Dec 02 2007

Wine Tasting: An Economic Thought

Published by V at 5:00 pm under Case Study, Cost Benefit

Last weekend, Alex and I went wine tasting in Sonoma County, Calif. and made a very interesting observation. After visiting a three or four vineyards, we realized that our cash was vanishing while we had only consumed a total of about a glass and half of wine total for two of us!

The prices on bottles of wine at the wineries are actually at least as much as you would pay in regular store, and quite often they are even more expansive. That’s a surprise! Why would selling at the winery, which by the way has a zero transportation cost be at a higher price than transporting those bottles of wine to San Francisco, or even to South Carolina?

We came up with several ideas on this, first it maybe an experience itself that is of high enough value for the customers to experience so that they are eventually ready to pay more money for the same bottle of wine, which they could have gotten cheaper in a less romantic environment.

The second explanation is that wineries are simply trying to sell at bulk, not sell a bottle at a time but sell cases instead, that would justify the cost of tasting. Indeed buying a case of wine in the winery is cheaper than buying that case at the store.

[Image from cotaticorner.com]

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