By Jim Boyce
… the money out of our pockets. And I mean the price of mass market bubbly such as Mumm or Moet & Chandon. Consumers typically face a price of RMB700 per bottle at bars or clubs that paid ~RMB250 or sometimes even less to buy it.
The reality is that choice is often not dictated by what tastes best, or offers best value, but by deals between the Champagne distributors and bars and clubs. Thus, the big bubbly boys can offer cash incentives, volume discounts, and other support to convince the bigger bars and clubs to feature these mass-market Champagnes. On top of this, big Champagne companies spend a good deal of cash on everything from advertising to sponsorships – Mumm and F1, for example – and these costs are ultimately passed to consumers. The result: the prices we pay are far higher than justified by the product itself.
None is this is groundbreaking news, nor does it mean mass-market Champagnes are not good. But after recently writing about what other beverages I could buy in Beijing instead of a bottle of Mumm or Moet & Chandon, I wondered how consumers could get better value for their Champagne dollars.
Here is one idea, though whether it will work in practice as well as in theory remains to be seen:
I am helping a bar in Beijing with its wine list. (Note: This is unpaid work – I simply want to understand the process.)Â My starting point: If bars and clubs charge RMB700 for mass-market Champagne, the markup is RMB400 to RMB500.
The place I am helping is: 1) too small to be of interest to big bubbly companies; 2) focused on quality; and 3) happy with a smaller markup, say, RMB150 to RMB200. That means it can sell a Champagne that costs it RMB500 or RMB550 for the same price as what many bars and clubs charge for mass-market Champagne.
I have already talked to distributors for three Champagne producers – these are good wines that most people are much less likely to have tried – and they are interested in this project. And if things work out, I hope this will spur smaller Beijing bars and restaurants focused on quality to follow suit. The end result, of course, is better Champagne at the same price for consumers.
More details to soon come…
(I also realize that some sparkling wines – i.e. those that come not from Champagne but from other parts of France or the world – also offer excellent value. More on this soon.)
See also:
Hold the Champagne: Better ways to drink your RMB700 in Beijing
Grape Wall has no sponsors of advertisers: if you find the content and projects like World Marselan Day worthwhile, please help cover the costs via PayPal, WeChat or Alipay.
Sign up for the free Grape Wall newsletter here. Follow Grape Wall on LinkedIn, Instagram, Facebook and Twitter. And contact Grape Wall via grapewallofchina (at) gmail.com.
JB,
Greetings from your friend in Bei Bing Ma Si.
If you want some exceptional “non-headache inducing” bubly, come over to my place for some Moscato D’Asti. We sell in-store for RMB400/bottle and in an equal fight can beat the #$%@ out of any frog juice. There’s no bling association that the beamer/LV/Lafitte crowd looks for, but we are not offering any. “In Vino Veritas” is our motto.
Gary
@ Mike B:
do you think only having MUMM and Moet on a Champagne list (at inflated prices) benefits consumers in any way, shape or form?
Please elaborate on your opinion because it certainly doesn’t seem to make sense from a CONSUMER advocacy perspective.
@ ali baba,
superb point. that means we are paying triple or more for mass-market champagne that might be old and that carries all the costs of marketing, sponsorships, and so on that got it into the bar, restaurant, or club in the first place.
cheers, boyce
@ mike,
you are talking about wine and food, while i am talking specifically about mass-market champagne, about brands that use cash, volume deals, and other incentives in what seems to me an effort to monopolize the bubbly list. this limits consumer choice and i believe this has led to artificially high prices. as a consumer, i don’t like this – i would like to see more choice and better value, and i think one possible step toward this is letting fellow consumers know how bubbly buying works in beijing.
cheers, boyce
@ wine blog,
the exchange rate is about RMB6.8 for USD1, so that RMB700 bottle of Champagne is about USD100.
Cheers, jim
@ tomaz,
thanks for the heads up. i’ve heard of a few other similar champagne deals in beijing and will put together a list.
cheers, jim
There is one other aspect of champagne in Beijing that was not mentioned, the age of NV champagne. Most of the NV Brut champagne sold in Beijing is old. NV champagne has an average life of 3 years from bottling. If you look at the production/import dates on the bottles from the well known to not so well known most are from 2006 or earlier. When you pop the cork and pour they are gold color and flabby. You have to really pick and choose carefully and check the dates on the bottle.
Food and Beverage markup is typically a percentage (multiple) of cost, usually around 300%. So a 250 RMB bottle of bubbly will indeed sell for around 750. And that 100 RMB burger has about 30 RMB worth of ingredients.
So if a bottle of wine is sold for 700 but costs just 200, don’t think of it as 500 RMB in markup, but a 3.5x markup. That’s because a 1500 bottle that actually cost 1000 has the same 500 RMB difference, but only sold at 1.5x cost so is actually a reasonable value.
Lowering the markup might NOT make good business sense in the long run. A healthy margin means everything to a bar / restaurant. If 700 RMB champagnes are too much for the clientele, then offer less expensive (but still good quality) bottles, instead of just offering the same bottles at a lower markup.
Squeezing margins isn’t going to help anyone. If you’re making less profit per bottle then you either have to sell more bottles or skimp cost elsewhere (lowering service quality, use cheaper food ingredients, force more turnover, etc.)
Generally that’s a losing strategy. You can’t run a steakhouse by pricing them like burgers. You’re better of closing the steakhouse and opening a burger joint.
I would help if you translated those numbers into dollars so the American readers such as I could get an idea of the actually cost you’re talking about when talking about these Champagnes. A bottle Moet White Star is around $40-50 here in the states, depending on where you purchase it from.
Agree completely,
And what you are trying has been done in Enoteca from the very begining.
We sell Champagne that is (contrary to other wines in the bar) not imported by us and with reasonable mark-up on the purchasing price we can sell it at 530RMB per bottle. We’re talking about Champagne Taittinger Brut. This goes without saying that the mark-up on the wines we import by ourselves is much lower.