“Fixing” The Wine Sales Results?
The Hypergigantitholic (that’s a technical term in the wine industry meaning "BIG") wine company known a Constellation seems to find itself in a bit of an embarrassing situation down in Australia.
According to reports, in an attempt to influence sales trials at a dining chain that was testing the popularity of a couple Constellation brands before adding them to their list, Constellation told their employees to go to these restaurants and buy the wine in order to "maximize volumes" during the 8-week trial.
Word of this maneuver got out when emails asking employees to buy a bottle a week at the chain then bill it back to the company were leaked:
""We would implore each of you to participate in this activity as
it is vitally important that we maximise volumes during the
remainder of the trial period. Line managers, as leaders of our
business, can you ensure your direct reports are aware of this and
are participating to ensure Constellation Europe is awarded this
lucrative contract. There is now two weeks remaining of the trial
and it is key that we pull through every bottle of Constellation
wine … to see us over the line."
Constellation claims it was actually undertaking a "mystery customer exercise" just to see how the wine was being presented during the trial period.
For the sake of argument, because we don’t have ALL the facts, that Constellation’s request of its employees to go buy the wine was actually an attempt to influence volume figures during the eight week trial.
Is any one surprised that this sort of thing happens? I wouldn’t be.
A rather benign example of this sort of thing happening is what takes place at charity wine auctions. I can report first-hand knowledge of "consortiums" of buyers coming together, financed by a winery, to assure the winery’s lot at the auction goes for VERY HIGH prices in order to garner prestige from the high price at which the wine sells. Now, while somewhat unethical, this doesn’t compare to what Constellation is accused of, but it speak to the notion that fixing results is a part of business.
I have a friend who works for a major beer distributor in the area who has a company provided expense account to buy bottles of that beer for anyone she likes to at a bar. She will provide beer for parties that she’s not hosting also. Of course, she’s doing it to get people to drink their beers. But she does like to joke that the company’s stock just dropped so she’s going to have a party so she can buy a lot of the product.
I’m not surprised that Constellation would do that, nor am I that upset about it. If they were in direct competition with another wine company for that account, do you really believe that the other company wasn’t doing the same thing?
Why are people shocked at this? The same technique has been used for decades to pump up the sales figures in the music and publishing industries. The use of automatic info gathering technology such as Soundscan has altered the terrain a bit, but where there’s an accounting process, there’s a way to game it.
The most surprising thing is that the Constellation manager made the intern-level error of leaving an email trail that could be leaked to the media. I wonder if similar blunders will be revealed on the part of his competitors: Blossom Hill, Wolf Blass and Fetzer?
DF
Who ever said that capitalism is pretty? Large chain book stores charge publishers to have major displays at the front of the stores, and we all know that large wine producers in this country use all sorts of deals and inducements to keep their products on certain shelves at eye level. This is business as usual, meaning, you can’t trust anybody.
The company that was running the trial to decide which distributer got the lucrative (£80m = $160m pa) account is known for its shady business practices – such as securing premium branded stock on the grey market and then shaking down its UK agent to get it delisted from its venues. So I guess you could say that it is a case of one dirty company playing the same dirty games as the other. In these days of “whistleblower” and email trails, it was incredibly stupid of that executive to send that email.