Consumer Expectation, Consumer Benefit and Willingness to Pay.

There is currently a debate raging in the international wine industry about whether or not it is a necessity to ship wines internationally under strict temperature control.  There exists copious anecdotal evidence that extremes of temperature damage wines, and that by ensuring consistent temperature for the duration of a wine’s journey from producer to market one can mitigate this damage. 

I have personally been on the receiving end of containers of (excruciatingly rare and expensive) wines which upon opening, reveal that instead of being temperature controlled for the entirety of their journey, spent a week unprotected on someone’s 90 degree loading dock. 
Ouch.

In the case of wines retailing for $600.00 per case, making the argument for temperature control at $2.00 per case is simple arithmetic.  Adding $0.17 per $50 bottle is cheap insurance.  Likewise, when the cost of goods on a case of wine is $24.00, the math is pretty much done for you.  At almost 10% of the total landed cost, the previously cheap insurance becomes an unaffordable luxury.  The difficult choices begin in the middle...

What does a wine importer do when the wines are especially robust, like alcoholic, tannic reds with modest value?  Likewise, what is to be done with inexpensive but delicate wines like Muscadet which will be heavily impacted by heat but which don’t offer the margins required justifying the use of reefers?

Consumers can be brought into a dialog with importers wherein they can both indicate their preference as to how a wine should be treated as well as be made to understand the costs associated with their choice.  Typically we use the importer brand as the language for this conversation.  An importer hangs his shingle with an implied value proposition, and the consumers indicate through their purchasing behavior whether or not the value proposition works. 

Let’s use the Muscadet example.  This young, fresh white wine from the Loire Valley has one mission in life… to refresh.  It should taste of mainly of Citrus, stone and a bit of briny sea air.  (I’m not kidding, have one.)  The problem with such an ephemeral wine is that once bottled, it begins a steady march toward boring.  Once the airy top notes of a wine like this disappear, all we are left with is the high acid and light body of a thousand insipid old-world whites.

As consumers we decide what we want.  The difference between the bottom of the market and the top (in the US) is the difference between $6.78 and $18.00.  Different importers with very different philosophies present these wines.  The cost of the wine ex-cellars is the first place we are asked to make an endorsement of one cost structure over another, the next is in transport (our choices are discussed in this article by David Schilknecht), the third is in the importer’s commitment to careful, appropriate marketing and a long term investment in brands and customer relationships over dump-and-see import.

The sophisticated consumer may not consciously make the decision of where they choose to position themselves in the consumer expectation, consumer benefit and willingness to pay equation, but by their behavior they make a statement.  A consumer’s behavior in regards to perceived import wine value is a referendum on the efficacy of  both an importer’s supply chain and their ability to communicate that benefit.

Comments

[Jack at Fork & Bottle]

Adding an extra dollar in the retail price always seems worth it. To me, there is no middle ground.