Wine Clubs From A Winery's Point Of View

Over the next few days I am going to talk about wine clubs. What are their benefits and what are their drawbacks. What I look for in the ones I join.

From the winery's perspective, a wine club gains them several things -

• Bigger profit margins - The biggest per bottle profit on a sale for a winery is the bottle that you buy directly from them. The reason for this is that they have to steeply discount the wine that is sold to their distributors.
• Guaranteed sale - A wine club membership is a commitment by the consumer to purchase n number of bottles on a regular basis
• Test market - The winery chooses which wine to send you. They can choose to send you a wine that you might not ordinarily try on your own, thereby exposing you to a new product in an attempt to build demand for that product
• Disposal of library wines - Wine improves over time before finally spoiling. This leaves winery's in a quandary - should I hold the wine until it's peak when it will command a greater price? And therefore risk not being able to sell it before it starts to sour? The answer is to sell most of your wine upon release, but hold some back. Now, how do you rid yourself of too much wine that you have held back? Your members!
• The ability to discount their wine - Winery's would love to sell more wine directly to consumers (go back to item #1 - bigger profit). One way to encourage consumers to buy directly from the winery is to sell the wine at a discount relative to retail price. Any discount they give you is paltry to what their distributors are getting, yet may be significant enough to you to encourage you to buy more wine than you would otherwise.
  Under normal circumstances it is a bad idea for a winery (or any manufacturer for that matter) to sell their products at a price lower than their retailers can afford to sell it at, because if they do, then they are put in the position of competing with their partners and thusly alienating them.
  As a matter of fact, many distribution contracts disallow you to sell your products to consumers at a discount. This market protection scheme is not unreasonable to expect. The creation of a class of consumer called a member allows a winery to sell their products at a discount without breaching their distribution contracts.