Customer Ratings Setting Prices

By mthomas

Those of you who were buying wine in the 80s are likely to have snapped up a bottle of Australian Chardonnay from Oddbins. It is therefore ironic that  now they have risen, phoenix-like from the ashes of  insolvency, they are focusing on ‘old world’ wines from less established/fashionable regions. The majority of their wines are now European with Spain particularly well represented.

Now owned by EFB group, Oddbins has 19 sites across London including one in Stoke Newington. They are aiming to avoid heavy discounting because smaller retailers can’t compete in this way. The Bottle Apostle in Hackney ‘village’ has demonstrated that there is a young, and surprisingly affluent, demographic prepared to buy premium wines at premium prices in East London Postcodes despite the recession. Oddbins will need to get their brand identity right if they are to compete with edgier independents though.

Oddbin’s idea of ‘pricing democracy’ where customers taste wines blind and say how much they would be willing to pay is an interesting initiative but it is hard to see how it will translate into a successful business model (other than telling staff a bit about preferences and the depth of peoples’ pockets). Following recent blind tastings  customers said that they would pay around £8 for Yering Station Chardonnay, Leyda Sauvignon Blanc and Valgrays Garnacha. Oddbins were going to price them around £9 but have decided to set the customer favoured price.

What does this really mean though? The relationship between price and quality is complex and people find it hard to distinguish between very differently priced wines. Oddbins customers are probably saying more about their preferred spend than anything about the intrinsic qualities of the wines. My guess is if you gave them a decent selection of (no technical faults) £5 and £30 bottles at a blind tasting they would probably say they were willing to pay between £5 and £9 for most of them. However, it would obviously be economically inadvisable to price the premium wine at this level…

The website here (at present) is a page with an ‘in progress’ message. They should really get a move on!