Coca-Cola did it. In September last year, Coke launched its ‘perfectly small’ 250ml Coke, Vanilla Coke, Diet Coke, Coke Zero, Sprite, Lift and Fanta cans with $2 maximum retail price marked clearly on them.
In December, Diageo followed suit. It predetermined the retail price of its new line of Smirnoff-branded wine coolers, writing the recommended retail price clearly on the exterior of the products. And bottle shop owners are up in arms.
The Smirnoff Coolers Limited Edition range is made up of Electric Citrus (lemon flavour); Berry Fusion (raspberry flavour); and Passion Twist (passionfruit flavour). They are available in packs of four for a recommend retail price of $14.99.
Diageo told PKN sister publication, Food & Drink Business, “While this is the first time we have displayed a price mark on a Diageo product in the Australian market, experience from other markets has shown that price marked packs are increasingly popular with consumers seeking reassurance they are getting value for money. This is particularly true when you bring a new or limited edition product to market.
“Most of our customers have welcomed this initiative and, like us, are eager to see the consumer response to it. The decision of final price sits with our customers and any price we suggest is recommended only.”
But liquor retailers are unconvinced and unimpressed.
Porter's Liquor general manager Giuseppe Minissale told Beer, Wine and Spirits Industry publication, TheShout, “In the long term, if this becomes the norm then they would be setting the margin expectations per SKU and the bigger customers would get a better margin at that price. Nobody’s given me the justification on why they’ve decided to put a price point on it.”
According to Independent Liquor Retailers spokesman, Corey Leeson, Diageo is placing more pressure on profit margins that are already shaved very thin, and setting a dangerous precedent for other drink makers.
According to alcohol industry consultant and Sydney University senior marketing lecturer, Rohan Miller, the company is trying to do the opposite – stop the discounting that downgrades brands and ranges.
"For consumers, price is the greatest predictor of quality. So they're trying to position their product as a premium-priced one, negating the impact of retailers advertising cheaper prices," he stated.
The controversy has muted the news that Smirnoff wanted to get out – that the new Smirnoff Coolers are based on wine, which is another first for the vodka brand in Australia.
