10 - Factors that Affect the Price of Wine Flashcards
1
Q
Factors that influence the price of a bottle
(main points)
A
- Production costs
- Grape Growing
- Winemaking - Packaging
- Transport, distribution & sales
- Taxes
- Retailers
- Market forces
2
Q
Production costs in winemaking
- Grape growing
- Winemaking
A
- Grape growing
- buy land
- prepare soil
- buy & plant vines
- build trellises
- labour - usually the largest production cost
can reduce: seasonal, casual workforce, mechanisation, share with other growers
- machines –> share?
- market forces - Winemaking
- equipping and maintaining the winery equipment
shared?
- time kept in the winery - storage facilities, money tied up in stock
3
Q
Production costs in winemaking
- Packaging
A
designed & purchased
- bottles
- labels
- capsules
- closures
- cartons
sold in bulk
4
Q
Production costs in winemaking
- Transport, distribution & sales
A
- only sold at the winery
- domestic & international markets: choose partners who offer both value for money & access to reliable sales
–> transport
–> distribution
5
Q
Production costs in winemaking
- Taxes
A
- nearly every government taxes alcoholic beverages
- seen as essential in controlling the cunsumption of alcohol
- important source of revenue for governments
6
Q
Production costs in winemaking
- Retailers
A
- shops or restaurants
- generally cost more in restaurants than in shops
(expect to generate more profit from wine, occasion, environment, level of service)
7
Q
Production costs in winemaking
- Market forces
A
- how much the destination market is prepared to pay for it
- to ensure the product is commercially viable: the costs of production, packaging, distribution & retail must all be taken into account
- high demand, limited supply –> retail price can far outweigh the costs (ie. Bx)
- lack of demand (ie. some steep vy sites in Mosel have been abandoned because prod.cost not covered by demand)
8
Q
Types of wine producer
A
3 main types
1. co-operatives
2. merchants
3. estates
- none of these words has legal significance & they rarely appear on labels
- quite common for a single producer to make different wines that are bottled under estate & merchant labels
9
Q
Co-operatives
A
- wine businesses owned by their members, typically grape growers
- growers deliver grapes to a winery that is owned by the co-operative & run by a winemaking team thas is employed by the co-operative
(+) growers guaranteed a buyer
(-) winemaker ight not always have complete control over the quality of the grapes - very common in Europe
(because the average vy holding for a grower in Europe is so small that it is rarely economical for them to produce & market their own wines) - less common in the rest of the world
10
Q
Merchants
A
- buy grapes, juice or wine from either growers or co-operatives
- will have contracts with their suppliers & in theory, have greater control over their quality
(can reject grapes that are not up to standard) - regions with high demand or limited supply: can be difficult to guarantee a regular supply of suitable grapes
- small scale, premium wine production, or large scale & a range of wines at different quality levels
- common throughout the world but especially outside for Europe
(grape growers have far larger holdings and this type of contractual arrangement is popular with producers who only have to deal with a relatively small number of growers) - Many of the large wine brands are made this way
- sometimes referred to using the French name: négociant
11
Q
Estates
A
- make wine only from the grapes that they grow
- typically produce wine on a relatively small scale
- greatest amount of control in the production process
- in most regions these producers are responsible for the best wines
- can have fewer blending options, challenge in years where the growing conditions have been poor (ie. due to frost, hail)
- made throughout the winemaking world
- sometimes referred to using the French name: domaine
