From Vine to Wallet: Navigating Wine & Spirits Pricing

I am super excited to have a very special guest on the show.

I have with me Ruchira Neotia.

Welcome, Ruchira.

Thank you.

Thank you, Janene.

I am absolutely chuffed.

This is such an interesting topic and an interesting audience.

Why don't we get started with a couple of rapid fire questions.

First of all, where are you joining us from today?

I'm in London today.

England, not Canada.

Oh, is there a London?

Oh, yeah, there is a London in Canada.

That's true.

How would you describe your superpower?

alcohol is my passion.

So, I have a pretty intuitive and informed palate.

I can match a relevant drink to anything.

This includes my book club.

So I told people, even if you set a book in Mars, I can pair a drink to that.

So yeah, that's my superpower.

Wow.

That's amazing.

I always find it really interesting when people can taste and smell

things at a level other people can't.

what's the one interesting thing that most people don't know about

you that you'd like to share with us?

Ooh.

I once co piloted a plane from London to Duxford Airfield

Museum wearing a Chewbacca mask.

I'm a big Star Wars fan.

And, I was training for a private pilot's license.

Okay.

I was going to say, there's a whole lot to unpack in that one short statement.

Why?

He was the best co pilot in the history of time.

I mean, come on, Chewbacca.

It was going to be an effective co pilot.

Yeah.

That's funny.

Okay.

Now, why don't you share with us a little bit about.

What your business offers and what you do.

I'm a wine and spirits in a sake consultant.

What I bring to the table aside from my mind by understanding my news and

the alcohol industry is tailoring my offerings to, the person, the

client and the business objectives.

And it's not just about the product and my knowledge and my own arrogance or hubris.

So for example, you know, I design, drinks lists for restaurants

and, they end up sort of achieving two, three X in beverage sales.

Because of the perfect fit between food and wine and spritz, as the case might be.

And then again, creating incredibly entertaining experiences for

corporate tastings, private events.

But just, you know, if you want to build a cellar, if you want to, you know, run an

amazing event virtually or otherwise, or if you've got a great restaurant who kind

of needs somebody to help them with their offerings, I'm the person to talk to.

Okay, excellent.

And how did you get into this?

It's one of those weird things in life.

I've been a bit of a nerd with alcohol, so I've done every qualification there

was, and it is pretty tough, right?

So when you're holding down a full on corporate job and re

orchestrating orgs and then you sort of lean too far into your hobby,

and then you sort of fall into it.

And that's what happened to me.

Once I got a taste of this, earlier this year, it was a little hard to

sort of extract myself and I'm kind of giving it, giving myself a run at it.

So this is how I ended up falling into this industry.

Lean too far into my hobby.

. Well, that's great.

Most people would love to have a job that is something that they're that

passionate about and love that much.

Congratulations on being able to achieve that

. Yeah.

I'd like to start this conversation because there's a lot that goes

into getting to the final price that you pay for a bottle of

wine or gin or whatever it is.

Can you tell us a little bit about what that process looks like

and how that might influence the pricing that we see in the end?

Here's the thing, right?

Before I got into this industry, we all have like a very

romantic idea about a drink.

We all lap it up, you know, the great advertising, the lifestyle,

it's a very romantic idea.

It is bloody hard work.

I mean, it's like blood, sweat, and tears.

So when you're sort of looking at the cost journey, there is

a whole heap of factors, right?

But the biggest price point in any bottle is actually the tax man.

When you're sort of looking at a bottle of wine, at the very, you know, so

UK is a very price sensitive market.

When you're looking at a price point on a wine, so like I said, you know,

five pounds 50 in a supermarket, about 60% of that is tax duty is 2.67 pounds.

That's flat.

And then on top of that, you have 20 percent VAT.

Then you've sort of got, you know, your labeling cost, your bottle.

So bottle glass became extremely expensive, you know, post COVID.

And there was a roll sort of glass, 40 percent more expensive.

Right?

So then you just look at a glass bottle, the price for that, the labeling,

transport and handling, depending on how the wine was made, but it would store

a single barrel, just an empty wooden French barrel costs 700 to 800 euros.

And that contains about, you know, 200 bottles worth of wine.

Then you sort of have transport and logistics.

Then you've sort of got your, um, supermarket or your retailers or

your trade restaurants margins.

Since we're talking about supermarket example, I'm gonna give you a

very, very tactical example here.

I'm gonna run some math, right?

Five pounds 50, 2.67, duty 20% VAT is about, I think circa 90.

Depends.

So that is over 60% of your cost packaging, as I

discussed, close to a pound.

Then let's say logistics is about 0.

30. And then if we kind of assuming the retailer's margin between

20 to 30%, it's like 80 pence.

So there's 21 pence worth of wine.

In a bottle that you pick up this five pounds, 50,

five.

Wow.

That's incredible.

Right?

I mean, that's just, that's mind blowing.

And I think, I mean, at least we're talking about if we're

looking at the costs here, right?

The costs involved in producing it.

I think a lot of people, I always joke with my clients that when they're focused

on the cost of things as the basis on the sole basis for what they charge.

We always joke about that's not what the customer is paying attention to.

Yeah.

And that when they're making a purchase, they're paying attention to what they

think they're going to get out of it, but they're not necessarily paying

attention to, they're not calculating the costs to produce it and bring it to you.

If they were, it would take them a long time to purchase any,

every little thing they buy.

Right.

So it's really important here for people to.

I think to realize that the cost is an important part of understanding

what to charge, because you need to understand how profitable you

can be and whether or not that's profitable enough for your business.

But the fact that 20 pence, 20 pence or 40 pence, out of a five

pound, approximately five pound bottle of wine, that's like peanuts.

What's interesting is as you start sort of going up in the

scale, just a tiny bit, that ratio starts to exponentially increase.

And specifically for the wine, right?

Because some things will stay the same.

Since the duty is flat, the VAT will shift.

Transport will relatively be the same.

Packaging, mas o menos a little bit.

But so, so say if you're looking at a 10 quid bottle of wine, you kind

of end up with about two pounds worth of wine in that instead of 21 pence.

So you, so it's just costing you double.

The quality of wine you're getting is 10x, then when you're sort of

going to 20 pounds, the quality of wine you end up getting in the

bottle is worth about 31 times more.

The increased cost is Forex, so it is a very disproportionate increase.

Right?

So I think every pound that you spend from eight pounds to especially 20 pounds.

it kind of goes exponentially towards the quality of the wine in your bottle.

Now again, you know, there are other factors at play, but this is

a very good general rule of that.

I'm not talking about affordability here, so we're not gonna get into whether

person can afford five pounds, 50 or 20.

I'm kind of about the value.

If you're looking for value for money now, after this particular threshold,

obviously over 50 GBP things start to shift a bit because brand comes into

play, how you're making certain things, and then there is how long is a piece

of string, but I would probably say the biggest aha moment for anybody thinking

about wine is by and large, if you can afford a bottle of wine that costs 12

pounds, you can afford a bottle of wine that costs 15 pounds, but that extra

three pounds that you pay in that.

It's probably going to go pretty much all against the quality

of the wine in the bottle.

Interesting.

And is that true for wines that come more or less from anywhere globally?

Or is there a different geographically?

Transport can get quite interesting, right?

So it can get quite complicated, but generally when people are importing.

You end up importing in sufficient quantity in bulk, so you kind

of do the math on that to keep that relatively stable.

So yes, there should be a little bit of a differential, but it's

actually more on import duty.

That makes a huge difference between where you importing from because for

example, American wine is so expensive in America that you will see that in the uk.

You find very few instances of that.

on basic shelves, maybe very at the top end, but even there, it's a little

bit lower because our, you know, duty relationships are much harder there,

whereas with, you know, when we were part of the EU, when pre Brexit,

that was a very different ballgame.

Cause you could literally be importing from anywhere in the EU,

which was very, very different.

Then there's labor costs, right?

So for example, why is South African wine such great money, you know, and

again, I'm taking into consideration vineyards where people are so

paid decently, but labor is cheap.

So the quality ratio to that versus producing wine, okay.

For example, like British wine, it can never be cheap.

Because it's really expensive to produce it here in the U. S., everything is exact.

So you would think, right, you're going to go buy a bottle of wine down my country

lane in Sussex or something like that.

I'm in London, but, you know, if I was in the country.

You would still kind of buy a more inexpensive bottle of wine from South

Africa or from Chile because it's the volumes that sort of offset it.

Right, right.

Well, that's interesting.

So in my earlier days, I worked for a company who is in agriculture.

And one of the things that we did was we went and visited wine producers

and Prosecco producers in Italy.

And I remember Being the wine producer, well, one of them that we

visited, it was very specific at the amarone, which is a lovely red wine.

I love it so nice, but it's produced in a very particular way.

And I would guess that that also has an influence, not just on the price, but

then also on the quality of the wine.

Oh, absolutely.

I mean, to make an Amarone is a multi step process because first of all,

you know, just in general, I think the one thing that people kind of

need to bear in mind when it comes to wine, it's an agricultural product.

So, you know, grapes are grapes.

You can't manufacture them.

Like they have to grow.

And it's beholden to the vagaries of nature, right?

And it takes, when someone starts a vineyard, my understanding is

it takes seven years before you have the first usable crop, right?

So really.

In certain regions.

That will not allow you to do anything before, you know, you can go make tea

brandy with it, but that's about it.

Yep.

So it takes about minimum seven years before you can establish a vineyard.

And then after 20 years, the yield for vine starts to lower because

the vines are getting older.

Fruit is concentrated.

Yes.

But, you know, again, when you're sort of thinking about the costs here,

there's a lot that goes into the bottle.

Then when you use the example of Amarone, my God, delightful wine.

But I'll just give you an example of how much work that goes into that.

You just, you know, with traditional wines, you pick the wines, uh, sorry,

you pick the grapes, choose to de stem, not crush it, press it, ferment

it, either store it or bottle it straight, depending on how you want

to sort of, you know, run with it.

With Amarone, there is no cutting corners.

To call it an Amarone, You have to dry the grapes.

Some people choose to dry it.

Like, you know, they chop it up, dry it on the wood.

So the grapes have to be raisined and then you have to crush the raisins

cause you can't press them cause there's no real juice and they have dried in

rooms to kind of make that happen.

There's special rooms.

Then you take these crushed grapes and soak it in some new wine that

was made with some of the grapes and then you kind of, you know, you

have to age them in certain barrels.

I mean, it is a romantic process to see the kind of grapes.

It is magical.

But it is very hard work.

And then you sort of go, well, I want an Amarone for five quid.

I mean, like, I'm sorry, but somebody is not getting paid.

And that probably isn't Amarone in your bottle.

there's a lot that goes behind your everyday wines, but a lot of

times, not always, but many times for the more expensive wines, there

is something very particular that's going on that impacts it even more.

But what's interesting, if it's only, a few pounds of the total,

then I would guess also what a lot of what people are paying for is

more perceived value in the wines.

Is that also.

That is correct.

And I think especially after a certain price point, because the market is very

competitive in between 10 and 20 quid.

But after that.

If you want the customer's dollars or pounds as we're in this

country, it's about the brand.

So even for example, you know, when you get into the wine industry and

I find this amazing little producer in you know, let's go with that.

And I'm a Amarone producer in Italy who's making literally like 200 bottles of wine.

Now to import that, just that small, tiny quantity, it's going to cost me a

fortune because it doesn't sort of take into account shipping, volumes, et cetera.

And then if that producer is completely unknown, it costs this producer quite

a lot of money to make that wine.

Nobody in the UK knows about it.

So if I go sell that to a restaurant, the restaurant guy is like, you're

my friend, you're sure I love you.

And I know you have great taste, but you're trying to sell me this bottle

of wine that nobody's ever heard of.

I know it tastes good, but it costs 40 pounds.

So that means I'll have to put it on the list.

Traditionally in the UK, it'd be three X. You know, 120 pounds, like

there is a very known producer making great wine, much larger quantity,

which I'm able to get at 25 pounds.

So how do I justify that?

Right.

So it's quite complex and, you know, so, and then brand will pay a huge amount.

So initially, when somebody is entering a market like the

UK, I always tell them that.

Because it's a price sensitive market, think about establishing and

investing in your brand first, getting yourself know, become covetable.

And this is specifically at the top.

And I'm not talking about value wines here.

And that's when you sort of tap into this cultish behavior and people who

are crazy about a particular flavor and that you can detect, you know,

these would be collectors like me, people who can sort of probably.

Where the money is, in a way is worth it because you can make out the

difference between and then you're just like, because I want to have X wine.

Cause I know what's going to taste like this and it's

impossible to get my hands on it.

I'm obsessing over it.

I will spend a hundred pounds, like no bother because that's, that's my producer.

And it becomes, it's, it becomes emotional.

So At the top end, when you sort of start crossing that 20 quid threshold

and starting to go up, there is an emotional price before that it's a price

after that it's an emotional price, which works, I think, very similar

to products in the luxury industry.

Interesting.

So I'm curious, because you said something in there and kind of ran by it.

So you said, You know, like for a restaurant, they're going to pay

a certain amount to get that wine and then they're going to put it on

their price list at somewhere else.

Can you share a little bit more with us about, you know, what goes

into that thinking and, you know, I mean, most of us, when we look at

a wine list, we're like, well, we don't want to pay the most expensive.

We don't want to pay the lowest.

So we'll take the thing in the middle.

Right.

So, you know, I will say this, this is something, I think the trends are

starting to change, but I wish fact how the majority of Europe handles pricing

in restaurants, specifically France, specifically Austria, and maybe Germany,

but let's kind of stick with France, Austria, Germany, Italy, Spain, you know,

these guys over there, they tend to sort of balance out the margins, the way they

sort of price the food in a restaurant.

So, you know, people are having a good eating experience.

You're going to have a good drinking experience.

You, you sort of get more value for money.

Now, for whatever reason in the UK and this sort of, you know, goes back, a

ways, I don't know how long back to, but general rule of thumb, at least in the

United Kingdom is retail price three X.

Okay.

So if you're able to buy a bottle of wine for 20 pounds in a wine shop and

find that in a restaurant, chances are it'll be listed for 60 pounds.

Okay.

Wow.

It's just.

So then you start to kind of go, and then what happens is at the cheaper

end, the margin will be even higher and at the more expensive end, they

do sort of tend to shrink it a bit.

Now, personally.

I disagree with this and I, there is a movement now because when you

start thinking about it, you go to great fine dining restaurants and then

you're starting to make decisions.

You know, you're eating great food, you made the decision.

I'm going to go in, I'm going to spend X amount of money on food.

I'm going to have like some great experiences.

Then when you start looking at the drinks list and then you start to make

as you, the exact thing that you said, don't want to buy the most expensive,

don't want to buy the cheapest, but then you start to value your list.

On the basis of price.

'cause you're kind of thinking, you know, where am I not

getting short circuited here?

Right, right, right.

And that's I think, what needs to shift.

'cause you don't look at that and think about that when

you are looking at the food.

You're not trying to, you know, look at that and where is that margin.

So I think to kind of bring that closer and work more on volume because in the

UK they tend to shift more wine at the cheaper ends, making higher margins.

That they do in the more expensive wines, but then I think, you know, it

ends up in many instances creating a lack of balance between the quality of

food you're eating and then the quality of the wine or the alcohol you're

sort of consuming along with that.

What I did with my restaurant, and I think I have to say, I'm a bit more inspired by

Europe in that, that, when I was asked to sort of design the drinks experience for

Dutch Healing Express, I was of a concept.

For this restaurant, all female kitchen, the only one of its kind in the world.

They're not trained chefs, they're housewives.

Hmm.

And she's like a, you know, global superstar.

She's on Netflix.

First British chef to be fa featured on Netflix is chef table.

Okay.

So I said I wanna bring, she's very generous with the ethos of her dining.

So I said, the way I wanna price it is I'm actually gonna

put everything by the glass.

You get decent margins there, but people have a great choice.

But it's gonna be a tight, condensed list Now instead of creating a compendium

because that's you know, all you end up being is like you're sitting with

friends You don't want to go through an entire Bible and I'm a wine that even

I'm not gonna do that I'm like, where's the song I need recommendations here.

Restaurant with no songs and I want to interact with people I

want People to have done the work and help make a tighter selection.

You have a tighter selection that allows you to have better bargaining,

wouldn't say bargaining power, but you, you're able to kind of avail of more

volume pricing from your wholesaler.

And then when you're selling more of the good stuff, even if it's a

lower margin, so my margins are much lower, you know, they're up to like 1.

75 to two X maximum.

I end up selling more of the better stuff, giving people a better experience.

So you end up actually increasing your beverage sales by three,

three X for the entire restaurant.

Because what happens is just in this instance, let's say if my cheapest

wine, I'm buying it for 10 pounds, I've listed it on the restaurant.

I'm making it up like, you know, traditionally anybody

would have done that.

They have listed it for 40.

That's not saying what I'm doing in my restaurant, but that's what happens.

If you were to flip that and then say, actually, I'm going to list an

incredible champagne on my list for 70 pounds that cost me 30 to buy it.

You just see, it's barely like.

Two X there, but you're still making 40 pounds, which is more than what you

would made on that cheapest bottle.

And if you're a discerning consumer and you want to have a good

experience, you're just like, well, I'm not going to buy the 40 quid.

Like I'm going to spend 60 on it.

And maybe I'm comfortable spending the 70 because I don't

feel like I'm being fleeced.

Right, right, right.

It influences behavior.

Yes, and I think it makes a huge difference.

That's why you actually sell better.

People drink better.

They have a much better experience.

And it's a win win.

I think in this instance, I'm like, you know what?

Yes, there's margins.

And then yes, you could throw math at me, but you forget that there is food and

drink is about the ultimate experience.

Watch that.

It's not just about this industry.

You know, I'm a marketer by trade, right?

You look at consumer marketing anywhere.

It's always about what is the end consumer experience and how

people will spend, like, what's the value that you're getting.

When you're looking at a wine list, you're not thinking about things like.

Don't want the cheapest, don't want the most expensive because I think

I'm getting fleeced on those things.

That's not the thought you want to be having.

You want to be kind of looking at it and sort of going, what

do I feel like drinking today?

And what's my budget?

That's the conversation you need to be having with yourself.

My budget is I'm willing to spend about 50 quid or 60 quid or 40

quid, whatever the case might be.

What's my best bet on this list that works in the flavor profile that I want.

Fascinating.

I love it.

So I'm curious about something.

So of course, I'm gonna stick with wines for a moment, but I do have

a couple questions on spirits.

But when it comes to, because of course, in the last 10 years or so, maybe, maybe

a little bit more bio wines have bio produced wines have come into to play.

And I'm just curious how is that reflected in the pricing and, you

know, what's the real difference there?

Is it more perceived value or is there actually something else going on there?

Well, it is, to be fair, it is a little bit more expensive to produce.

Now, when you talk about bio, there are so many terms that throw around

in the wine area that I think, you know, do a person's head in.

I actually had to do my diploma thesis on certifications.

Can you imagine?

For just one region, which is Bordeaux, never mind where else.

It's insane.

But if I combine them together and I talk about, let's say organic and

overarchingly, you know, bio sustainable practices, as it were, what this basically

means is again, going back to the agricultural behavior of, how organic

kind of came into eating produce, which was, let's stop throwing chemicals.

Into everything just to kind of create more volume more volume more volume

more volume So if you're creating better quality, so you're using less

chemicals, yes you save money on okay Not spending on using a lot of chemicals

By and large when you look at a lot of wine regions, they're beset with

All the problems that's happening with the, you know, global climate change.

Then you look at regions like Bordeaux, which are wet and humid and weirdly cold.

And there's a lot of pests and disease pressure and kind of automatically

will mean there will be a settling time when your yields are going to contract.

Right.

When your yields contract lower volume, that means you have less

wine to sell the quality higher, but you have less wine to sell.

So therefore it's a bit more expensive.

Right.

You drink better.

So, there and it will balance out ultimately at some point, but I think by

and large it's definitely costs a little bit more because along with just, it's not

just the lack of chemicals, but generally people who talk about sustainability, who

talk about, all of these certifications, it goes beyond, it goes into the process.

It goes into how you're treating your people.

It goes into, you know, is there sort of, you know, fair

working conditions, et cetera.

So it's, it's about, you're not running a sweatshop.

It's when you're not kind of doing that, that's, you know,

where the cost sort of comes.

So there is a little bit of perception as well, because I think sometimes, you

know, you could be drinking something and you're like, Oh my God, this like

tastes like 50 shades of apple cider.

And after a while, you're like, you know, put something in it to stabilize it.

But I think there is a thoughtfulness and giving back to the school.

There's a thoughtfulness in how we are sort of doing our practices.

But there, there is a reflection in the price.

It's, it's the same as how it is with a lot of produce, but I wouldn't

get hung up on the word organic.

I think we need to be a bit more conscious and use sustainability because

a lot, and this also happens with food, you can get a lot, but I will

give you the example of a couple of regions in the world where they have a

natural advantage, dramatic conditions where sustainability is much easier.

I think New Zealand wins hands down.

Like it's this country, right?

It is paradise on earth.

And even as, you know, when you're studying wine, you're sort of going, Oh

my God, like they've got every climatic, they get the sun, but they kind of get

the winds, they get the coolness, they get the rightness, they get all of it.

But by and large, pretty much everything that's produced in New Zealand is,

you know, they have a benchmark.

You will never find New Zealand wines too expensive.

You will never find them too cheap.

But you will always have a quality consistency when you buy it because

of the general sort of ethos in the country and their natural advantages.

But that is, I think, possibly a good benchmark to sort of then look from

when you're looking at where can I have quality wines that have been

made with a relative level of ethos.

You know, so everyone in the world is doing that, including in the uk.

Yeah.

But yes, there is uk.

It's hard to sort of find , organic biodynamics sustainably.

You've made wines at 5.99 a bottle.

Yeah.

, it's almost impossible, right?

You probably wouldn't want to, right?

Because No, no.

I don't know what we are putting in our body, so I really would not recommend it.

Okay.

So now, is there a difference then in sort of this, this overview of how you

price a wine versus how you price spirits?

Yes.

With spirits, there's certain similar factors, but unlike

grapes, which is a fruit and yield is a really huge part of it.

With spirits, it's primarily made from grain and obviously there's

cognac and things, but it uses brandy.

It uses pomace.

It doesn't use fresh grapes.

With spirits, the biggest differential is between large volume production

and smaller batch craft, the word sort of, you know, artisanal as it were.

Now, for example, and I hope the folks at Diageo don't shoot me for this, but.

A Johnny Walker Black is a really well made blended whiskey.

They don't cut corners, it's very well made, but it costs, I

think, about 40 or 50p a bottle.

The liquid inside it.

Just because of the sheer volume, they own the global chain.

Because... You are able to recoup back the cost or you

put in the initial investments.

The investments in, in, in distilling spurts, initial investment is huge, right?

While your stills, you've sort of got to have the right hygiene,

storage factors, all of that.

But you, if you're able to make enough and you're able to find a market for

it, you make your money in the volume.

Whereas when you're looking at smaller producers, it just becomes XXX more.

It's just because.

You off the economies of scale there and things that again, you know, you, you,

you can't get the same discounts that you would when you're buying a barrel

versus somebody who's buying, you know, I need to buy three barrels versus

somebody who's like, you know, I'm buying.

50, 000 barrels a year or 50, 000 bottles versus I'm going to make 3000 bottles.

So there is a huge cost differential there.

Then the other really big thing about spurts is when you go

away, there's a standard, right?

So most gins, on the premium end will kind of cost you anything

in the thirties to forties in the UK, like it's a standard muscle.

It's like, if you quit a few pounds here or there, there is with wine, it can vary.

You know, massively, but then when you start getting into

collectors type stuff, there is a very significant difference there.

It's because of the aging process.

So for spirits, aging is the biggest thing, especially with whiskeys.

It's a barrel age, which is why gin, with very few exceptions, you

don't find them in like, you know, psychotic premium categories, but

whiskeys and things that you age.

It's that because of the high alcohol content, most of all,

there's a huge evaporation loss.

So the harder the country, the more it, you know, of the angels share,

how long are you aging it for?

What's the quality of the barrels, And then also like, you know, on the prestige

and the dramatic nature of the bottles.

Like we're talking Baccarat crystal, we're talking all of this.

So whereas with wine at the end of the day, even the most expensive bottles

would be costing like, you know, a certain amount here, just the container of the

spirit can get into like ludicrous amounts

have a lot more consistency in pricing.

You start to really get into, you know, collector stuff, but even there, I

think spirits is a lot more consistency, consistently priced than wine.

Yeah.

And it also suffers less from the vagaries of nature and

vintage variation year on year.

So, you know, releases in 2022.

Very expensive because in certain countries, because they had massive fires.

So they lost about 50 percent of the production.

We keep hearing about hail when the vines are very tender.

When that happens in spring, they don't just lose crop from that year.

Because there are lots that are gonna open the following year, you lose crop

for a number of years, that variation is less dramatic in spirits, because

you're aging them, you're releasing them, you're sort of blending them,

there is a lot more consistency so you can balance yourself out.

That's why so many people are getting back into the distillery great game

simply because the distiller's margin is higher than what a winemaker's margin

is unless you're a multi wall shield.

Right, right.

Oh, that's really interesting.

Yeah.

I mean, I've never seen, I mean, okay.

Never seen.

I haven't been around that long, but it was really obvious.

When all of these like micro producers of gin started because

they're just gin everywhere, right?

I mean, I can make some and that's probably one of the easier ones

to, to produce, which is why,

why, because you just work with a good neutral spirit and you decide

by many distillation things.

I mean, COVID was so many people turned into gin producers in a way.

It's a really, it's a really fascinating world, there's like so much magic.

There's a lot of innovation in the world of spirits that's happening,

which I think is really quite fantastic.

It's able to be a lot more agile than wine.

But yeah, I think with spirits.

Without question, there is a lot more consistency in pricing and quality.

I had to laugh because last year I was at Christmas market in Freiburg, Germany.

And I ran across this stand that had moonshine.

And as an American, so I live in Switzerland for anybody who's

watching, doesn't know that I was like.

They're selling root cherry.

And it was really lovely.

I have to say,

but all of this home distillation stuff is moonshine.

You know, there is another magic like today I can, I mean, of course

you can do this with wine as well.

The world is shifting so much.

Like, you know, when you talk about investment, like people used to

talk about wine collections, right?

Right.

Whiskey costs today are even more stable investment.

Because if you get the right product and again, you know people keep

talking about rum But you know, we will see what rum goes unless you're

buying something from a distillery.

That's completely closed It can never be produced again.

Then basically you can like come on stupid amounts of money at auction.

Like, you know, Bowmore released the 20, 38 year old whiskey that got into a

bidding war and sold for half a million.

So for example, with one of my private clients, you know, they're

going to be buying a cask of whiskey and they want it for the long term.

So by the time, you know, and I'm going to probably buy them

something that's currently about sort of eight years of age, because

by the time they will want to.

You know, either dispose of it, or they want to actually partially

bottle some for their friends.

At that point, it's going to be 18 years old and the storage costs.

Yes, they're expensive, but the exponential value of that risky

at that point would be phenomenal.

And then this person is going to be having this amazing.

You know, personalized bottling, they're going to be giving out to their friends

as a big, big major celebration.

So I think that there's something quite remarkable about that.

People do this with wine as well, but with spirits, I think it's, yeah.

Also I think, it's interesting that for the first time in the

history of time, spirits sales have overtakenwine sales in the U.S.

Hmm.

Is that a good thing or a bad thing or just an interesting thing?

Interesting things because wine is going through a bad time.

I think global, you know, climate change is destroying a huge amount.

Yields are getting unpredictable.

Small age year prices are going to the roof.

People are earning a lot less because of all of the, you know, the global

drama that's kind of going on.

We're all aware of it.

So it's kind of becoming a little bit more unwieldy.

I think the other thing that we also forget with wine is you can't just

buy a great bottle of wine and just store it anyhow and think, you know,

it's going to hold itself together.

It's a fragile item, right?

The more expensive wine is the better you want to store it.

So even you sort of look at countries like India and everything and people

are like, Oh, you know, the wine scene.

And I'm like, yes, it's, it's burgeoning.

But with that, you also need to have the infrastructure.

It's not going to die.

You keep it out of the, you know, direct light.

But if I stick a bottle of spirits, you know, in a

cupboard in India at 40 degrees.

It's centigrade heat.

I don't know how that converts in American Fahrenheit, but, um, 40, 50 C it's fine.

My wine is going to turn into Madeira.

So

you can use it like a wine phrase.

So you know, it's, it's, it's, it's, it's, there, there's a lot of costs involved.

Um, and lots of sort of duty and regulations and alcohol is

a, is a different, difficult industry to price smartly.

So Ruchira, if, if someone out there listening is starting a business in the,

uh, food and beverage or the wine and spirits area, and they need to go about

pricing their wine or the spirits for that, what tips do you have for them?

I think.

Let's kind of be, let's start with what it actually cost them to make

and then the quality of the product.

Right.

Right.

And then I think if it's of a particular ilk, it's worth an understanding

what's the right market for you.

Because make a great product, for example, but it literally costs you.

And I'm going to lose, lose numbers to, to run the math on it.

It costs you 20 pounds to make this.

Beautiful wine.

Um, and you're like, but I really want to get into the UK and you're

making it, let's say in, you know, I don't know, Spain or South

Africa or something, actually.

And then you sort of go UK is a very price sensitive market.

You're going to do a pricing war to try and sort of, you know,

get into this here or you go find yourself a different market for it.

I think the other thing is, what is it that you want to, you want to do

in the, in, in this industry, right?

There are so many different variations that you can do, whether you kind of

come in as a consultant, you want to be a sommelier, you want to understand why

I think it's important kind of doing the certifications, but when you're pricing a

product, it's, um, just, just be realistic with the market that you want to sell

in and then work backwards from there.

Yeah.

Because you might find that producing a wine in the UK is

not the right thing for you.

You really want to produce.

Today, if I wanted to produce, I would possibly, and I want to sell

in the UK until I build my brand, I would produce it elsewhere.

Yeah.

Well, that's one of the things I preach to everybody out there is that, you know,

starting with who, who you're targeting answers a lot of the pressing pricing

questions that you have along the way, not all of them, but many of them.

So that's always a good place to start.

One last question before we start wrapping this up, which is what

tips do you have for consumers when they're buying wine and spirits?

Okay, a couple of things.

If you're in a restaurant, the sommelier is your friend.

You know, don't be afraid.

If they've got a sommelier, their job there is to help you.

Start with, this is how much I want to spend, what's your best bet, and these

are kind of the tastes I'm looking for.

They will do a good job for you.

If you're in a supermarket or you're looking for wine to buy or you're

in a wine shop or whatever, you know, online as the case might be, that's

going back to the original example we were talking about, that anything

between sort of, and especially for the UK between eight pounds and 20 pounds.

every extra pound you spend goes towards the quality of wine in your bottle.

Think about that, you know, when you're looking at it and consider, three regions

of the world for consistency and quality.

South Africa, New Zealand, and, to a huge extent, southern Rome.

They've got great, you know, climatic benefits.

Old Rome is doing a great job.

Like I was at, um, I visited them last week.

Uh, so, you know, that is something to kind of bear in mind.

Those are, those are the main things that I would say.

Okay, super.

Those are great tips.

I look forward to putting them into use.

So if there's one thing that you'd like people to remember from our conversation

today, when it comes to pricing and the wine and spirits industries, what

is it that they should take away?

You know what?

Don't get hung up on what everybody does with pricing.

Be bold, understand your industry, work backwards.

Be bold with your pricing choices.

They will surprise you.

Like I was a newcomer.

And within six weeks of launching a restaurant drinks list,

beverage sales went from 10 percent of total sales to 30%.

The accountant is calling the restaurant owner going, have you

stopped paying your invoices?

Like, why are you making so much money on beverage sales?

So, you know, I just use a different approach.

I think it's, it is, this just the norm.

Okay.

Are there any books or tools that you'd recommend for people?

Pricing strategy.

I think, Janene, you're probably better on that one.

I think I'm going to go with something, you know, we all need a little

bit of light humor in our lives.

So for me, a tool that kind of calms me down is the humor of P. G. Wodehouse.

He's one of the most entertaining, right?

It's a fictional world.

One of the most entertaining writer of... The last century.

I'm just so comical.

It just, it just really relaxes me.

So

I'll have to get the spelling of the name for you so we can put

them for the link into the show.

Yes.

Yeah.

Yeah.

Yeah.

Yeah.

Cool.

So we're sure if someone would like to talk to you about how to price

what they're doing or how to select the right wines for their restaurant

or location, where's the best place for them to reach out to you.

I would suggest, you know, reach out to me either on my LinkedIn

or, um, actually my Instagram.

So, just contact me on my Instagram.

So we'll put both those links in the show notes as well so people

can reach out and talk to you.

Ruchira, this has been really insightful.

Thank you so much for joining me today.

It was my pleasure.

This was so much fun.

I know,

I found, I found it super interesting.

Like I said, I mean, I have a previous life kind of in the agriculture side

of things, so I was already fascinated and interested, um, but I know there's

a lot of gaps in that and, um, I love putting a different spin on the topic.

So I very much appreciate, thank you so much for being here.

It is my pleasure.

And actually, if I may just one last thing, I would probably say the one thing

I think when considering drinks industry and considering pricing is to really set

up match it with a marketing strategy.

Because nowhere in any industry does brand and marketing have a greater impact on

the overarching price that you can come on for your product than this industry.

Super.

Great way to wrap that up.

So thank you to all of you who are out there listening.

We appreciate having you here with us today.

today.

One more thing before you go.

If you're curious about how to set prices in your business, then head on

over to thepricinglady.com/setmyprices and check out the next cohort

of the fair price formula.

That's all for today, everyone.

I wish you all the best and, as always, enjoy pricing