Spill the Wine

According to today’s WSJ, the luxury wine market is not faring well in this downturn. As many of you can guess, people are cutting back and the spending orgy of the last few decades (of which, I admit, I took part on many a Napa/Sonoma bus trip) is quieting down. We even discovered the joys of cheap wines at the Fremont Wine Warehouse here in Seattle, where they only sell bottles that cost $25 or less from Washington and around the world. You can find some aweseome gems at that price, so why bother plonking down $80 for a bottle of Silver Oak? (on release day at the winery, of course; in a restaurant, it will cost 2 or 3x that).

Some brands are choosing to go with the flow and discount, either through retail outlets or through their distributors. But others are resisting this ploy and hoping to keep their “luxury brand” status intact. As one Napa distributor stated in the article, “If you’re a $90 bottle of wine and all o the sudden you’re on the Internet at $50, how do you ever become a $90 bottle again?”

Even restaurants are offering more bottles at a more moderate pirce range than in the past. And they are trying to offer more wines by the glass as people cut back as well.

I’m not sure what the right answer is for a luxury wine brand. I guess like with everything related to branding, it depends on their unique customer profile. There’s the reality of reduced revenues right now, but you could damage your brand if you sink too low and then try to bounce back in better times – which might have more of a long-term impact. American wines have indeed been a bit overpriced in the last few decades, but a precious few have been worth it. Innovative wineries are even turning to Twitter and Facebook to try to cultivate new customers directly – and some have been showing success with that. Only time will tell, I suppose.

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