Holland America Reduces Bring-On Wine Allowance

[LindaM]

What I don't understand is that if the cruise lines cannot sell 1 bottle of wine per person, why have they not figured out that if they want to sell it, they have to "mark it down". They figured out holding "happy hour" on the ship to sell more drinks. I don't agree that people don't drink wine for health reasons. I believe it is quite the opposite.

 

Bruce...if you are reading this, do you know the reason why cruiselines insist on drastically marking up wine, even though they are not selling it? I assumed they marked it up to make money off of it. But, apparently that is not the case. They could probably sell tons if they charged $15 for a $10 bottle. People would overlook overpaying by $5. The only issue is they would need to hire more wine stewards.

[dogo88]

What I don't understand is that if the cruise lines cannot sell 1 bottle of wine per person, why have they not figured out that if they want to sell it, they have to "mark it down". They figured out holding "happy hour" on the ship to sell more drinks. I don't agree that people don't drink wine for health reasons. I believe it is quite the opposite.

 

Bruce...if you are reading this, do you know the reason why cruiselines insist on drastically marking up wine, even though they are not selling it? I assumed they marked it up to make money off of it. But, apparently that is not the case. They could probably sell tons if they charged $15 for a $10 bottle. People would overlook overpaying by $5. The only issue is they would need to hire more wine stewards.

 

I think the problem with that perspective is it's only true in an open marketplace, with competition and such. Onboard they have a "walled garden" effect, no competition. The last piece was what you can bring onboard. Once they shut off the unlimited, they can offer whatever they want, at whatever price they want. You will have three options. Buy it, don't buy it, or don't go on their ships.

 

Dan

[RichJan]

We have become fans of HAL and despite some glitches we shall continue to sail with this company though we may, from time to time, go with others because of either destination, duration and other factors.

 

As concerns taking wine on board, we've done it every time we've cruised, one bottle each, without any problems. We ask for ice from our room steward and chill the bottle(s) when necessary and drink it in our room, usually before dinner. I've also brought on scotch, again without any problems and again obtaining ice from the room lads. In both cases there has been no hassle of any kind.

 

We also purchase a bottle every evening with dinner and in most cases, drink it all at that sitting, rarely resealing it for next evening's meal. While we do not spend the money on over inflated bottles of wine, sticking usually to the House Selection for both colours, what we lack on price points, we make up for on quantity. So, it's a win win situation for HAL and us.

 

I think the ticket is to be discrete and not flagrantly flaunt the bottles you bring on board. We have always placed the hooch in our larger bag.

 

We shall continue to do this.

 

Richard

[kazu]

We have become fans of HAL and despite some glitches we shall continue to sail with this company though we may, from time to time, go with others because of either destination, duration and other factors.

 

As concerns taking wine on board, we've done it every time we've cruised, one bottle each, without any problems. We ask for ice from our room steward and chill the bottle(s) when necessary and drink it in our room, usually before dinner. I've also brought on scotch, again without any problems and again obtaining ice from the room lads. In both cases there has been no hassle of any kind.

 

We also purchase a bottle every evening with dinner and in most cases, drink it all at that sitting, rarely resealing it for next evening's meal. While we do not spend the money on over inflated bottles of wine, sticking usually to the House Selection for both colours, what we lack on price points, we make up for on quantity. So, it's a win win situation for HAL and us.

 

I think the ticket is to be discrete and not flagrantly flaunt the bottles you bring on board. We have always placed the hooch in our larger bag.

 

We shall continue to do this.

 

Richard

 

Unless the policy is amended - you will not be able to do this any longer (of course the scotch was not allowed anyways). after January 31st. Prior to that you were always allowed to bring wine onboard. Discretion may be the better part of valor -but if the rules don't permit it.......

[dockman]

Having been addicted to cruising since the mid-1980's, and having been a casual wine aficionado for longer than that, my recollections about wine consumption on board a cruise ship include the following:

 

Bottle pricing

 

Back in the day, the wine list prices on cruise lines (including HAL) were never more than double retail for standard labels - lower than the norm for white tablecloth restaurants where triple is the norm. (I'd test the theory by checking Kendal Jackson Vintners Reserve Chard retail at a regular retailer before boarding. Back in the 1980's a KJ Vintners sold for $7-8 at the local wine shop. HAL listed it at $18 to $20. Restaurants in town asked $27-$35.

 

Recent cruise line pricing has crept up to triple, or more, which has encouraged some to bring their own wine on board and others to skip wine and drink beer, or full fledged cocktails.

 

 

The reduced consumption of wine, then, is simply a result of the pricing strategy.

 

Wine sharing

 

Back in the day it was customary at dinner on a cruise ship that a bottle of wine should be shared among all at the table. That means ordering wine at an 8 top could result in the person (couple) getting only a single glass each per bottle. Normal etiquette back then was that those participating in the sharing would take their turn buying so that, roughly, the cost of wine was shared equally among everyone.

 

This practice naturally caused an increase in wine consumption, back then.

 

These days, with open dining hours and multiple dining venues, folks rarely dine with the same people all 7 nights on a 7 night cruise. Also the idea of sharing the bottle has, unfortunately, become archaic. This change has probably reduced the overall consumption of wine.

Healthy living

 

The constant "healthy living" drumbeat has had a significant impact on sales of alcoholic beverages in general. The "peer pressure" of ordering a drink in a lounge or at dinner has pretty much disappeared (can you say Perrier?) so that wine, which was a popular way for those who were self conscious about declining a hard drink, is no longer a normal alternative.

 

* * *

 

In sum, there really is a reduction in wine consumption caused by a combination of economic, societal and health influences.

 

I often wonder if cruise lines would reduce the prices so you could buy a bottle of basic wine for no more that twice what it would cost in a supermarket if they would not end up selling five times as much.....seems the cheapest bottle is at least $20 bucks for a $5 bottle of wine.....frankly it certainly isn't difficult for a couple to drink a bottle of wine at dinner OR if you are alone and want to be nice and offer your tablemate a glass ....so to drink the cheapest wine they have would cost you at least $23 with service charge every day.....while that may not seem a lot it does in fact add up pretty quickly...and with the volume of wine that carnival corp could be buying you can be sure that they could get a HELL of a deal on some inexpensive chile/Australian/napa valley wines....

 

So does ANY cruise line have the gonads to at least TRY the concept of REDUCING wine prices to see if their actual sales and profits might be HIGHER?...and certainly a lot of their guests would be much happier....they can still GOUGE with la de da wines for those who don't mind shelling out $50 plus or more for a bottle of something but how about some simple basic bottle of white or red wine for about $10 a bottle...what a concept..cut the price and increase sales/profits...gee I wonder why about a million other businesses worldwide never thought of that ...oh wait...they did and it works more often than not.

 

Sadly it seems that a lot of today's cruise execs NEVER ever think "outside the box"...gee maybe if we reduced prices on wine and shore excursions we would sell twice as much and end up making MORE money and at the same time INCREASE guest satisfaction and word of mouth referrals rather than having guests COMPLAINING more and more on the web about being GOUGED ? If 1000 people cancel Holland cruises how much more wine will they have to sell to make up for that lost revenue?

 

Come on cruise execs....at least experiment a bit rather than sitting on your butts doing NOTHING but raising prices on everything and pissing off some of your very best customers.

[MR NW GUY]

I was just reflecting on what could have been.

 

When you set up that overly complicated yes or no poll the other day,the chips just didn't fall your way.

 

Had the poll shown that the new wine policy would impact 70% of the passengers,you would have been the hero.

 

The postings would have been something like

 

"Thanks For Posting This Poll"

 

"Thanks For Taking The Time To Set Up Such An Eloquent Poll"

 

You would have been more popular than Vince Lombardi in Green Bay,or Derek Jeter in NYC

 

You would have been the new king bee of cruise critic. There probably would be a bronze bust of you in the Prinsendam's crows nest.

 

Unfortunately the numbers didn't shake out properly

 

Then we found out the poll was worded incorrectly was meaningless and you were just a pot stirrer. What might have been sigh

you are sooo right...

 

It could have and should have been a life changing event...

 

I just had no idea that some people would have such a difficult time answering a yes or no question...

 

but, all jest aside... It really was becoming evident that the vocal minority did not like the results and they ruined what was actually becoming interesting topic.

 

CHEERS!

[papadicrusty]

I just finished a 22 night Athens to Barcelona cruise on the Noordam. I brought several bottles from home (CA) and purchased a few more bottles in ports. I also bought a few bottles aboard ship. I just sent the following to Mr. Kruse stating my feelings:

Hello Mr. Kruse' date='[/i']

Through Christine Ferris, you recently responded to my email regarding your new wine policy effective next year. I had then then stated that my then upcoming cruise might just be my last one with HAL and now that the cruise has finished (Athens to Barcelona via Noordam) I can easily say that it will be my last with HAL. I will now be using other cruise lines. Read on to find out why..

We are not wine snobs but we do enjoy our favorite wines. That's why we like to bring our wines aboard. We did just that with this last cruise but we also tried some of the wines on board. The selection of wines on board is abysmal. And we found that the wines that we might have liked WERE VERY OFTEN NOT AVAILABLE. The worst case was on our last night on ship when we ate at the Lido in order to have time to pack. It took more than a half hour to get a bottle of wine to drink. TOTALLY UNACCEPTABLE. We first wanted Nobilo Sauvignon Blanc but of course it was not available and she instead brought some Washington State Sauv Blanc that was not acceptable. So we asked for any other Sauvignon Blanc, and no, there was nothing. So we found a Pinot Noir (Meridian) that we would like and a second choice of the Mark West. She returned with 4 bottles of Red wine, none even close to a Pinot Noir. So we opted for Chardonnay which she was able to find. While pouring it, she broke a glass which shattered on the table - in my food and in my wine glass. I needed to go get more food and then the wine steward came back with small PLASTIC glasses so that she would not break another. One had some white wine in it but by no means enough to justify the loss of wine in my glass as well as the time lost, dinner lost, and the whole sordid situation. In any other venue, there would have been some sort of compensation for this, like a free bottle of wine. That doesn't happen on Holland America though. The only thing she offered was to go and get more food for me. And I’m sure she was not authorized to do any more than that. Which seems to be the case with ANY mishaps that occur. They lose a shirt in the laundry and the only thing that they can do is apologize. Breakfast comes either a half hour early or a half hour late to the room (a 90 minute space) and no one can do anything about it.

And if you are continuing to read, we found the port information woefully lacking. I admit that I would normally have done a lot more homework before the cruise but could not this time. Maps of a port that were provided in the room were not helpful. They were often inaccurate and there’s no excuse for that. That’s easily fixable. But I suppose the focus is to sell more shore excursion making Port Info a second though for HAL.

This letter may make it sound that we are spoiled American tourists. Not true. We are quite cognizant of the cultural differences between ourselves and the cruise staff. The Indonesian crew members are especially wonderful. But they are only able to work with what they are given and it does impact your passengers in a big way. Some passengers may feel it more than others. Personally, I’ve seen the degradation of your overall product over the past several years and that’s why I’ll be choosing other carriers in the future.

It seems to me that Princess and NCL each still have a sensible wine carry-on policy so I’ll now be going with them. I’ll gladly pay $15 a bottle upfront for each that I carry on upon embarkation. And the same $15 when I find I find a wine in a port that I’d liked (as I did in Dubrovnik a couple weeks ago) and be able to drink it with dinner on the ship. The only way that I will come back to HAL is if you upgrade (only slightly, good wines aren’t that expensive) your wine selections. You’re already charging an upgraded price, now just make the wines match.

 

Hey, you were the one drinking all the Nobilo Sav Blanc and that nice French Pinot!!

 

We were on the same cruise and we aren't 'spoiled American cruisers', we are 2nd time cruisers from Perth Western Australia. Your post resonated so strongly. My wife & I like NZ Sav Blanc, Pinot Noir(NZ or France) and I'm partial to a Beaujolais. No Nobilo for the first half of the cruise, the Pinot and the Beaujolais ran out, with no comparable alternative! The selection is very US centric (don't get me started on the beer!). Only prior cruise was aboard Dawn Princess, a clear step above in my opinion!

 

Closing points re the carry-on wine.

If I was teetotal, how much would they make in booze sales?

Do non drinkers pay more for their cruise? Do drinkers 'subsidise'?

Cruise lines liken themselves to floating Hotels. When were you last searched for 'contraband wine' when returning to your hotel room?

[LindaM]

I think the problem with that perspective is it's only true in an open marketplace, with competition and such. Onboard they have a "walled garden" effect, no competition. The last piece was what you can bring onboard. Once they shut off the unlimited, they can offer whatever they want, at whatever price they want. You will have three options. Buy it, don't buy it, or don't go on their ships.

 

Dan

 

I understand what you are saying. However, other cruiselines such as Celebrity and RCI already have that policy in effect, and apparently they still aren't selling wine.

 

You'd think the execs and members of that big cruiseline group would think about this. Overcharging isn't working, according to Bruce's statistics.

 

I guess the next big idea is seeing if they can make money on a corkage fee, although Celebrity and RCI do not have an unlimited with corkage policy like Princess.

[dogo88]

I understand what you are saying. However, other cruiselines such as Celebrity and RCI already have that policy in effect, and apparently they still aren't selling wine.

 

You'd think the execs and members of that big cruiseline group would think about this. Overcharging isn't working, according to Bruce's statistics.

 

I guess the next big idea is seeing if they can make money on a corkage fee, although Celebrity and RCI do not have an unlimited with corkage policy like Princess.

 

I guess what's clear to us isn't to the execs.

 

Dan

[kazu]

I guess what's clear to us isn't to the execs.

 

Dan

 

you got that one right:):) They probably have to do a study that cost x$$$ and then refer to the bean counters for more $$$ and then it has to go to a meeting for more $$$.

 

thinking outside of the box is not something that they have done yet. - at least not for a long, long time:p

[taxmantoo]

I guess what's clear to us isn't to the execs.

 

Dan

 

you got that one right:):) They probably have to do a study that cost x$$$ and then refer to the bean counters for more $$$ and then it has to go to a meeting for more $$$.

 

thinking outside of the box is not something that they have done yet. - at least not for a long, long time:p

 

Why do people always blame the executives when they take positions the clients do not agree with or do not understand?

 

I am not saying they are all geniuses or that I agree with the policy decision discussed here but it seems to me that Holland America would not have survived profitably for over 100 years by hiring bozos. :rolleyes: On the other hand, some people here have a hard time managing the relatively small budget required to afford a $25 airline surcharge to pack a suit for formal night, the cost of a few bottles of wine regardless of the huge markup charged by the cruise line, the amount automatically withheld by the cruise line has gratuities or the cost of a few minutes worth of internet.

[startwin]

Why do people always blame the executives when they take positions the clients do not agree with or do not understand?

 

I am not saying they are all geniuses or that I agree with the policy decision discussed here but it seems to me that Holland America would not have survived profitably for over 100 years by hiring bozos. :rolleyes: On the other hand, some people here have a hard time managing the relatively small budget required to afford a $25 airline surcharge to pack a suit for formal night, the cost of a few bottles of wine regardless of the huge markup charged by the cruise line, the amount automatically withheld by the cruise line has gratuities or the cost of a few minutes worth of internet.

 

Feel better now you've got that off your chest?:p

[taxmantoo]

Feel better now you've got that off your chest?:p

 

Much ;)

[startwin]

Much ;)

 

I thought you would:D

[BruceMuzz]

I often wonder if cruise lines would reduce the prices so you could buy a bottle of basic wine for no more that twice what it would cost in a supermarket if they would not end up selling five times as much.....seems the cheapest bottle is at least $20 bucks for a $5 bottle of wine.....frankly it certainly isn't difficult for a couple to drink a bottle of wine at dinner OR if you are alone and want to be nice and offer your tablemate a glass ....so to drink the cheapest wine they have would cost you at least $23 with service charge every day.....while that may not seem a lot it does in fact add up pretty quickly...and with the volume of wine that carnival corp could be buying you can be sure that they could get a HELL of a deal on some inexpensive chile/Australian/napa valley wines....

 

So does ANY cruise line have the gonads to at least TRY the concept of REDUCING wine prices to see if their actual sales and profits might be HIGHER?...and certainly a lot of their guests would be much happier....they can still GOUGE with la de da wines for those who don't mind shelling out $50 plus or more for a bottle of something but how about some simple basic bottle of white or red wine for about $10 a bottle...what a concept..cut the price and increase sales/profits...gee I wonder why about a million other businesses worldwide never thought of that ...oh wait...they did and it works more often than not.

 

Sadly it seems that a lot of today's cruise execs NEVER ever think "outside the box"...gee maybe if we reduced prices on wine and shore excursions we would sell twice as much and end up making MORE money and at the same time INCREASE guest satisfaction and word of mouth referrals rather than having guests COMPLAINING more and more on the web about being GOUGED ? If 1000 people cancel Holland cruises how much more wine will they have to sell to make up for that lost revenue?

 

Come on cruise execs....at least experiment a bit rather than sitting on your butts doing NOTHING but raising prices on everything and pissing off some of your very best customers.

 

Many cruisers are rather limited in their cruising experiences and even more limited in their understanding of cruise industry finances.

It is very easy to say," Reduce the selling price by 50% and you will sell twice as many and make far more money".

Anyone with basic math skills can demonstrate why that doesn't work.

If it did work, you can bet that General Motors, Coca-Cola, and McDonalds would have started doing it many years ago.

 

McDonalds sells you a quart of Coca-Cola, badly made from syrup, in a paper cup half filled with ice, that costs them just a few pennies to make. You pay more than a dollar for it. That's quite a substantial mark-up. One might even claim it is downright theft. Is anyone complaining?

 

Starbucks makes you stand in line - twice - to get a paper cup of coffee that costs just a few pennies to produce. You are quite happily paying $32.00 per gallon for it. Does that seem like some kind of total ripoff to you? I don't hear anyone screaming..............

 

Have you visited an American movie theater lately? Try to buy a chocolate bar or a box of popcorn in the lobby. You may need to get a 2nd mortgage to afford them. People do complain, but they keep on buying..................

 

Last year, Americans paid over $14 BILLION for bottled drinking water. Most of that water came from city taps in Atlanta and Dallas. Chances are that the tap water in your home is better quality - and costs you basically nothing. Nobody seems to care. They keep on sucking on those trendy bottles - and throwing them in land-fills all over America..

 

By the way, Americans paid just $12 BILLION for gasoline that same year (something you cannot make or get at home for a few pennies) and screamed bloody murder at the high prices.

 

I stayed at the Hilton Hawaiian Village recently. A 12 oz can of coke from a vending machine there is now $3.25. Hilton pays less than 50 cents for that coke. A 650% markup. The machines are often empty because so many people are using them. Are people really that dumb?

 

The cruise line execs ARE paying attention - and learning a great deal about you, from the points listed above.

 

Let's look at costs and profits. Many people do not understand them.

 

A land-based Bar in North America hopes to have an average beverage cost of 8% to 12% in order to stay profitable.

Simply put, if the drink costs them 8 cents to make, they charge you a dollar for it. It's actually a bit more complicated than that, but you get the picture.

 

A cruise ship works a bit differently. Most major cruise lines try to keep their beverage costs under 20% most of the time. Transportation, handling, breakage, and theft push their costs higher. The old urban myth of duty free costs keeping their costs down is just that - an old urban myth. Most cruise lines today find is cheaper to buy alcohol from major distributors (tax included), then pay a fortune to fly it halfway around the planet, and pay some local union another fortune to break/steal part of it and deliver the remainder to the ship. Going "Duty-Free" through a government bonded warehouse is far more expensive, time-consuming, difficult - and just not worth it.

 

So if a cruise line drink costs them 20 cents to make, they charge you a dollar for it. Pretty simple so far, no?

But so far we are talking only about "drinks" - and not wines.

 

Suppose a cruise line wants to sell a lot of wine.

They need to maintain their 20% cost (or lower) to remain profitable.

The bottle of wine costs them $5. Selling price needs to be $25 to make the 20% cost.

 

I haven't seen a bottle of wine with a $5 cost on a ship in quite some time.

The cheapest bottle on my ship today costs us just over $8. It's not very good. Nearly half the cost was flying it from California to Hong Kong to get it onto the ship.

That requires a selling price of just over $40 to maintain a 20% cost.

 

Let's look back at that bar on land.

His costs are generally lower and he needs a smaller cost percentage to stay profitable.

He doesn't have to pay the interest on a $750 MILLION mortgage, and his monthly fuel bill is substantially below the $2 MILLION (and rapidly climbing) that I pay every month.

 

Of course, he doesn't get to sell cruises to make a profit.

But guess what - my company also makes no profit selling cruises. We sell them at cost most of the time, and below cost to fill those last 50 cabins every week.

 

He also does not sell much wine.

Most Americans are not wine drinkers; it is mainly just people living on the California Coast, a few areas in the Northeast, and South Florida. Those are the big three wine markets in America; the ONLY big wine markets in America.

 

But he is also very lucky. Wine almost always has a higher cost of sales. The more wine he sells, the higher his costs go - and the lower his profits fall.

He can easily sell whiskey, vodka, and even beer with costs below 8%. But not wine.

Does he want to sell wine to you? No.

 

My onboard beverage manager has the same problem - but even worse. His costs on spirits and beer are a bit higher than the land-based bar, but not by much. That's why my ship can sell you a cocktail for about the same price you pay at a Holiday Inn, and still maintain a reasonable +/- 20% cost of sales.

But his wine costs are much higher than those paid on land - mostly due to transportation and handling costs.

Every time he sells you a glass of wine instead of a whiskey, his costs go up and his onboard revenue and profit goes down.

The bulk of his salary comes in the form of an incentive bonus that is based on cost of sales, and overall revenue.

Does he want to sell wine to you? No.

Would he ever suggest lowering the wine prices so that he can sell more, completely sabotaging his costs, killing his monthly salary, and rather quickly losing his job? Not a chance.

 

Would his Corporate Beverage VP ever want to lower wine prices? No way.

The result would cost the company millions in additional costs and lost revenues.

 

Would he ever propose having you pay a $20 corkage fee to bring your own wine onboard?

No way. That gives you 4 or 5 drinks for $20 revenue and no cost.

But selling you a bottle of wine - or even better - 4 or 5 cocktails, would get him more revenue and more profit despite the costs.

 

So now we know the REAL reason why ALL the cruise lines cannot manage to sell even one bottle of wine per passenger per cruise.

We really don't want to. We simply cannot afford it.

The passengers who drink other beverages are subsidizing your cruise.

 

So, all you wine mavens out there (myself proudly included), how much do you think the cruise lines really value your business?

[MR NW GUY]

Taxmantoo,

 

You are spot on!

 

The issue is not the policy, it is the cost and limited budgets that some of the folks here are really concerned about.

 

The recession appears to be over and the ships are filling up... so the cost is going to go up. I think that is how the "free market" place works. Sunshine and warm days help clear the mind.

 

:rolleyes::rolleyes::rolleyes::rolleyes:

[Mimosa09]

To BruceMuzz,

Interesting read and point of view. So why do some of the other lines have a better list of wines on board to select from? (Think I missed that part in your explanation). Even with the mark-up that HAL apparently has on their wines compared to the other cruise lines, I'm also reading that Hal has an abysmal list to chose from.

Thanks for your posting. Coming from someone who appreciates wine who lives in the NW (near Idaho of all places!)

-Rose

[MR NW GUY]

Many cruisers are rather limited in their cruising experiences and even more limited in their understanding of cruise industry finances.

It is very easy to say," Reduce the selling price by 50% and you will sell twice as many and make far more money".

Anyone with basic math skills can demonstrate why that doesn't work.

If it did work, you can bet that General Motors, Coca-Cola, and McDonalds would have started doing it many years ago.

 

McDonalds sells you a quart of Coca-Cola, badly made from syrup, in a paper cup half filled with ice, that costs them just a few pennies to make. You pay more than a dollar for it. That's quite a substantial mark-up. One might even claim it is downright theft. Is anyone complaining?

 

Starbucks makes you stand in line - twice - to get a paper cup of coffee that costs just a few pennies to produce. You are quite happily paying $32.00 per gallon for it. Does that seem like some kind of total ripoff to you? I don't hear anyone screaming..............

 

Have you visited an American movie theater lately? Try to buy a chocolate bar or a box of popcorn in the lobby. You may need to get a 2nd mortgage to afford them. People do complain, but they keep on buying..................

 

Last year, Americans paid over $14 BILLION for bottled drinking water. Most of that water came from city taps in Atlanta and Dallas. Chances are that the tap water in your home is better quality - and costs you basically nothing. Nobody seems to care. They keep on sucking on those trendy bottles - and throwing them in land-fills all over America..

 

By the way, Americans paid just $12 BILLION for gasoline that same year (something you cannot make or get at home for a few pennies) and screamed bloody murder at the high prices.

 

I stayed at the Hilton Hawaiian Village recently. A 12 oz can of coke from a vending machine there is now $3.25. Hilton pays less than 50 cents for that coke. A 650% markup. The machines are often empty because so many people are using them. Are people really that dumb?

 

The cruise line execs ARE paying attention - and learning a great deal about you, from the points listed above.

 

Let's look at costs and profits. Many people do not understand them.

 

A land-based Bar in North America hopes to have an average beverage cost of 8% to 12% in order to stay profitable.

Simply put, if the drink costs them 8 cents to make, they charge you a dollar for it. It's actually a bit more complicated than that, but you get the picture.

 

A cruise ship works a bit differently. Most major cruise lines try to keep their beverage costs under 20% most of the time. Transportation, handling, breakage, and theft push their costs higher. The old urban myth of duty free costs keeping their costs down is just that - an old urban myth. Most cruise lines today find is cheaper to buy alcohol from major distributors (tax included), then pay a fortune to fly it halfway around the planet, and pay some local union another fortune to break/steal part of it and deliver the remainder to the ship. Going "Duty-Free" through a government bonded warehouse is far more expensive, time-consuming, difficult - and just not worth it.

 

So if a cruise line drink costs them 20 cents to make, they charge you a dollar for it. Pretty simple so far, no?

But so far we are talking only about "drinks" - and not wines.

 

Suppose a cruise line wants to sell a lot of wine.

They need to maintain their 20% cost (or lower) to remain profitable.

The bottle of wine costs them $5. Selling price needs to be $25 to make the 20% cost.

 

I haven't seen a bottle of wine with a $5 cost on a ship in quite some time.

The cheapest bottle on my ship today costs us just over $8. It's not very good. Nearly half the cost was flying it from California to Hong Kong to get it onto the ship.

That requires a selling price of just over $40 to maintain a 20% cost.

 

Let's look back at that bar on land.

His costs are generally lower and he needs a smaller cost percentage to stay profitable.

He doesn't have to pay the interest on a $750 MILLION mortgage, and his monthly fuel bill is substantially below the $2 MILLION (and rapidly climbing) that I pay every month.

 

Of course, he doesn't get to sell cruises to make a profit.

But guess what - my company also makes no profit selling cruises. We sell them at cost most of the time, and below cost to fill those last 50 cabins every week.

 

He also does not sell much wine.

Most Americans are not wine drinkers; it is mainly just people living on the California Coast, a few areas in the Northeast, and South Florida. Those are the big three wine markets in America; the ONLY big wine markets in America.

 

But he is also very lucky. Wine almost always has a higher cost of sales. The more wine he sells, the higher his costs go - and the lower his profits fall.

He can easily sell whiskey, vodka, and even beer with costs below 8%. But not wine.

Does he want to sell wine to you? No.

 

My onboard beverage manager has the same problem - but even worse. His costs on spirits and beer are a bit higher than the land-based bar, but not by much. That's why my ship can sell you a cocktail for about the same price you pay at a Holiday Inn, and still maintain a reasonable +/- 20% cost of sales.

But his wine costs are much higher than those paid on land - mostly due to transportation and handling costs.

Every time he sells you a glass of wine instead of a whiskey, his costs go up and his onboard revenue and profit goes down.

The bulk of his salary comes in the form of an incentive bonus that is based on cost of sales, and overall revenue.

Does he want to sell wine to you? No.

Would he ever suggest lowering the wine prices so that he can sell more, completely sabotaging his costs, killing his monthly salary, and rather quickly losing his job? Not a chance.

 

Would his Corporate Beverage VP ever want to lower wine prices? No way.

The result would cost the company millions in additional costs and lost revenues.

 

Would he ever propose having you pay a $20 corkage fee to bring your own wine onboard?

No way. That gives you 4 or 5 drinks for $20 revenue and no cost.

But selling you a bottle of wine - or even better - 4 or 5 cocktails, would get him more revenue and more profit despite the costs.

 

So now we know the REAL reason why ALL the cruise lines cannot manage to sell even one bottle of wine per passenger per cruise.

We really don't want to. We simply cannot afford it.

The passengers who drink other beverages are subsidizing your cruise.

 

So, all you wine mavens out there (myself proudly included), how much do you think the cruise lines really value your business?

 

You last sentence will settle this debate once and for all...

 

I bet the policy will stick and the less profitable passengers will either pay up or stay home..:rolleyes::rolleyes::rolleyes::rolleyes:

[PunkiC]

So, all you wine mavens out there (myself proudly included), how much do you think the cruise lines really value your business?

 

And that, as they say, is the $64,000.00 question.

 

Do they really think that wine drinkers will switch to hard liquor if they overprice the wine? I know I wouldn't, but then my eating and drinking habits must be pretty atypical. I haven't had a soft drink or stopped at a McDonald's restaurant (except once to use the toilet in London) in decades and Coke and McDonalds seem to be clicking right along without me.

 

Moreover, while we sank as much money as we possibly could into Starbucks when they first went public, we never visit Starbucks stores or kiosks. We do buy lots of Via at Costco so we can be sure to have coffee like when we travel and cruise. I really do hope they don't start confiscating our Via. ;)

 

I also board lot a Perrier. Sometimes a whole case at embarkation and often several bottles at each port. I know I can always drink ship water, but I love Perrier. That is another thing that I really like about being Princess elite. They stock our fridge with lots of silly soft drinks but will trade them all out for Perrier so I don't have to lug so much on the ships.

 

I will definitely leave HAL if they don't modify their wine policy, but then I might be the only one who will, so they might not care about losing me. :-(

 

Since this discussion began, I have been looking around at folks in restaurants to see what they are drinking and most of them are drinking beer or wine. I have noticed on the ship that there are a lot of folks who just drink water or iced tea, so it probably is a cost related issue.

 

I rarely see folks drinking hard liquor but then I don't frequent bars.

[BruceMuzz]

To BruceMuzz,

Interesting read and point of view. So why do some of the other lines have a better list of wines on board to select from? (Think I missed that part in your explanation). Even with the mark-up that HAL apparently has on their wines compared to the other cruise lines, I'm also reading that Hal has an abysmal list to chose from.

Thanks for your posting. Coming from someone who appreciates wine who lives in the NW (near Idaho of all places!)

-Rose

 

The answer to your question is very simple.

Some cruise lines cater to a more switched-on demographic, and they feel the need to hire more knowledgeable corporate people who really know wines. Good wines do not necessarily have to be costly. But coming up with great wine values takes time, dedication, skill, effort, and financial investment. Even after all that, the wine drinkers will still have a negative effect on revenue and profits.

 

Other cruise lines really don't care to get involved.

When you think about it, if a cruise line really doesn't care about selling something that only hurts their overall profits, will they really bother to spend extra time, money, and effort to make the sales or the product better? Do they want to attract passengers who will only hurt the bottom line?

Overall, (and very sadly) serious wine drinkers are a minuscule sub-segment of the cruising public. And they (we) are generally considered a negative influence on revenues and profits. Would you as a manager (relying on revenue-based bonuses to support your family) want to invest any time, effort or money into this group who guarantee to reduce your earnings?

 

In case anyone wants to assign blame or point fingers, I suggest you look at the cruise lines - all of whom listened to the cruising public and gave them exactly what they demanded: the rock bottom cheapest possible cruise experience where anything of any quality requires substantial additional payment.

[Omega1]

 

In case anyone wants to assign blame or point fingers, I suggest you look at the cruise lines

 

Perhaps a future strap line for Holland America ought to be 'A signature of mediocrity'

[kazu]

[/u][/b][/color]

 

You last sentence will settle this debate once and for all...

 

I bet the policy will stick and the less profitable passengers will either pay up or stay home..:rolleyes::rolleyes::rolleyes::rolleyes:

 

and the more profitable passengers for whom it's important will find other lines to cruise on or, at the very least do some serious looking and comparisons.

[dogo88]

and the more profitable passengers for whom it's important will find other lines to cruise on or, at the very least do some serious looking and comparisons.

 

I Agree.

[MR NW GUY]

and the more profitable passengers for whom it's important will find other lines to cruise on or, at the very least do some serious looking and comparisons.

I think you are confused again about what I said....

 

The more profitable passengers are probably already booking at peak times, spending money on shore excursions and don't care about new wine policy because they already buy wine on board.

 

So, what cruise line will you be switching to?

:rolleyes::rolleyes::rolleyes:

[magandab]

I've stayed out of this but today's Bizarro comic seemed spot on.

 

http://www.arcamax.com/thefunnies/bizarro/s-1401605