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Pricing Wine and Consumer Response

March 1, 2011
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Pricing of wine remains a fine art: too high and the customer doesn’t see value anymore and leaves the brand, too low and you make a loss despite the impressive volumes.

The above point is well illustrated by KWV, whose wine and spirits business swung to losses of ZAR7.2m, versus profits of ZAR20.7m in the same period of the previous year, the just-drinks website reported.

“KWV blamed the fall on its decision to increase prices on non-profitable products, such as Pearly Bay in the UK, coupled with a strong rand currency and the slow recovery of the global economy. Operating profits slid by 85%, to ZAR5.3m.

Many of its UK listings were dropped and KWV’s global sales sank from about 2.5m cases to 500,000 cases. Global net sales fell by 9% to ZAR360m, although high-end wines and brandies showed growth in Japan and China.”

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