Don't call it price fixing...

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Samuel Whitmore
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Don't call it price fixing...

#1 Post by Samuel Whitmore » September 9th, 2011, 11:28 am

Curious to hear some thoughts from folks in and out of the wine business...I have a retail store in NY and carry a high end Napa wine that has a suggested retail price of $125 (give or take), my price is dramatically lower. The distributor rep called to request I raise the price, and I refused; now they want pick up the balance of this wine because of my low price. Not price fixing...but is it price bullying? Are they in the right?

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Re: Don't call it price fixing...

#2 Post by Samuel Whitmore » September 9th, 2011, 11:54 am

Thanks for the move...I have paid for them. Thinking of lowering the price even more just to needle them...generally, my distributors will tell me at time of purchase if they are price sensitive.

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Re: Don't call it price fixing...

#3 Post by Corey N. » September 9th, 2011, 11:57 am

Samuel Whitmore wrote:Thanks for the move...I have paid for them. Thinking of lowering the price even more just to needle them...generally, my distributors will tell me at time of purchase if they are price sensitive.
2 points:

1. You paid for them, so the wine is yours. If the distributor wants them back, you should sell it to him...at retail (presumably at the price that he'd like you to sell it for).

2. You likely won't be getting these wines again.
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Re: Don't call it price fixing...

#4 Post by Larry Kaplan » September 9th, 2011, 11:59 am

They can not pick them up if you have paid for them. Make them buy them back if they want it back. As for the pricing do not expect that you will get this wine again but you may not want it. I will work with my suppliers if they approach it well, if not well then to each his own.
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Re: Don't call it price fixing...

#5 Post by Larry Kaplan » September 9th, 2011, 12:00 pm

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Re: Don't call it price fixing...

#6 Post by C. Bowman » September 9th, 2011, 12:14 pm

Welcome Samuel

We've had a few phone calls from distributors & also wineries strongly requesting we raise prices on wines if they aren't what the winery feels is in line with what it should be and basically say if we don't raise it we don't get anymore but have not had anyone threaten they would pick it up, I don't believe that is possible if we've paid for it or not, once the wine is in our possession . I usually tell them check Wine Searcher, there's discounting all over the place . What sends me over the edge is when I hear consumers talk about seeing a wine in Costco after getting a phone call and the distributor has allocated us a couple cases, when I request more they give me the schtick "oh we only got 20 cases for the whole state and we're lucky to be able to get you this" .
I've actually had a winemaker show up and purchase the balance of bottles that he was unhappy what we had them listed for.
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Re: Don't call it price fixing...

#7 Post by Todd F r e n c h » September 9th, 2011, 12:18 pm

If I were a retailer, I'm not so sure I'd want to continue doing business with wineries like that anyhow.
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Re: Don't call it price fixing...

#8 Post by Rick Gregory » September 9th, 2011, 12:27 pm

Are you selling at your cost? Below it? I can see a reason for them to be upset if you were blowing it out below cost as a loss leader etc... but if not... they need to deal.
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Re: Don't call it price fixing...

#9 Post by Peter Tryba » September 10th, 2011, 8:43 am

From the point of view of the winery, you're both undercutting every other one of their clients and damaging their brand image.
From the point of view of the distributor, you're not upholding your side of a mutually beneficial relationship.
From the point of view of the customer, you're a hero, today. Sorry about tomorrow.

Keep your exceedingly low price and...
Don't expect to be offered this wine ever again.
Don't expect to be offered other opportunities from the distributor to make a little extra coin.

Is it so bad to make a ~little~ more money on this wine? You could probably be lowest on wine-searcher by a few bucks and still be a hero, still get next year's wine, and still be offered exceptional deals.
Or, you can the attitude of "it's mine and mine alone" to the bank. Once.
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Re: Don't call it price fixing...

#10 Post by Stephen Pepe » September 10th, 2011, 9:03 am

Peter +1. Fortunately as a small winery we do not have to use distributors to move our wine. We use brokers who are paid a commission on what they sell when they sell it. Since brokers do not buy our wine they have no incentive to undercut our retail price to move the wine and the commission as a % of the sale price is an incentive to maitain the retail price. When they sell our wine to wine shops they let the retailer know that if they substantially undercut our retail price, I will not sell to them again. [stirthepothal.gif]
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Re: Don't call it price fixing...

#11 Post by C. Bowman » September 10th, 2011, 9:19 am

Peter,
When you say "both", if we're one you're referring to, I will say when it comes to high end harder to come by wines & small production wines we follow a wineries request so we will be able to continue to get their wines. The requests that are hard to abide by are when it's a winery that has raised their price & production and we're told what price we must not list it below and then see everyone in the country selling the same wine for an average of $15.00 less.
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Re: Don't call it price fixing...

#12 Post by Peter Tryba » September 10th, 2011, 9:41 am

C. Bowman wrote:Peter,
When you say "both", if we're one you're referring to, I will say when it comes to high end harder to come by wines & small production wines we follow a wineries request so we will be able to continue to get their wines. The requests that are hard to abide by are when it's a winery that has raised their price & production and we're told what price we must not list it below and then see everyone in the country selling the same wine for an average of $15.00 less.
Don't buy their wine. Sell something else.
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Re: Don't call it price fixing...

#13 Post by Ken V » September 10th, 2011, 3:39 pm

Wow. So much for a free market economy. Peter, how long would you sit on a wine that won't sell at or near the "suggested" retail price?
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Re: Don't call it price fixing...

#14 Post by Peter Tryba » September 10th, 2011, 4:37 pm

Ken V wrote:Wow. So much for a free market economy. Peter, how long would you sit on a wine that won't sell at or near the "suggested" retail price?
I'm defining a free market economy. In a free market, choice is paramount. OP chooses to low ball the price. Winery and distribution choose to not sell to him again. Someone else will buy the wine and sell within the parameters of the relationship.
That's how a free market works. Money and goods flow in a way most beneficial to the active parties. If its balance is skewed, a free market will correct itself.
Leave "right" and "wrong" out of it.
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Re: Don't call it price fixing...

#15 Post by Randy Bowman » September 10th, 2011, 4:56 pm

Todd F r e n c h wrote:If I were a retailer, I'm not so sure I'd want to continue doing business with wineries like that anyhow.
It's not just wineries. We carry a number of wine accessories that the manufacturer requests we sell at a particular price point [wink.gif]
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Re: Don't call it price fixing...

#16 Post by Peter Tryba » September 10th, 2011, 5:06 pm

Randy Bowman wrote:
Todd F r e n c h wrote:If I were a retailer, I'm not so sure I'd want to continue doing business with wineries like that anyhow.
It's not just wineries. We carry a number of wine accessories that the manufacturer requests we sell at a particular price point [wink.gif]
No kidding? The nerve!
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Re: Don't call it price fixing...

#17 Post by Peter Tryba » September 10th, 2011, 5:12 pm

Ken V wrote:Wow. So much for a free market economy. Peter, how long would you sit on a wine that won't sell at or near the "suggested" retail price?
I forgot to answer your question:
Don't buy a wine that won't sell.

If you do, don't list it on wine-searcher, but blow it out in-store.


Moar answerz to your retailing questionz here!

(I haven't read it, but, seriously, this topic is Econ 101)
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Re: Don't call it price fixing...

#18 Post by Samuel Whitmore » September 12th, 2011, 11:04 am

Peter Tryba wrote:From the point of view of the winery, you're both undercutting every other one of their clients and damaging their brand image.
From the point of view of the distributor, you're not upholding your side of a mutually beneficial relationship.
From the point of view of the customer, you're a hero, today. Sorry about tomorrow.

Keep your exceedingly low price and...
Don't expect to be offered this wine ever again.
Don't expect to be offered other opportunities from the distributor to make a little extra coin.

Is it so bad to make a ~little~ more money on this wine? You could probably be lowest on wine-searcher by a few bucks and still be a hero, still get next year's wine, and still be offered exceptional deals.
Or, you can the attitude of "it's mine and mine alone" to the bank. Once.
Peter - it is not the lowest price by any means - SRP - $125, my price $115, lowest price on wine-searcher $90 (about $2 above cost). No wine retailer on wine searcher was above $120...I have no interest in being the bottom of the barrel wine retailer, nor am I looking to apply an attitude of mine alone - the thought process here is of equitable balance and full disclosure – the distributor never mentioned any kind of pricing expectation. My pricing was based on what I saw online and a goal of land somewhere in the middle price wise and win out on service.

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Re: Don't call it price fixing...

#19 Post by Peter Tryba » September 12th, 2011, 11:53 am

Samuel Whitmore wrote:
Peter Tryba wrote:From the point of view of the winery, you're both undercutting every other one of their clients and damaging their brand image.
From the point of view of the distributor, you're not upholding your side of a mutually beneficial relationship.
From the point of view of the customer, you're a hero, today. Sorry about tomorrow.

Keep your exceedingly low price and...
Don't expect to be offered this wine ever again.
Don't expect to be offered other opportunities from the distributor to make a little extra coin.

Is it so bad to make a ~little~ more money on this wine? You could probably be lowest on wine-searcher by a few bucks and still be a hero, still get next year's wine, and still be offered exceptional deals.
Or, you can the attitude of "it's mine and mine alone" to the bank. Once.
Peter - it is not the lowest price by any means - SRP - $125, my price $115, lowest price on wine-searcher $90 (about $2 above cost). No wine retailer on wine searcher was above $120...I have no interest in being the bottom of the barrel wine retailer, nor am I looking to apply an attitude of mine alone - the thought process here is of equitable balance and full disclosure – the distributor never mentioned any kind of pricing expectation. My pricing was based on what I saw online and a goal of land somewhere in the middle price wise and win out on service.
That wasn't clear from your original post, but now I understand. I had the impression your price was a cellar dweller. The winery is clearly not asking for this upward price movement or the w-s results wouldn't be so low.

My advice:
Sell it for the price you want.
Tell the distributor you won't adjust upwards until every wine-searcher result is within 5% of your own.
If the wholesaler insists, sell the wine back at full mark-up, no discount; for your trouble. Why should you "lower it more to needle them" and take the loss in your margins?
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Re: Don't call it price fixing...

#20 Post by Matthew Brown » September 12th, 2011, 12:03 pm

1) I wouldn't call $10 off a wine in that price range 'dramatic', especially when you look at the price differences in the Cinderella Wines banners to the right of these pages (unless you're a donor, then you'll just have to trust me), where there are $10 off wines at $30 or less.

2) If they think your $10 discount is damaging their brand, I'd suggest to them to yank their heads out of their collective asses and take a brief look around at the world we're in these days. Months from now when they are closing out the brand for 1/2 the wholesale price you can swoop in and make a killing.

3) If it's a brand you like/respect and want to get again, or its something that sells very well anyway, there ARE worse things that could happen than making an extra $10 on a wine. Some wineries just don't like seeing their brands used in price wars and having stores undercut each other by a few bucks just to say 'Lowest Price on Wine X In The Area!' in their ad. May be worth your energy to let it go and try the same approach on some thing else
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Re: Don't call it price fixing...

#21 Post by David K o l i n » September 12th, 2011, 12:37 pm

Peter Tryba wrote: From the point of view of the distributor, you're not upholding your side of a mutually beneficial relationship.

Wow. Things must have changed a lot ITB since I've played in the sandbox. Not many distributors cared very much about my business in the old days, even though my success was "mutually beneficial"

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Re: Don't call it price fixing...

#22 Post by Richard Leland » September 12th, 2011, 8:27 pm

David K o l i n wrote: Wow. Things must have changed a lot ITB since I've played in the sandbox. Not many distributors cared very much about my business in the old days, even though my success was "mutually beneficial"
It's not so much the distributors these days as it is the wineries themselves. With wine-searcher.com the winery can see in an instant what everyone is charging for their pride and joy. A quick phone call (or email) to the local wholesaler results in the kind of phone call the OP received.

Some wineries are pretty loose about it while others are unbelievably anal. I got a phone call once threatening to cut me off if I didn't bring my price into line immediately. This Napa Valley winery priced their white blend at $39 which to me is an odd price. Why not just set the price at $40 and let everybody sell it for $39.99? I think $38.99 looks funny so I decided to work slightly light and priced it at $37.99. So I get a phone call from the sales rep, apologizing profusely, asking me to help get the winery off her back by setting my price within their guidelines. And exactly what are their guidelines, I asked? The shelf price had to be within $1.00 of their suggested retail. So $38.00 was okay but $37.99 would get me cut off from ever doing business with this winery again. I like the sales rep so I changed the price to $39, sold through my remaining inventory and have never carried the wine again.
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Re: Don't call it price fixing...

#23 Post by Randy Bowman » September 12th, 2011, 8:46 pm

We often find wines dirt cheap on wine searcher, often at or below our wholesale cost. Go to the website, sure enough, its sold out, but "here's a better deal on some plonk," or order it and get an e-mail two days later that they were sold out and get an offer on some plonk.

We also find that stores in NJ are just above wholesale and they have the wine. With some research, we find that sometimes the wholesalers dealing with NJ are cutting great deals on bulk sales. To stop it from happening, the wineries have to go after the wholesaler or switch wholesalers.

We have a couple of small wineries that we are direct with that dictate the sale price and sometimes a limit on the number of bottles per individual buyer. We have followed their directions and it has proven to be to our benefit with increases in allocation along with a little leeway on pricing "off line."

On the flip side, we have turned away several wines/wineries whose wine we've seen blown out at wine library, Cinderella, etc.
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Re: Don't call it price fixing...

#24 Post by Scott VZ » October 1st, 2011, 6:21 pm

"Branding." I hate that word. It's the cultivation of a product, especially in a high end market, to cater to a specific set of consumers looking to buy as a status symbol, more than an indicator of quality. They want their wine in a specific tier of wines, and think they can compete, despite obvious flaws. LVMH has done this splendidly, with an advertising campaign, product placement strategy, and overall marketing scheme that allows retailers to price their wines at $55 dollars a bottle, because LVMH put the hard work and money into the brand in order to give it the appearance that it's worth it, while other brands expect to slap a story about their hard work onto the label or wooden case insert, and tell the wholesalers that they better go out and sell (at the right price), otherwise their allocation gets shortened. It's all about mutual benefits... If the producer decides to invest in marketing, they're reaching their intended audience much faster than going through 2 other levels of interaction to get to the customer who inevitably drinks the damn wine. It saves on the wholesaler from having to convince their customers of the need for their product, and it saves the retailer from having to deal too much with customers beyond pointing them in the direction of the label on their shelf.
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Re: Don't call it price fixing...

#25 Post by Dan Hammer » October 1st, 2011, 6:44 pm

Samuel Whitmore wrote:Curious to hear some thoughts from folks in and out of the wine business...I have a retail store in NY and carry a high end Napa wine that has a suggested retail price of $125 (give or take), my price is dramatically lower. The distributor rep called to request I raise the price, and I refused; now they want pick up the balance of this wine because of my low price. Not price fixing...but is it price bullying? Are they in the right?
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Don't call it price fixing...

#26 Post by Steve Gautier » October 1st, 2011, 7:09 pm

Samuel Whitmore wrote:Thanks for the move...I have paid for them. Thinking of lowering the price even more just to needle them...generally, my distributors will tell me at time of purchase if they are price sensitive.
I see you lowered the price even further.
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Re: Don't call it price fixing...

#27 Post by JP Taboada » October 8th, 2011, 1:49 am

Omg... They're gonna cut you off if you don't raise the price?! As if there wasn't plenty of other wines/wineries to support that are begging for exposure and sales. Next time they tell you what to price your wines at, in your store, kindly ask them if they'd like to split the bills, rent and field customer complaints, queries and other random emails.

If you enjoy "that" wineries selections and want to continue to carry their brand, speak with the rep, the supplying manager or the winery itself and express your reasoning behind the pricing. I'm quite sure an agreement can be reached. If they're still stubborn, move on.

Better yet, post the price they want you to have it at, and offer in-store discounts on said wine that puts it right at the price you want it to be.

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Re: Don't call it price fixing...

#28 Post by Andrew Morris » October 8th, 2011, 8:48 am

I am far from an expert on all the regs, but I thought I recalled seeing a reg. which states that the the retail price is set by the retailer and can not be dictated by others. I am not sure how cutting you off from future purchases fits in with that.
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Re: Don't call it price fixing...

#29 Post by Samuel Whitmore » October 19th, 2011, 11:11 am

Steve Gautier wrote:
Samuel Whitmore wrote:Thanks for the move...I have paid for them. Thinking of lowering the price even more just to needle them...generally, my distributors will tell me at time of purchase if they are price sensitive.
I see you lowered the price even further.
Well, I thought my original price was fair to all involved...but when they said they wanted to take it back after I have paid for it I figured I would have some fun...I'll be in Napa later this month, have not seen an invite to the winery.

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Re: Don't call it price fixing...

#30 Post by Scott Butler » October 19th, 2011, 11:29 am

Holy crap, I love your wine description!!

Get it while you can! The winery requested the distributor pick up this wine because we are selling it for too low of a price. Just 6 bottles left.

$99.99

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Re: Don't call it price fixing...

#31 Post by Terence T-Bone Livingston » October 19th, 2011, 2:24 pm

Richard Leland wrote:
David K o l i n wrote: Wow. Things must have changed a lot ITB since I've played in the sandbox. Not many distributors cared very much about my business in the old days, even though my success was "mutually beneficial"
It's not so much the distributors these days as it is the wineries themselves. With wine-searcher.com the winery can see in an instant what everyone is charging for their pride and joy. A quick phone call (or email) to the local wholesaler results in the kind of phone call the OP received.

.
I found one online retailer listing wines just a few dollars above wholesale that weren't even offered to them and hadn't even been offered to our distributor! I flipped a nut, called them on it and had them remove it the wines from their site.

Other than that, if a customer calls me and says "I can find this wine at "x price" which is lower than my wine club price" I tell them that is a great deal, they should take advantage of it, and I'd be more than happy to offer them the same price on that particular wine. Then I explain the difference in profit margins by various retailers, and let them know once they buy it, they can price it however they want. Wineries need to protect their wine club members, and when these instances happen, you should continue to take care of your members, and then make your broad-market sales decisions from there.
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Re: Don't call it price fixing...

#32 Post by M Hudson » October 21st, 2011, 4:23 pm

t-bone,

I wish all wine clubs shared your vision. I recently had the exact opposite experience with a well known napa winery. They had a 3 bottle set which I could find on winesearcher with shipping for 100 less than the wine club price.

They told me they would look into it. One week later no response.

Guess I should buy online and not from the winery.
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Re: Don't call it price fixing...

#33 Post by Dave Erickson » October 25th, 2011, 7:40 am

Matthew Brown wrote:1)
2) If they think your $10 discount is damaging their brand, I'd suggest to them to yank their heads out of their collective asses and take a brief look around at the world we're in these days. Months from now when they are closing out the brand for 1/2 the wholesale price you can swoop in and make a killing.
It's amazing how this one works with certain distributors over and over again. They literally never learn.

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