5 Flashcards
What decision does a producer consider when answering how to get the wine to the end consumer?
-sell direct =to retail sector or hospitality or both?
In many markets, the volume of wine to consumers off prem is higher than bars & restaurants
In a free market a consumer can choose between a variety of retail outlets depending upon what wine-buying experience they want
List the retail wine buying options?
D o G S S C H O W
Deep Discounters Convenince Retailers
Global Travel Retail Hybrids
Supper markets Online Retailing
Specialist wine retailers Wine Investment company
Reaching the end consumer - Supper markets
-many markets this is the most important outlet
- many market this is the largest market share
- generally, stock well know & popular regions/ grape
Reaching the end consumer - Supper markets
Disadvantages of Supper markets from producer direction?
- well-known brands that attract consumers
- do not promote customer loyalty
- consumer can price shop
- producers (to reduce price shop) make private labels
Reaching the end consumer - Supper markets
-private labels define?
- to reduce consumer price-comparing, producers make __
- label under exclusive label for a particular supermarket in effrots to create customer loyalty
- created label and brand where market NOTon label- favored by Walmart, Costco in US and Marks & Spencer in UK
- created label and brand wher market IS on label -Stainsbury’s Taste in UK -can promote customer loyalty
Reaching the end consumer - Supper markets
-private labels- from producer’s characteristics
- label need to be in large volume, typically from large producer
- enjoy high level of market exposure,
- can be more than one country
- sometime sell from producer to supermarket
- no intermediary costs
- supermarket may work w/ producer & ensure quality control
Reaching the end consumer - Supper markets
-private labels- producer’s risks
D O N E P Q
Delisted if volume & profit not achieved
Over supply
Negotiating power of spmk
Ensure variation for Spmk
Pay for product placement
Quality control- pkg, label, delivery
Reaching the end consumer - Supper markets
premium supermarkets
Eg. Whole Foods buys wines from artisan producers under producer’s label
Bought in smaller quantities
Range appeal more to consumer w/ strong interest in wine
Reaching the end consumer - Deep discounters
Defined?
Shares features of spmk but sells at lower prices
- Aldi/ Lidl Trader Joe
- Have been important in Germany and only recently in US & UK
- business model offer permanently low prices
Rarely have any price promotion
-take lower profit margin than traditional spmks & rely on volume
Reaching the end consumer - Deep discounters
-how does the busines model work?
B R O i L S
Buy direct from producers
Rarely stock major brands
Often basic
Limited product range
Specialty items around holidays in affluent areas
Reaching the end consumer - Deep discounters
-shop is often basic?
- goods stacked on pallets vs. shelves
- not prime retail location
-lower rent areas
Reaching the end consumer - Deep discounters
-product range is limited
- streamlined product range which is cheaper to maintain
- do not usually sell multiple brands of one type of product
- take private labels that were meant for other companies
- eg Charles Shaw’w ‘two buck chuck’ for Trader Joe’s
Reaching the end consumer - Deep discounters
-rarely stock major brands
-often work with less well-known producer with lower overhead
-buy stock that is available – when out that is the end
-appealing to producers who have surplus of wine to sell
Reaching the end consumer - Deep discounters
-buy direct from producers
-cutting intermediary costs
-Tend not to charge supplier to stock products
-producers don/t have to cover the cost of any price promotions
Reaching the end consumer - Deep discounters
-small amounts of specialty items?
- sometimes will buy small amounts of expensive wine in more affluent areas
- this has started to attract consumers w/ a stronger interest in wine
- consumers moving from bottom rung to mid-tier price range
- resulting in retailers increasing their wine share
Reaching the end consumer - Convenience retailers
-usually located in town centers or out of town shopping areas -near where people live
-independently owned (India) or franchise -brands popular w/ local customers
-limited range – similar to smaller spmkts
-tend to be more expensive than spmkts
à consumer often willing to pay for ease -employ a higher proportion of staff relative to size than spmkts
Reaching the end consumer - Specialist wine retailers
-wine, spirits, beers, cheese, delicatessen foods, artisan producers
-most independently owned or small chain
-few have purchasing power of larger retailers
-build trust between staff and consumer likes/ dis
-hold event & wine education classes
Reaching the end consumer - Specialist wine retailers
-Why a smaller producer would be attracted to a wine retailer?
- focus on smaller producers from less well-known regions & less common grapes -attractive for producers
- average price is higher than spmks & deep discounter
- cater to consumers more interested in wine & willing to spend
- high involvement consumer
Reaching the end consumer - Specialist wine retailers
-high involvement consumer define?
Consumer willing to spend more b/c appreciate the broader range of wines offered & more personal service as compared to retail options
-staff knowledgeable & well trained- can hand sell wines
-tell the story of wine, provide info about the lesser known regions, varieties, food pairing
-build relationship w/ staff to know preferences & suggest new
In return customer trust
Reaching the end consumer - Hybrids
Retailer & bar area -drink the wine they buy in the store
Usually sell food- mainly cheese & delicatessen, tapas
Benefits: consumer can try wine before buy whole bottle
Encourage purchase someone with less wine knowledge to purchase a wine they might not have
-offer regularly changing wine by the glass selections
Reaching the end consumer - Online Retailing
- Growing percentage of ____ sales are predicted -Bricks-and mortar retailer often offer online survices
- Clubs for which a number of clubs are set up by Newspapers
- May require a certain amount of wine each year-may be customer choice or restricted to what retailer puts together
- click and collect- curb side pickup from store saving costs
- mobile app- China, can tailor, WeChat Bottles XO
Reaching the end consumer - Online Retailing
-advantage to online retailer?
-not the expense of a store, although stock stored in warehouse
But warehouse in low cost area.
-can have larger, more varied stock than retail
- provides small, niche producer
- can have larger customer base, not limited to easy reach
- still need staff to take orders, dispatch order, advise customers
Reaching the end consumer - Online Retailing
-disadvantage to online retailer?
Expense of delivery
Wine is heavy, bulky, fragile
-may not always pass on full cost of delivery to customer
-retains risk of damage/ lost in transit
Reaching the end consumer - Online Retailing
-characteristics of a good website?
- click and collect- curb side pickup
- need to ensure easy to use reliable website -easy to make selection & place orders
- distinctive and convey retailer’s brand image Need ongoing tec support
- detailed description,-helpful content b/c they might be buying wines they have not tried
food pairing, critics -stock kept up to date
Reaching the end consumer - Global Travel Retail
-located where customers are traveling from one country to another -airports, seaports, international railway, on board ships
- Airport advantage- passenger has leisure time after check-in
- or at arrivals, or point where go through border controls
- sector know as Duty Free b/c national taxes were not chargeable on goods sold for personal use
- range of wine, including super premium wines
- retail is expensive, high cost for space, lower profit margins
Reaching the end consumer - Wine Investment company
-co that specialize in sourcing & selling wine for investment
-most sought after & expensive – Bordeaux Premier Cru Classes, Burgundy Grands Crus, Napa
- retailer allowed small allocations each year
- sell to customers who have already expressed interest
- other co that effectively act as brokers -customer tell them what wines & these Co try and put them in touch w/ potential sellers If deal done, then broker gets commission
Wine Investment
Has become an increasingly important part of the wine trade
-growth in Bordeaux en Premeur and driven by China
- shown to be safer investment than stock & shares in times of financial uncertainty
- element of risk that even the most prestigious wine can fall
fine wine
- no agreed definition
- Type of wine which investors tend to be interested in from prestigious regions
- small quantities by leading producers and consequently command super premium prices
How do investors buy wines for their investment company?
- either directly from producer or through retailer, or on release
- exclusive wine clubs -retail brokers
- Co that manage wine portfolios for clients
- like managing an investment fund which investors can buy into w/o needing any k knowledge of wine
- Auction houses – risk of not knowing condition bottle was housed -risk wine fraud
