2.6: Challenges of Oversupply and Undersupply

Question 1

Name 3 ways producers move their unsold wine.

Answer 1

1. may be forced to sell the excess wine at a much lower cost than they would like (sometimes below production cost)
2. more proactive producers will try to find new markets and outlets for their wines (must be well established)
3. bottle the wine under a different label and offer it to a supermarket, deep discounter, bar or restaurant as a private label wine (larger volumes of wine)

Question 2

What problems arise when there is an undersupply of wine?

Answer 2

• not having enough wine to sell
• disappointing clients (and ultimately consumers)
• strained business relationships
• If producer has contract with large retailer, retailer may impose financial penalty/cancel the contract if the required volume of wine is not available

Question 3

For large- scale producers, what does an excess of demand over supply result in?

Answer 3

• often have wines at different price points, styles and regions of origin
• offer an alternative from portfolio
• sell to different markets, meaning that if price increases because of undersupply cause sales to drop in one country, they can sell wine into less price-sensitive markets instead