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You must buy this if you want that! What?

C cabchrisMember
The other day I had the pleasure to taste a few barrel samples by an obscure but promising producer. One of the samples was a 2005 To Kalon vineyard that was absolutely spectacular. The 2004 is scheduled to be released soon and at $100 per bottle I feel that it is priced fairly. I praised the winemaker and of course mentioned that I would love to purchase some. His response was "You have to establish some purchase history in order to be offered any of the To Kalon vineyard" Basically what it came down to is that I had to buy 6 bottles of his 2003 Napa Valley at nearly $60 each to secure only 2 bottles of what I really wanted. At first I was going to pull the trigger but then common sense took over. Should wineries be playing this game?
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K ksc02Member
I'll admit, it SEEMS good marketing strategy to move product across the line.

However, this ALWAYS irks me and I've yet to ever bite at these types of 'promotions'. MadJust can't do it, and don't expect to change, unless I REALLY wanted BOTH items involved. Cost averaging, I might as well purchase EXACTLY what I want on the secondary market and not have bottles of what I DON'T want lying around. Besides, who wants to choke down a bottle of juice that was 'forced' on them. I can't imagine it being a very enjoyable experiance.
S stefaniawineMember
I am committed to never doing it, but it is a very tricky situation. I can easily see that in 4-5 years only people who have been on my list for a long time will be offered the Chaine d'Or vineyard Cabernet. Production will always be less than 175 cases and it will take a long purchase history to get an allocation.

I won't do a 'you must buy this to get that", thing, but you would have had to have lots of 'points' to get some.
W wecMember
This is just a standard tying problem. This problem in its' simplest form is just an application of two-part tariffs. Sure I want to go on the rides at disneyland but I have to pay for admissions. Sure I want to buy a Kirkland PN, but I have to be a member of costco.

And as irritating as this may sound from consumers' perspective, they are generally welfare enhancing.
S sydthesquidMember
quote:
Originally posted by WEc:
This is just a standard tying problem. This problem in its' simplest form is just an application of two-part tariffs. Sure I want to go on the rides at disneyland but I have to pay for admissions. Sure I want to buy a Kirkland PN, but I have to be a member of costco.

And as irritating as this may sound from consumers' perspective, they are generally welfare enhancing.


How so?
S sydthesquidMember
quote:
Originally posted by cab chris:
Because it is a bad practice. They could have had three of my friends and myself bying this wine every year and I am sure that along the way we would have purchased some of his "Napa Valley" in addition.


They may not need you and your friends. They much prefer to have three other people who will ALSO buy their other wine.

Either way, they sell the top-tier juice. This way, they sell alot of the other juice, too.

I understand it from a business persepective. It irks me enough not to play the game. And I can do this because I don't want the good wine enough to play. That and the fact that there is always a wine as good (to me) that I can get without playing.
P papeduneufMember
"Got to buy this to get that" happens at the distribution level all the time. Even many retail wine stores will hold rare and allocated bottle for the best customers.

The alternative is allocating by price, marking up the most wanted products to the highest the market will bear, and marking down the other product to what will make it move. Bundling the products together enhances loyalty. Both are valid strategies.

Personally, I don't buy something I don't want in order to get something I do.
W wecMember
quote:
Originally posted by sydthesquid:
How so?


Are you referring to welfare enhancing? simplest example. Winery has 2 bottling Napa and a SV. Two types of people. Person A is willing to pay $20 for the Napa and $90 for the SV. Person B is willing to pay $50 for the Napa and $70 for the SV. If the winery just chooses to sell the two bottling individually, price on the Napa will be $50 and the price on the SV will be $70. (Winery wouldn't want to price the Napa at $20 cause it will sell one to each type and only get $40 in revenue. Likewise, the winery wouldn't want to price the SV at $90 because doing so only sells to A whereas pricing it at $70 sells to both.) Total revenue for the winery is $50+$70x2=$190. Suppose now the winery says I won't sell you the SV unless you buy one Napa from me. I'll charge $35 for the napa and $75 for the SV. Person B will definitely buy, cause he values them at $50 and $70, respectively, but person A will also buy, because he values them at $20 and $90, respectively. Does the winery want to do this? Yes, cause now revenue is ($35+75)x2=$220. So if the winery didn't tie the sale of the SV to the Napa, only person B buys the Napa and both would've bought the SV, but if the sale was tied, both A and B buys.

If you weren't asking about the welfare enhancing bit, then you need to clarify.
S sydthesquidMember
quote:
Originally posted by WEc:
quote:
Originally posted by sydthesquid:
How so?


Are you referring to welfare enhancing? simplest example. Winery has 2 bottling Napa and a SV. Two types of people. Person A is willing to pay $20 for the Napa and $90 for the SV. Person B is willing to pay $50 for the Napa and $70 for the SV. If the winery just chooses to sell the two bottling individually, price on the Napa will be $50 and the price on the SV will be $70. (Winery wouldn't want to price the Napa at $20 cause it will sell one to each type and only get $40 in revenue. Likewise, the winery wouldn't want to price the SV at $90 because doing so only sells to A whereas pricing it at $70 sells to both.) Total revenue for the winery is $50+$70x2=$190. Suppose now the winery says I won't sell you the SV unless you buy one Napa from me. I'll charge $35 for the napa and $75 for the SV. Person B will definitely buy, cause he values them at $50 and $70, respectively, but person A will also buy, because he values them at $20 and $90, respectively. Does the winery want to do this? Yes, cause now revenue is ($35+75)x2=$220. So if the winery didn't tie the sale of the SV to the Napa, only person B buys the Napa and both would've bought the SV, but if the sale was tied, both A and B buys.

If you weren't asking about the welfare enhancing bit, then you need to clarify.


No, just wanted to hear your fuller explanation, as I enjoy your economic arguments. I'm sure this works well for many, many wineries, as long as they have proper demand. I wonder how many of them truly do this analysis, or is it: "We need to move this other juice, so let's bundle it up."

In most cases, I am customer C: I don't place any value on the secondary wine. I'd be happy to pay $90 for the primary but that is it. Paying another $20 simply raises the price of the primary wine for me to $110, at which point I have to reconsider. (Not to mention another XXX bucks for shipping wine I don't want). Plus, I now have a bottle I don't want bouncing around, clogging up my storage space. Mad Not to mention it usually is buy 6 crappy bottles, and get access to 1 or 2 good ones, which makes the situation even worse for me.

This may not be a real economic argument, but is generally how it plays out for me personally. There are exceptions, of course.
M mikep 2Member
quote:
Originally posted by WEc:
quote:
Originally posted by sydthesquid:
How so?


Are you referring to welfare enhancing? simplest example. Winery has 2 bottling Napa and a SV. Two types of people. Person A is willing to pay $20 for the Napa and $90 for the SV. Person B is willing to pay $50 for the Napa and $70 for the SV. If the winery just chooses to sell the two bottling individually, price on the Napa will be $50 and the price on the SV will be $70. (Winery wouldn't want to price the Napa at $20 cause it will sell one to each type and only get $40 in revenue. Likewise, the winery wouldn't want to price the SV at $90 because doing so only sells to A whereas pricing it at $70 sells to both.) Total revenue for the winery is $50+$70x2=$190. Suppose now the winery says I won't sell you the SV unless you buy one Napa from me. I'll charge $35 for the napa and $75 for the SV. Person B will definitely buy, cause he values them at $50 and $70, respectively, but person A will also buy, because he values them at $20 and $90, respectively. Does the winery want to do this? Yes, cause now revenue is ($35+75)x2=$220. So if the winery didn't tie the sale of the SV to the Napa, only person B buys the Napa and both would've bought the SV, but if the sale was tied, both A and B buys.

If you weren't asking about the welfare enhancing bit, then you need to clarify.


What?
S sydthesquidMember
quote:
Originally posted by pape du neuf:
"Got to buy this to get that" happens at the distribution level all the time. Even many retail wine stores will hold rare and allocated bottle for the best customers.


As well they should, as it is good cutomer relations. However, Sherry-lehmann is unlikely to tell me that they have and 89 Beaucastel on hold for me, and I can have it if I buy two bottles of some other wine. The choice to buy one wine is never tied to buying another specific wine. Slightly different scenarios, if you ask me.
P papeduneufMember
quote:
Originally posted by sydthesquid:
quote:
Originally posted by pape du neuf:
"Got to buy this to get that" happens at the distribution level all the time. Even many retail wine stores will hold rare and allocated bottle for the best customers.


As well they should, as it is good cutomer relations. However, Sherry-lehmann is unlikely to tell me that they have and 89 Beaucastel on hold for me, and I can have it if I buy two bottles of some other wine. The choice to buy one wine is never tied to buying another specific wine. Slightly different scenarios, if you ask me.


You are absolutely right. One is an enforced pre-condition and the other is a reward for loyalty. Distributors do, OTOH, frequently enforce bundled purchases.
W wecMember
quote:
Originally posted by pape du neuf:
Personally, I don't buy something I don't want in order to get something I do.


But that certainly cannot be a rule you follow. It only holds at extreme circumstances. Restricting our attention to wine, forget about shipping costs or assume we have a Loring free shipping policy. If you are willing to pay $100 for a bottle and $0 for their second wine, and they charged you $100 for their top label would you buy it? Of course yes. If they charged you $90 would you buy it? Of course yes. $80? $70? and so on. Now what if they said you can have the top bottle for $60 but you must buy one bottle of their second wine for $10? Would you bite? If that second wine is really worthless to you, I'm sure you can tell the winery to keep the second wine and just bill you $70 for their top bottle. In other words, your claim can only be true IF requiring you to buy something else forces you over your top price. And that is only true, in this scenario, if the price of the top label + the price of the second wine exceeds $100.

If you want to make the situation even more extreme, what if they said they'll sell you their second wine for $80 and their top label for $10? I think that's still a buy! Big Grin
F foghornleghornMember
quote:
Originally posted by cab chris:
Because it is a bad practice. They could have had three of my friends and myself bying this wine every year and I am sure that along the way we would have purchased some of his "Napa Valley" in addition.


OK, so you (Joe Blow off the street) walk in and expect to get treated like one of the family, but you're not willing to participate....except for the To-Kalon events. Yet they have faithful folks that participate in all events. Which ones do you think they are going to offer the limited production to? You think this is "bad practice"? Confused

I have been on the Harlan list since 1994. This year I order a 6-pack and mag of their '05 Estate. I get three bottles. Yet I see on ebob that there are folks that got 2 bottles with their FIRST offer. Confused To me.....THAT is bad practice.
P papeduneufMember
WEc,

The math works, but you are giving hypothetical examples that don't match real world experience.
In any case, the decisions you posit come down to buying what one wants at a price that one is willing to pay. You even say "you can tell the winery to keep the second wine".
The "bundled" wines are irrelevant, just as the price of any wine that I don't want to buy is irrelevant, no matter what a comparative bargain it might be.
W wecMember
pape du neuf: That's exactly my point. You will buy something you don't want in order to get something you want. Whether it happens or not depends on what the actual cost is. It's like a costco membership. I don't want to buy a membership but I need it to buy the stuff at Costco. The point of my most of my examples on this forum are not to make it resemble reality, but to illustrate my point while eliminating all distractions which are not necessary to the argument.
K ksc02Member
quote:
Originally posted by GreenDrazi:
I take it your new to mailing lists and hostage wines.

No, not new to mailing lists. Just haven't bought in to any list that enforces these 'rules'.

Why don’t you join Martinelli’s list where you have to buy an entire case of wine to get allocated one bottle of what you really want.

As much as I'd have loved a 'first crack' at Marinelli's great offerings, I'll take the secondary market price hit for the times when I DO want a few of a specific vintage. Overall, I feel I'm STILL further ahead AND, more importantly, NOT a 'hostage'.
Last edited by ksc02
K ksc02Member
quote:
Originally posted by sydthesquid:
In most cases, I am customer C: I don't place any value on the secondary wine. I'd be happy to pay $90 for the primary but that is it. Paying another $20 simply raises the price of the primary wine for me to $110, at which point I have to reconsider. (Not to mention another XXX bucks for shipping wine I don't want). Plus, I now have a bottle I don't want bouncing around, clogging up my storage space. Mad Not to mention it usually is buy 6 crappy bottles, and get access to 1 or 2 good ones, which makes the situation even worse for me.

This may not be a real economic argument, but is generally how it plays out for me personally. There are exceptions, of course.

Well said, Syd.
What I was attempting to say near the beginning of this thread.
greendrazigreendraziMember
quote:
Originally posted by KSC02:
quote:
Originally posted by GreenDrazi:
I take it your new to mailing lists and hostage wines.

No, not new to mailing lists. Just haven't bought in to any list that enforces these 'rules'.

Why don’t you join Martinelli’s list where you have to buy an entire case of wine to get allocated one bottle of what you really want.

As much as I'd have loved a 'first crack' at Marinelli's great offerings, I'll take the secondary market price hit for the times when I DO want a few of a specific vintage. Overall, I feel I'm STILL further ahead AND, more importantly, NOT a 'hostage'.
KSC02,
My post was not addressing you. It was in response to cab chris.
C cabchrisMember
Foghorn

In actual fact this is as I stated before an obscure producer who few people know about. A new kid on the block who has yet to build solid customer base. His label may possibly become in demand someday but until then I will be calling the shots.

The problem here is that he is placing too much emphasis on moving his 2003 rather than building customer loyalty for the long term. I am only interested in supporting producers who appreciate my business and do not try to sell me what is leftover inventory first.
winetarelliwinetarelliMember
This is such a tricky situation... and it boils down to intention.

Is the winery rewarding loyalty by giving its most limited productions to its most loyal customers? Then yes, it is fine.

Is the winery trying to move less desirable product by forcing people who want its best wines to buy less desirable wines? Then no, I do not approve.

And, as stefania wine pointed out, those two ideas can seriously flirt with one another.
J juicyMember
Believe Peter Michael is also one that will bundle wine offers, something that is easy for me to resist.

I must admit that I have bought something that was perhaps not desirable at the time to get something I wanted. It wasn't stated by the lady in so many words but buying dinner did open doors to a more enjoyable evening.

This occurs more on the wholesale side of things but it does cause more of a stir when it happens on the retail side.

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