Glutted market, flat sales should bring markdowns


October 27, 1991|By Michael Dresser

Soon it's going to be fun to go to the wine shops again.

For years, unrelenting price increases have made the trip to pick up a mealtime beverage a depressing venture. Wine after wine has crossed over that psychologically important $10 barrier without even bothering to say goodbye. The terrific $2.99 bargain of only three or four years ago -- remember Long Flat White? -- is now pushing $6 with no discernible improvement.

In part you can blame the government, but increased taxes are only a small part of the problem. The wine distribution system -- especially in Maryland -- is based on rapacious markups and rigid pricing formulas, with little thought given to what the consumer can afford.

Fortunately, nature and the markets have conspired to bring about a solution.

After a series of gargantuan harvests in Europe, the world wine market has developed what may be the greatest wine glut in history. Wine drinkers have barely begun to sip at 1988's huge production, and here comes a flood of 1989s and 1990s -- excellent vintages in almost all parts of Europe.

tTC On top of that, sales are flat. From Tokyo to Towson, people are doing just about anything but buying wine.

The dam has to break sometime. It's already cracking in Washington, where two of the biggest wine specialists, Macarthur and Calvert-Woodley, are running aggressive sales.

What this means for consumers is that some very fine wines with prestigious names will soon be selling for prices you haven't seen in a decade. Wholesalers are beginning to dump slow-moving inventory at fire-sale prices -- and while some of this wine will be mediocre or past its prime, there will also be some spectacular bargains.


Now, dear consumers, I'm going to have a word with Maryland's wine retailers. Feel free to eavesdrop.

Folks, you've been a bit slow getting off the mark. You've been telling me you know what you have to do, but I haven't seen it yet.

Some of you -- you know who you are -- have fallen in love with your inventory. You just can't bear to let your precious babies go for a reasonable price because that nasty wholesaler charged you so much to stock them.

But, hey, in some of your shops I've been seeing the same bottles sitting there so long they greet me by name. I walk through the aisles and they call out things like: "I know you can't afford me but could you at least ask the boss to come and dust me."

Now I'm not a retailer or a business consultant, but I know one thing: These wines are costing you money. You know better than I that a business runs on cash, not cabernet.

Many of these wines you've been sitting on are wonderful products. But once a bottle has sat on your shelf for a year, it's time to mark it down. When it sits that long, it means in effect that every one of your customers has seen it and decided against buying it at that price.

Think like a consumer. That's what the folks at Macarthur Liquors did when they cut their losses on 1983 Burgundies. It was a spotty vintage -- a few great wines but many failures -- and the wines had been in stock since Oliver North was an obscure lieutenant colonel. So Macarthur cut prices on $30 Gevrey-Chambertins and Nuits-St. Georges to under $10. Now that's where a consumer is likely to take a chance.

The same applies to other vintages from other regions. There's no doubt 1986 was a great, classic vintage for Bordeaux, but it was too tannic to catch the consumer's fancy. A 30 percent price cut would stimulate some action, though.

Those good Rhone, Burgundy, Piedmont and Tuscan wines from 1986 and 1987 will always be lost between the finer 1985s and 1988s. But once you get them into single figures they'll zoom out of the shop.

Don't think of it as a loss. You lost money on those items a long time ago. Anything you get for them now is money you can use to take advantage of the great deals that will pop up when wholesalers get serious about cutting prices.

Besides, if you don't get that money somebody else will. Don't make the mistake of thinking Baltimore-area wine lovers are too law-abiding to drive down to D.C. and stock up on several cases.

Once you've cleared the shop of all that tired inventory, you'll be ready to start over with a new approach. You can junk your automatic 50 percent markup and institute an "everyday low prices" strategy. The Maryland wine market is ripe for a

"category killer." It could be you.


Now that we consumers are finally gaining the upper hand, it behooves us to use it wisely.

First of all, we can stop using expensive wine to impress people. That's not what wine is for. If your friends are such wine snobs that they will be insulted if you serve an $8 wine, get new friends.

Most guests would be delighted if you serve them an exceptional wine you purchased for under $10 -- one they can afford to buy by the case when they get home.

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