2.1 - 2.3: Factors Influencing Demand

Question 1

Name 4 social factors that influence the demand for wine.

Answer 1

1. changes in consumption habits
2. changing consumer preferences
3. changes in reputation
4. changes in spending patterns

Question 2

In general, how has wine consumption changed since 2001?

Answer 2

• increased rapidly in the first part of the 2000s

- fall back again after the global financial crisis of 2008

Question 3

Which country has the largest wine consumption worldwide? Why?

Answer 3

USA

• wine drinking became part of mainstream culture
• helped by increasing globalisation of the food and drinks industry (consumers more able and willing to embrace new tastes)
• increases and improvements in wine production in the domestic market

Question 4

Name 4 possible reasons why wine consumption is falling in some countries.

Answer 4

1. Younger people drinking less wine
2. Health concerns
3. Changes in lifestyle
4. Reduced availability of cheap wine

Question 5

Why are younger people drinking less wine?

Answer 5

• Regard wine as old-fashioned, turned to other alcoholic drinks (e.g. gin in Spain).
• Spending less time in bars, preferring to contact their friends via social media. (e.g. UK)
• increased awareness of the negative health effects of alcohol

Question 6

How do changes in reputation influence wine demand?

Answer 6

• Good reviews from publications and critics can increase demand and allow a producer to increase their prices for subsequent vintages
• Online influencers and key opinion leaders (KOLs)
• Popular culture e.g. films, television series, music lyrics or celebrity lifestyle news

Question 7

Name 3 economic factors that influence the demand for wine.

Answer 7

1. strength of the economy
2. fluctuations in currency exchange
   3 changes to the market

Question 8

Name 5 legislative and political factors that influence the demand for wine.

Answer 8

1. laws prohibiting/limiting the sale of alcohol
2. government policies to reduce alcohol consumption
3. taxation
4. international trade
5. wine laws

Question 9

Name 4 ways the sale of alcohol can be tightly-controlled in a country.

Answer 9

• by limiting the sale of alcohol to state-owned monopolies
• the USA’s three-tier system.
• minimum legal drinking age
• sales generally limited to particular hours of the day

Question 10

What is Loi Evin?

Answer 10

• France
• introduced in 1991
• greatly restricted the advertising of alcoholic drinks
• significant factor in reduction of wine consumption

Question 11

What has the Scottish government done to reduce alcohol consumption?

Answer 11

• the first government to introduce ‘minimum unit pricing’ to reduce the availability of cheap alcohol.
• The minimum price of an alcoholic drink will be GBP 0.50 per unit, meaning that a 75cl bottle of white wine with 12% abv (i.e. 9 units as defined in the UK) must cost at least GBP 4.50, whereas bottles were previously available for as little as GBP 3.

Question 12

Give an example of a sudden legal change that affected wine demand.

Answer 12

• China, 2012,
• An Anti-Extravagance campaign was launched explicitly to prohibit the gifting to or consumption by government officials of luxury wines and spirits.
  (Xi Jinping)
• As a result, demand for those wines dropped almost immediately.