4. Different options for getting the wine to the point of sale Flashcards
What are the advantages (2) to the producer of selling directly to retailers?
1) No intermediary cost/margins to consider.
2) Control over which retailers sell their wine and hence greater control over brand image.
What are the disadvantages (2) to the producer of selling directly to retailers?
1) Increased administrative burden including delivery of wine (damage, loss) as well as understanding foreign import legislation for packaging and taxes.
2) Takes time to build a direct relationship particularly in foreign markets, which can be costly too if visits are required.
What are the advantages (6) to a producer of appointing a distributor?
1) Distributor’s market knowledge of key players, consumer preferences and trends.
2) Distributor can introduce producer to its contacts saving producer from finding themselves.
3) Distributor can be aware of retailer requirements and so target wines accordingly.
4) Distributor assumes the administrative burden particularly with respect to logistics including collection, transportation, delivery and absorb risk of loss or damage.
5) If the wine is being imported, they deal with legal compliance and duty.
6) Distributor can help with any language barriers.
What are the disadvantages (3) to a producer of appointing a distributor?
1) Distributor charges a fee to achieve its desired margin and so reduce producer’s profit.
2) Can lose control over how the wine is marketed and where it’s sold.
3) As one of many clients, the producer will not get the distributor’s undivided attention.
What is the main advantage of a joint venture?
To give each company a greater potential profit share as costs are shared and intermediary costs are avoided.
If the companies involved in a joint venture aren’t of comparable size it’s considered a what?
Takeover.
What is a broker?
An independent intermediary who represents neither the producer or retailer.
What are the advantages (3) to a producer of using a broker?
1) Smaller fees as a result of low overheads - approximately 1-5% of the contract price.
2) Brokers have an intimate knowledge of their market and to whom to sell what at what price.
3) Brokers bring together buyer and seller saving each time.
What is a broker called in Bordeaux and what is their role?
A courtier. They have legal status acting between Chateaux and negociants.
What advantages (3) are there for producers selling via their CD?
1) Larger profits.
2) Direct engagement with their customers.
3) Greater spread of word of mouth marketing with good experiences.
What considerations (3) must a producer address before establishing a CD?
1) Cost to build the CD.
2) CD location.
3) Additional staff cost.
What considerations (3) may a producer need to make when attending an event?
1) The cost to exhibit.
2) Travel expenses.
3) Additional staff costs.
What advantages (2) are there for producers selling directly to consumers via wine clubs?
1) Reduces their need to find other sales outlets for their wines.
2) Allows producers to stay in contact with their members building brand loyalty through newsletters etc.
What advantages (3) are there for consumers buying via a producer’s wine club?
1) Access to exclusive and allocated stock.
2) Free tours and invitations to exclusive tastings.
3) Preferential pricing.
What five considerations should a producer make while establishing and running a wine club?
1) Regular newsletter.
2) Promotional offers and event invitations.
3) Dedicated CRM platform.
4) Additional resourcing.
5) Choosing a reliable freight company and assuming responsibility for the packaging and dispatch of orders.
