Great point. The winery does face channel conflict issues, and this could explain why most discounts at the winery are associated with membership in their ‘wine club’.

However, I don’t think that the vineyards represent competition for the retail channel. There are barriers to buying direct from the vineyard that segment it fairly well from true retail channels.

Dave

The winery charges suggested retail price — the price they believe their product is worth. Stores, however, buy from a distributor at much lower cost. They can then set whatever price they want, typically between their purchase price and SRP.

St. Clement’s problem is that it CAN’T charge less than SRP as a regular practice. To do so would undercut the retailers who carry their products. Your instinct is to expect St. Clement to compete with the retailers on price, but in fact the retailers are vital partners of theirs. If St. Clement undercut them, the retailers would refuse St. Clement products when the distributor offered them, and then the distributor would destroy St. Clement. That’s the way the wine business works, because the laws are set up in a way that gives distributors HUGE power.

So don’t blame St. Clement.