This Library Release was selected in conjunction with the next episode discussing pricing and was initially released on December 2nd, 2020. Robert and Peter discuss how luxury wines are priced, delving into the core insights from the Pricing Chapter of Peter’s book, Luxury Wine Marketing. They discuss the luxury wine price segments, the types of luxury wine buyers, and how you need everything to be working right to build a luxury wine brand. “You can’t just stick a label on two-buck-chuck and price it at $1,000.”   Detailed Show Notes:  Luxury Wine Marketing (“LWM”) was published in late 2019 It contains industry best practices for how to sell luxury wines vs. more “commercial” winesIncludes new research on the market size, customer segmentation, and frameworks for marketing luxury winesWine pricing segments The overall wine market has an average price of $7-8/bottleThat makes $20+ sometimes classified as “luxury”In LWM, luxury wine is more of a luxury good - where the product is used to differentiate$50-99 - affordable luxury$100-199 - everyday wine for the luxury buyer$200-499 - special occasion luxury$500-999 - icon wines$1,000+ - dream winesLuxury wine consumer segments The Wine CollectorThe Wine Geek - seeks knowledgeTrue Luxury Buyer - buys top brandsAspirational Buyer - looks up to the True Luxury BuyerBrand impact on price Dom Perignon is a special occasion wine at $170/bottle vs. if it was $40/bottlePrice signals an element of qualityPrice makes some people think it’s better qualityStrategies to launch luxury wines Build Up - start lower priced and build upBuild down - start higher and build downNeed a good story and quality to back up pricingE.g., Penfolds - from Grange to $10-15/bottle wines, Grange provides the halo effect for the cheaper wines as people associate themselves with the brandLuxury branding - using price over value as the luxury driver, e.g., Harlan EstateLuxury wine demand Sometimes when you increase the price, you increase the demandTwo types of demand - consumption and investment demandWineries want people to drink, not sell the wines, to keep the secondary market highStill need to have value - quality and reputation of the winesBurgundy - driven by wine collectors who want the scarce and rareTricks and tips for buying luxury wines Know what you like and target those types of winesIf you want something special - brand strength is essential, a la the gifting culture in ChinaFollow critics whose palates are similar to yours and track their scores to find valuesCheck out the best wines from less well-known parts of the worldWinery pricing strategy has four major determinants QualityBrand strengthCompetitionExternal factorsHow do some Napa wines come out of the gate pricing $250+?  Sometimes they leverage the brand strength of the winemakerPrimarily selling to friends and familySometimes they need to play the long game and sit on wines for a while Get access to library episodes Hosted on Acast. See acast.com/privacy for more information.