2. Factors That Affect The Price Of A Bottle Of Wine- Trrought Out Supply Chain

Question 1

What’s are the factors that affects the price of a bottle of wine- cost throughout supply chain?

Answer 1

1. Vineyard cost.
2. Winery cost.
3. Transportation cost.
4. Insurance cost
5. Sales cost
6. Marketing cost
7. Impact of legislation on the cost of wine.
8. Impact of fluctuation in currency

Question 2

Describe how vineyard cost influences the price of wine

Answer 2

1. Vineyard establishment.
2. Vineyard management

Question 3

Describe the cost of vineyard establishment.

Answer 3

1. Purchase or rent the land.
2. Survey conducted on soil analysis, site selection, consultancy, clone rootstock selection.
3. Site cleaning- removal of rock and vegetation
4. Road
5. Stake and wire for trellis.
6. Drainage, pipe channel
7. Protection against weather, netting for hail, frost protection, wine break.
8. Protection against animals- fence, bird scarer.
   9.machinery- tractor sprayer, harvester
9. Capital, loss of cashflow,, incurred interest, investors share and profit.

Question 4

List and explain the cost of vineyard management.

Answer 4

1.Labour- cost more on steep slope, cheaper in Chile than machine. Experience and skilled, busy harvesting cost more.
2. Machiney, fuel
3. Supply- material for repair trellis, irrigation.
4. Vineyard treatment- Agrochemical, use less in Bio and organic vineyard.
5. Water- more costly in dry year.
6. Electricity- pump, frost protection.
7

Question 5

How winmaking cost influence the price of a bottle of wine throughout supply chain?

Answer 5

1. Winery establishment: land, building,equipment including crusher, press folklift, cooling system, maturation system, climate control.
2. Winemaking cost.
   2.1. Grape growing and the cost of bought in fruit. Bought in, blending .
   2.2 Labour, experienced skill, harvest,cellar, overtime penalties. Safety.
   2.3machinery Inc maintenance and running cost.
   2.4 winery material sugar, acid, yeast, co2 fining agent.
   2.5 water - cleaning, rain water Ro equipment, rooftop tank.
   2.6 electricity, cooling, ventilation, press, pump, lighting.
   2.7 maturation- labour monitoring, oak, loss of cash flow. Brucellosis di montalcino 5 year after harvest.
   2.8 packaging- bottle labels. Bottling line, hire or off site.
   2.9 Depreciation- budget for replacement equipment

Question 6

List two forms of wine transportation.

Answer 6

1. Transport wine in bottle.
2. Bulk wine

Question 7

Describe the method that wine is being transported in bottles.

Answer 7

1. Air- method for shipping wine with tight timeline or special occasions. Very expensive, high carbon footprint. Super premium.
2. Road- flexible, door to door, or door to port. Susceptible to strikes, road conditions and weather hazard.
3. Rail-cost of loading pallet, need to work with truck, less flexible route, cheaper, containerised. Route dependent.
4. Sea- cheapest, long distance, slow, consider heat, war and politics factor. Time. Lead time.
5. Insurances

Question 8

How bulk wine transportation influences price?

Answer 8

1. Lighter - no glass
2. Higher volume 24000 vs 9000
3. Lower carbon footprint.
4. Using flexitank and isotank.
5. Large volume only. For supermarket
6. Quality issues.

Question 9

why is insurance important?

Answer 9

1. Vineyard- natural hazards such as hail, fire, flood
2. Winery- equipment, breakage, damage, thief, safety, public liability.
3. Transportation- sopliage, and damage. Accidents and cause of delay.

Question 10

Importation cost influences the price of a bottle of wine in the ways …?

Answer 10

1. Custom duty.
2. Taxation- country to country.
3. ABV- EU shown closest half or whole unit, USA allow 1.5. Affect label on wine and to comply.
4. Heath warning,
5. Different country laws to comply.
6. Distributors, knowledge, fee, added cost,
7. Distributors take 5-25%

Question 11

List the factors related to sales cost that influence the price of a bottle of wine?

Answer 11

1. Property cost.- lease or buy, fine dinning, specialist. Lease or rent. Loan or mortgage, water, power decorating, insurance, waste management.
2. Labour- skill, experience, wage, knowledge of wine. Sommelier
3. Equipment and materials, shelving and fridge, display cabinet, cleaning.
4. Storage cost, climate control, external storage if run out of space . Large distributor centralise warehouse.
5. Margin at the point of sales. Retailer 20-50%, restaurant 66%,
6. Delivery cost- expensive, broken, spoilage, heat. FIX FEE/ free on larger order, discount without reduce price.

Question 12

How marketing cost affects the price of wine?

Answer 12

1. Labour- large producer in house marketing, external marketing company。 industry organisation
2. Design and production of bottle and labels
3. Marketing campaign - advertising promotional, send samples

Question 13

How legislation affects wine price?

Answer 13

1. Tax - UK charge excise duty. Wine stored in bonded warehouse cost more but helps cashflow.
2. Trade barriers.
3. Label laws

Question 14

The method to reduce the risk of currency fluctuation.

Answer 14

1. Options- agreed on amount, date, may not take l, producers risk.
2. Fixing the price in the currency of the importer at the date of ordering.
3. Buying currency to cover specific orders.- in house currency manager.
4. Entering a contract to fix the exchange rate- buying amount of currency at the agreed rate with bank.
5. Trading in USD/ euro- producer use the currency to buy equipment from this
6. Opening a foreign account in a local bank. Direct payment to seller , seller uses it to purchase equipment from importers country.
7. Opening a foreign account in a overseas bank.