is a basic understanding about the ways and whys of state to state laws with respect to alcohol legislation. What the hell does that mean? It means that every state has different laws - the result being different prices for the same product. Here is my response (posted on Facebook) to the article.

Re: article on the differences in wine pricing from city to city...the example of Duckhorn Merlot being $96 in one city and $160 in Pittsburgh can be explained by the fact that Pennsylvania is a control state and the rest's in that state have to pay retail prices for their wines, which they have to buy from the state who is acting as the wholesaler. All wine in Penn rest's are more expensive than almost any other state. Also, there are different laws from state to state that can allow for drastically different discounts in one market, but not in another. This can be done through quantity discounting (the more you buy, the less you pay) or through channel pricing (one price for on premise, one price for off premise). You also have national accounts - Flemings, Ruths Chris, etc - that have "National Cuvees" priced lower than the "regular" bottling of what is essentially the same wine. This leads to disparity from the national and the locally owned rest's. And then there is the ego!

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