Raising Prices…While Maintaining Sales

It happens to everyone at some point: dry-goods costs go up, fruit costs go up, labor costs go up, and fuel costs seem to be constantly on the rise. Yet many consumers seem shocked when wine prices go up. Distributors bristle and retailers and restaurateurs threaten to drop the products. You swear up and down that the price increase is not due to some rave or score in a publication, but instead is related to increased costs to make the wine. People can be jaded, so these assurances are often not enough. So what do you do to keep your sales from tanking?

The short answer is that a raised price will take some time to sink in, and to get people comfortable with it, you’re going to have to spend some money. There are two ways I see to stave-off backlash: put new placement drives in place, and offer on-premise discounts (if state law allows it).

Think about it this way: how much money do you spend visiting any given major market in a year? A week in a big city will cost you roughly $150/night in hotel bills. Then you may have another $100-200 per day of food costs, plus the $350-400 in airfare, $200 for a rental car, $40-100 in parking or cab fares, and of course, the cost of your samples.  Let’s just assume an average trip to a big city will cost you between $1750-2500. As I have said before, I always advocate for face time if you can afford the time and expense. But if you are well established in a market, why not run a new-placement drive on an item where the price has increased? You will be capturing new customers (who didn’t even know what the price was before). You also will retain some of the loyal customers who have purchased the wine in previous vintages. You will also have the added benefit of being “front-of-mind” with your distributor sales reps, and even after you run your program, you will still retain some residual “mind-share.” Skip your visit and do a placement drive.

Another option is to offer an on-premise only discount. This will not attract the kind of immediate depletions you may be hoping for, but it will drive restaurant customers to seek your product out on retail shelves, and you will eventually see modest increases in both on and off-premise sales.

Finally, an additional (or alternative) option is always to sample the sh#t out of your wine. Offer at least one month of samples at 100% billback, or add free goods as samples onto the distributor shipment. To quote one of my favorite distributors, “You gotta pop corks to sell wine!” I know that many producers think their wine should sell on name alone, but there is a LOT of competition and if a sales rep can share your wine with an account, that becomes a known quantity against  a sea of other names and brands.

I’d be curious to hear if anyone out there has any other solutions to improving sales after price increases!

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