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Holland America Reduces Bring-On Wine Allowance

LauraS

By LauraS,
in Holland America Line

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MR NW GUY

MR NW GUY

Posted
Posted
I'm taking bets on how long before we read

 

 

 

"Brucemuzz Has No Clue What He's Talking About"

As soon as the sun rises in the north perhaps?

 

Or, after the first bottle of "Thunderbird" kicks in?

 

Is Thunderbird even available anymore? Before the comments kick in,,, I have never touched a glass of Thunderbird or 2-buck Chuck. My deceased mother who was an alcoholic and always found a way to have cheap booze near by bought that stuff along with a bottle vodka. Umm... let's see where this topic goes now.

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LindaM

LindaM

Posted
Posted
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?

 

All I can say is "Wow"!! What an eye opener. Thanks for taking the time to share.

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LindaM

LindaM

Posted
Posted
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:

 

I am not Kazu. We are most likely going to Regent. We will probably try Seabourn, depending on their smoking policy. We've sailed Regent a couple of times. I didn't think they were that different from our favorite Prinsendam, and the cost in the end not that much higher. We pay a premium to sail on Prinsendam, anyway. Regent puts an effort in choosing inexpensive wines that are quite good. Even though everything is included, the drink selections are of a better quality than what we could get with HAL's new package.

 

I would guess if HAL doesn't institute a corkage, those from the other HAL ships will go to Princess. The lines are very similar.

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kazu "Live from...." Rare

kazu

Posted
Posted
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:

 

confused? Please do not call me that. Just because someone disagrees with you or adds a comment does not mean they are confused.

 

How do you know what the most profitable passengers for HAL are doing? What makes you assume we are not? You have generalized all passengers who like to bring some wine on board in ports as always not profitable.

 

Very untrue. Just because you want to bring some wine on board in ports does not mean you don't buy HAL's wine nor does it not mean that you are not profitable. Your innuendo is a bit tiresome. it may be true of some but it is certainly not true of all.

 

I had already posted what we are considering in the future. so why ask? For what we pay to sail on the Prinsendam in the categories we do we can easily move to Seabourn or Silversea (all of whom have no issue if you bring wine on board - however, since they buy local wines in ports it may well not be necessary). And those are the lines we are considering. Itinerary will still be taken into account. And our decisions will be made accordingly.

 

hopefully I have cleared up your confusion or misunderstanding

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chrispb

chrispb

Posted
Posted

According to a reputable consumer programme that I saw last night on tv, the value of the wine in a bottle that cost £5 in a supermarket, is only worth 20p - that's after the govt takes taxes, bottling, transportation, etc. On a bottle that cost £15 the wine then goes up to a value of around 70p.

 

Perhaps we should all make our own:D

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PunkiC

PunkiC

Posted
Posted

Is Thunderbird even available anymore? Before the comments kick in,,, I have never touched a glass of Thunderbird or 2-buck Chuck. My deceased mother who was an alcoholic and always found a way to have cheap booze near by bought that stuff along with a bottle vodka. Umm... let's see where this topic goes now.

 

I don't know anything about Thunderbird, but I have had some two buck Chuck that was very good. It is overage wine and changes from batch to batch. I know folks who will buy a bottle from time to time to test and then, if it is good, will go back and buy a whole case. I know they had a Chardonnay that won a bunch of awards a while back.

 

Given Bruce's posted information on profit margins, I wonder how HAL can sell liquor for in room consumption for so little money.

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sapper1

sapper1

Posted
Posted
As soon as the sun rises in the north perhaps?

 

Or, after the first bottle of "Thunderbird" kicks in?

 

Is Thunderbird even available anymore? Before the comments kick in,,, I have never touched a glass of Thunderbird or 2-buck Chuck. My deceased mother who was an alcoholic and always found a way to have cheap booze near by bought that stuff along with a bottle vodka. Umm... let's see where this topic goes now.

 

I always thought the sun rose in the east but what do I know? Maybe I'm just confused.

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cruz chic

cruz chic

Posted
Posted
lorekauf, Have a wonderful cruise! Smooth seas and good desserts to you!

 

I use Two Buck Chuck, which is really closer to Four Buck Chuck here on the East Coast, for cooking. It is good for cooking, not for drinking, imo.

 

Thank you. I'm hoping for good desserts although my butt can do without it:D.

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