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  Editorial Issue 108, June 2012   
Underselling WinesUnderselling Wines  Contents 
Issue 107, May 2012 Follow DiWineTaste on Follow DiWineTaste on TwitterIssue 109, Summer 2012

Underselling Wines


 We are facing a crisis. This is not anything new, this is something we are hearing for a long time and every day. Economy is not certainly having its best time, people is not having the best time ever, facing a limited personal financial possibility which can barely ensure a decent life style. In this context, which does not seem to give signs or reprise, people are forced - this is understandable - to set essential priorities while leaving little or no possibility to everything that, in this moment, has an elitist meaning or however not indispensable. Wine, it is very likely, belongs to this category, and it is having a little or lesser chance to get to the table of Italian because of the diminished availability of money. The consequence of this also affects both the profits and the activity of wine producers, forced to think about new commercial strategies in order to ensure themselves, as hard as they can, the indispensable profit.


 

 The effect of crisis can also be seen in the shelves of shops. The prices of many wines have in fact underwent a substantial fall, also those wines which have always had a historical and strong fame and were sold at certain prices. Wines that, not so long ago, were sold at an average price of 20-30 euros, today - in certain cases and for some producers - it is not uncommon to see the same wines undersold at few euros, sometimes even less than 5 euros. If it is true a news like that would make many consumers very happy and, last but not the least, their wallets as well, it is also true this is the clear sign of the difficulties producers are having in selling their wines. Price does not make quality, or better to say, it does not always make it, although sometimes it clearly increases the possibility. The equation “an expensive wine is equal to a good wine”, is not that reliable, as - glass on hand - it frequently happens a wine sold at a modest price is better, as a matter of fact, than many other expensive bottles.

 Wines sold at less than 5 euros are not anything new, as this commercial strategy has been widely used for wines of modest quality, also for certain DOC (Denominazione d'Origine Controllata, Denomination of Controlled Origin) and DOCG (Denominazione d'Origine Controllata e Garantita, Denomination of Controlled and Guaranteed Origin) wines. If this commercial strategy was mainly used in the past for wines of certain areas - some of them also being famous and not only in Italy - today it seems to be used to a higher and increasing number of wines from other and renowned areas. One could say there is the freedom, for the producer, to choose the price for his or her wines, therefore in case he or she makes the decision to undersell them, it is just a matter of choice. However, seeing a wine one month ago was sold at 20 euros and today it is sold at less than 5 euros, this can be cause of legitimate doubts. Is it a speculation done one month ago, or a “promotional gift” a producer wants to give clients, both to keep the old ones while getting new ones? Or, are they simply unsold wines, now undersold, in order to avoid the risk of not selling those wines at all?

 In any case, the sign is clear: the wine, that wine, is too expensive and at a price higher than few euros remains unsold. If we do a quick calculation, by considering the profits to be ensured to all the commercial subjects involved to the distribution of each bottle, the real costs for making and bottling a wine can hardly justify that price. In fact, in case we consider the wine - even a bad quality wine however has production costs - the bottle, label, cork and cap, as well as packaging and shipment, it is easy to understand production and distribution costs are higher than the few euros at which each bottle is being sold. Commercial strategies of large distribution chains, which sometimes decide to sell a product at “below cost” in order to recover - indeed, to increase - the loss of profit by selling other products, does not always justify these choices.

 If the lowering of prices of wines is welcomed by consumers with evident satisfaction, some consortiums for the safeguarding of Denominazioni d'Origine Controllata consider this phenomenon as dangerous both for the prestige of the denomination itself, as well as for the loss of profits. In some cases they even suggested the introduction of a minimum price for each bottle, a price no producer is allowed to lower, in other words, a minimum fixed retail price. It can be understood the safeguarding of a legitimate profit to anyone running a business - and a winery is no exception - however there is also the risk this message can be negatively perceived by consumers. Setting a minimum fixed retail price, looks like a political choice instead of something decided for economic reasons. In other words, it is the arrogant and presumptuous will to claim the wines of certain areas - as such - must be however “expensive”. Indeed, the ruthless evaluation of facts shows not all the wines belonging to a certain area, even renowned and famous, are worth the price at which they are sold.

 In medio stat virtus (the vitrue is in the middle), taught us our ancestors. It certainly makes everyone think to see a wine sold at an improbable price and not plausible in “industrial” terms, however it also makes everyone think to see a wine sold at a very high price. In both cases, it is legitimate to ask “where is the trick” or, maybe, the cheat. Price is not always associated to the real quality of a wine. If it is true a high price should - or better, could - ensures a product of better quality, a very low price can be easily associated to a product of mediocre quality or bad. In case a bottle is being sold, for example, at 2.50 euros - a price frequently corresponding to reality - what is the real production cost for the wine alone? Few tens of cents per liter and, it should be said, there are many producers capable of ensuring this price to any possible “bottler” who can ensure the purchase of a remarkable quantity. How that wine is really made is sometimes an enological mystery. A non adulterated wine - hopefully - however produced with disputable quality criteria or however nonexistent. Underselling quality: this too is a sign of crisis.

Antonello Biancalana






   Share this article     Summary of Editorial column Wine Tasting 
  Editorial Issue 108, June 2012   
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