Metropolitan New York City (cont) Hudson Reporter Dispatch (White Plains) Chicago Chicago Tribune Chicago Sun-Times Denver Rocky Mountain News The Denver Post Miami Fort Lauderdale News/Sun-Sentinel The Miami Herald Los Angeles Herald Examiner L.A. Daily News L.A. Times, including editions San Fernando Valley Centinela South Bay West Side Orange County North Orange County South San Gabriel 8 The price advantage held by domestics over considerably among the five metropolitan markets. Imports varied A great deal As noted earlier, the a lower average price In New York, adver of this variation is accounted for by differences in the mix of brands having local advertising support. 750ml Imports were actually advertised at than were domestics in New York (by $.01). tising for the domestic 750ml size was very light, with only several wineries represented. Andre Champagne (part of Gallo) advertised most frequently, while Gallo generic brands advertisized almost not at all (in the 750ml size). This disparity pulled up Gallo's average in the New York City market, and (given Gallo's overwhelming dominance in volume among those companies advertising this bottle size In metro New York) raised the domestic average above that of Imports. 9 In the other four markets, the domestic 750ml prices were below those of Imports. The domestic advantage was lowest in Miami at 17.1% ($.51), and highest in Denver at 100.5% ($2.14). The variations between the domestic and Imported 1.5L advertised prices among the five metropolitan areas were smaller than for 750ml bottles. Again, Imports had the smallest disadvantage In Miami (21.5%), and the greatest in Denver (62.6%). In these markets, the Imported 1.5L bottles had respective price disadvantages of $.91 and $1.64. A review of advertising frequency by bottle size for Imports versus domestics reveals an Important difference in advertising strategy between Imported and domestic brands. Imported brands more frequently were advertised in the 750ml container size (565 vs. 401), while the overwhelming support for domestic brands came In the 1.5L size (1,157 VS 181). This disparate advertising frequency somewhat reduces the dependability of comparing advertised prices for any given container size (e.g., domestic 750ml vs Imported 750ml). As a result, we converted observed advertised prices into "cost-per-ounce" and blended the price data for the two sizes. We estimate that domestic wines were advertised at an average price of $.072 per ounce, while Imports carried an average price of $.103 per ounce. (Note: For this exercise we assumed that Imported wines sell equal volumes in 750ml and 1.5L 11 containers, but that domestic wines sell twice as much In the 1.5L size as in the 750ml size. Alternate assumptions of sales mix by size will change the estimated price differences, but we belleve our assumptions to be fair.) Published Wholesale Prices in the Five Markets Imported wine prices were lowest in the New York City market for all three years in both the 750ml and 1.5L containers, and highest in Miami and Denver (with one of the two always having the highest price). New York also posted the lowest domestic prices in all Instances; Miami's wholesale prices were always highest. In every market for both sizes, and in all three years, domestic wholesale wine prices were below those of imports. The disadvantage of Imports in 750ml cases was smallest in New York City in 1981 and 1982, and in Miami in 1983 (ranging from 17% to 23% in the three years). The largest price disadvantages for Imports were found in Denver in 1981 and 1982, and in Chicago in 1983. The disadvantage was nearly 50% in Denver in 1981, and was 33.4% in Chicago in 1983. The New York City market also provided a clear "smallest disadvantage" to imported wines in the 1.5L size. There Imports were only about 20% more expensive than domestics rather than the 40%, 50% and even 60% found in the other four markets. We see no obvious movement in the amounts by which imports carry higher prices than domestics at the wholesale level. The average price differences for the 750ml size were $7.48, $6.84 and $7.19 in 1981, 1982 and 1983 respectively. In the 1.5L size, case prices for Imports exceeded those of domestics by $9.67, $9.66 and $9.53 in the 3 years under study. Given the variations other factors could introduce in the calculated average prices, we do not consider these minor changes significant. |