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Snooth User: superab

Does the domestic market pay more to supplement the export market???

Posted by superab, Jul 10, 2012.

As an Australian who has lived in both the US and Australia, I noticed an interesting trend, and that's the price difference of seemingly the same wine in both countries. This could be due to the fact that some companies will sell a different product in different countries but market it under the same name, hence the price difference. But the cost of seemingly the same product for major companies found in both countries like Penfolds, Rosemount, Jacons Creek or Yellow Tail is definitely different in each country. Take for example Yellowtail who has just started selling domestically in Australia. For the price of a standard 750ml bottle in Australia you could buy a 1.5L magnum for the same price.

 

So got me wondering, does the domestic market pay more to cover the export market? As someone familiar with the aviation industry I know airlines will sell their tickets to overseas markets at a discounted rate to drive up sales and get increased brand loyalty overseas, but increases the cost of its domestic operations to offset the extra costs. So wonder if wineries do the same.

Any thoughts?

Replies

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Reply by D9sus4, Jul 11, 2012.

Probably has more to do with the VAT tax added by most European countries, especially the UK and its colonies and former colonies. That's why it costs twice as much for a bottle of Whiskey produced in Scotland as it does for the same bottle in the USA. 

We have our third President to thank for this as he kept the import taxes on wine low due to his belief that "No nation is drunken when wine is cheap" - Thomas Jefferson.  

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Reply by EMark, Jul 12, 2012.

That's a darned good question Superab.  You certainly can't attribute it to currency exchange rates.  The US dollar is slightly weaker than the Australian dollar, but the difference is pretty slight, and, besides, that should actually make Australian products more expensive in the US.

So, I might wonder if there are regulations that increase the price of Australian wines sold in Australia vs. the price of those that are exported.  That would certainly support D9's thought.

How do the prices of US wines sold in Australia compare with the prices of the same wines sold in the US?

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Reply by jtryka, Jul 13, 2012.

There is probably some truth to all these things, and I'll be the first to admit that I'm pleased to drink as much French and Italian wine as I can while the dollar is rediculously overvalued!  I think that it might also make a difference regarding the production characteristics of the winemaker.  Yellowtail in my view was always designed as a winemaker focused on the value end of the US market (if I recall correctly, they were first a value based house wine for a major supermarket chain, maybe it was Albertsons or Safeway).  So if they were focused on low-priced wine for the US market, it doesn't surprise me that they price the wine in the Australian market in a way that suggests they aren't as interested in selling it there.  Just my thoughts.

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Reply by zufrieden, Jul 13, 2012.

I noticed the same thing with Australian wine in Oz as opposed to Canada; there appears to a slightly cheaper situation here in the Great White North.  That's surprising given the tax implications of marketing anything with alcohol in Canada.

What would interest me is what your comments might be regarding the tax situation in Oz as opposed to the Euro Zone, Canada and the USA.


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