3 Types of businesses engaged in the production of wine

Question 1

Estates:

could an estate producer use bought in grapes & grapes from their own vineyard?

Answer 1

Yes

Question 2

3.1 Estates:

Name 4 key advantages & 4 key disadvantages of being an estate producer!

Answer 2

advantages:

• control over entire process (growing to producing)
• choose style & quality control at every stage
• without using intermediates all profit belongs to estate
• marketing (story of wine)

disadvantages:

• cost of managing an running
• hiring equipment (harvest)
• hiring costs are reducing capital for running the busines
• difficult vintages = higher prices = consumer ?

Question 3

3.2 growers:

Why could someone choose to be solely a grower?

List 3 reasons!

Answer 3

1. ) small vineyard
2. ) no money for equipment
3. ) don’t want to market

Question 4

3.2 growers:

Name advantages and disadvantages of being a grower!

Answer 4

advantages:

• better cash flow
• focus on growing = maybe high quality

disadvantages/risks:

• vintage variation
• fluctations in supply/demand

Question 5

3.2 growers:

Name one prime example of a high quality producer:

Answer 5

e.g. Andy Beckstoffer & Beckstoffer Vineyard

= Cabernet Sauvignon = Napa Valley

Question 6

3.2 growers:

Go deeper into the risk of a grower when it comes to vintage variation.

What could happen - in a meaningful order!

Answer 6

less fruit to sell / no grapes at all
=
push price of higher qualities 
= 
less money / no money

Question 7

3.2 growers:

Go deeper into the risk of a grower when it comes to fluctuation in supply and demand.

What could happen - in a meaningful order!

Answer 7

supply exceeds demand
= 
reduce prices
= 
not able to sell
=
profit loss

Question 8

3.2 growers:

Name the 2 options for growers to sell their grapes!

Answer 8

1. ) contract with producer or merchant

2. ) spot market

Question 9

3.2 growers:

Give 3 advantages and 2 disadvantages of selling by contract/long term contract!

Answer 9

advantages:

• certainty
• one or multiple vintages
• strong business relationship = best quality

disadvantage:

• minimum quality level
• low quality = rejected / low price

Question 10

3.2 growers:

Give 1 advantages and 1 disadvantages of selling to the spot market!

Answer 10

advantages:
- shortage of grapes = greater rewards

disadvantages:
- glut of grapes = less rewards

Question 11

3.3 grower-producer = typical burgundy

Give 2 advantages and 2 disadvantages of being a grower-producer!

Answer 11

advantages:

• no maturation cost
• no marketing & sales

disadvantages:

• lose control of making process
• less profit

Question 12

3.4 merchants/négociant

What was the traditional role of a négociant?

Answer 12

1. ) buy immature wine
2. ) mature it
3. ) sell it under merchants name

Question 13

3.4 merchants

Give the advantages and disadvantages of being a merchant/négociant!

Answer 13

advantages:

• support the growers
• close work with growers
• no expense for buying and managing vineyards
• buy different grapes = protection bad vintages
• large volumes = different, private labels

disadvantages:

• little control of grape growing
• if bad vintages = higher prices on spot market

Question 14

3. 4 merchants
4. ) What is a micro-négociant?
5. ) Where has the micro-négociant scene grown?
6. ) & Why?

Answer 14

1. ) small production of individual vineyards
2. ) burgundy
3. ) land is high priced & seldom sold

Question 15

3.4 merchants

How do merchants/négociants react to the rising prices of grapes?

E.g. Napa or Burgundy

Answer 15

long term contracts & technical support + advice

Question 16

3.4 merchants

What is the main difference between merchants in Burgundy and Bordeaux?

Answer 16

Burgundy = involved in the growing process

Bordeaux = focus on selling matured wines

Question 17

List all the 9 businesses which are engaged in the production of wine!

Answer 17

1. ) estates
2. ) grower
3. ) grower producer
4. ) merchants
5. ) grower-merchants
6. ) co-operatives
7. ) custom crush facilities
8. ) virtual winemakers
9. ) conglomerates