By WINE INDUSTRY NETWORK Editor
Using Data Analytics to Optimize DTC Pricing and Inventory Depletion
Costs have risen exponentially since the onset of the pandemic, making it even more critical to use data analytics to guide wine pricing to maximize profits.
“Wineries have an amazing amount of data from their POS systems and wine clubs that can be used to build a depletion curve, price elasticity estimates and predictive models,” says Bob Terzotis of Mather Economics.
Jim Moroney reached out to Mather after opening Sixmilebridge Vineyards (Paso Robles, Calif.) during the pandemic. “We were running out of Cabernet Sauvignon partway into our first vintage. I needed to raise the price without depleting my inventory before the next vintage was ready.” Mather recommended an increase to $120. That was too big a leap for Moroney, so he raised it to $96 — and, as predicted, ran out early. The lesson he learned? Use data to take the emotion out of the decision.
In Adelaide, Calif., Denner Vineyards GM Carol Rounsaville also struggled with pricing during the pandemic. “We were concerned about raising prices because we thought people would be scared.” Mather helped Denner use its data to understand how to price for the best profit without turning away buyers. “We took the plunge, and it flowed as it was supposed to. Taking the emotion out and allowing the data to speak was highly successful.”
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Mather worked with a midsize winery located in Paso Robles, CA, who sought to optimally price a selection of SKUs for their Spring 2022 release while also staying within their depletion, or “time to sellout” goals.