3. Types Of Business Engaged In The Production of Wine Flashcards
What businesses are involved in the production of wine?
Estates Growers Grower-producer Merchant Co-operatives Custom crush facilities Virtual winemakers/wineries Conglomerate
What does an estate do?
Produces wine exclusively from their own vineyards
What are the advantages and disadvantages of an estate producer?
Advantage:
Estate retains control over the entire process
All of the profit from the production of the wine belongs to the estate
Consumers look authenticity are often drawn to wines that are estate-bottled
Can tell the whole story of the wine
Disadvantage:
Cost of managing the vineyard, equipment & running he winery
May have to hire equipment
Difficult vintages therefore a loss in profits
May need to sell at a higher price that consumers won’t buy at
What is a grower?
Growers choose not to produce their own wine, concentrating solely on growing healthy grapes which they sell to a merchant or winemaker.
What are the advantages and disadvantages of being a grower?
Advantage:
Good option for smaller vineyards who can’t justify the cost of equipment
Generates better cash flow because payment is due when the grapes are sold rather than when the wine is made and ready to sell
Focus on the best, healthiest grapes possible
Disadvantage:
Bad vintages or vintage variations
Supply and demand issues
Options for a grower
One off contract
Long term contract
Spot market
What is a grower-producer?
Some growers also produce wine from their grapes but sell it to a merchant to mature and bottle.
What are the advantages and disadvantages of being a grower-producer?
Advantage:
Do not incur the cost of maturation (barrels / cellar space)
Do not incur the cost of marketing
Disadvantage:
Smaller profit than if they were to sell the finished wine
What is a merchant?
Negociant in French.
To buy immature wine, mature it and sell it under the merchants name. They could blend wines of different producers prior to bottling.
To help negate risk due to the control over grape growing and wine making they now may produce their own wine from grapes or juice and provide tech support to their suppliers to ensure the grapes, wine and/or juice they buy are of the required quality.
What are the advantages and disadvantages of a merchant?
Advantage:
No expense of buying and managing vineyards
Protection and flexibility in bad vintages as they work with many suppliers
Can have a large range of wines at different prices points
Disadvantage:
May need to turn to the spot market in bad vintages - this is costly
May not have control over the growing of the grapes bought or the wine made
Expanses if some merchants
E.Guigal - Rhone Valley
Domaine Dujac - Burgundy
What is a co-operative?
They are owned by a group of growers and produce and sell wines made from grapes grown by their members.
What are the advantages and disadvantages of a co-operative?
Advantage:
They can pool their financial resources
Some give access to expert Viti and Vini cultural services and advice
Some give access to marketing, packaging and sales services
Collectively be more efficient and effective
Paid a share of the profits
Some profits go back into the co-operative to invest in technology, research, effective marketing and labelling
Disadvantage:
Due to management structure decision making can be slow and cumbersome
Agreed course of action may not be to the liking of each individual member
What are some examples of co-operatives?
Plaimont - South West France
Badischer Winzerkeller - Southern Germany
La Chablisienne - Chablis
Mont Tauch - Fitou
What is en primeur?
Also known as ‘wine futures’, a method of selling wine before it has been bottled. Purchasers buy the wine whilst it is still in barrel and it remains in the producers cellar until it is ready for bottling. The purchaser only receives the wine once it had been bottled, usually a few years later.
