Wine producers in the US face a tight balancing act over pricing

Wine producers in the US face a tight balancing act over pricing

Pricing strategy is becoming a “critical skill” for wine producers in the US looking to penetrate the country's increasingly influential retail chains, according to a new report. 

Rabobank's latest quarterly wine report says that producers in the US are faced with the “complex” issue of a variety of SKUs, varying costs, regualtions and differing mark-up structures among states. The study says that investing in boosting skills around pricing can “deliver long-term dividends to wine marketers, particularly if they are attempting to sell through chain accounts".

The report flags Nielsen research that the growth in the number of US chain stores selling wine is outpacing the growth in the number of independent stores stocking wine.  

The reports adds: “Trading off some margin for improved volumes can have a positive impact on the bottom line, particularly in the short term, but discounting must be managed with extreme caution.” 

It warns: “The US wine market is littered with once-profitable brands that were seduced by the short-term benefits of discounting and degraded their brand equity.” 

In its last quarterly report, Rabobank suggested that growth is still available in mature markets for producers willing to innovate