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WSET D2 Wine Business > 5 > Flashcards

5 Flashcards

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1
Q

What decision does a producer consider when answering how to get the wine to the end consumer?

A

-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

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2
Q

List the retail wine buying options?

A

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

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3
Q

Reaching the end consumer - Supper markets

A

-many markets this is the most important outlet

  • many market this is the largest market share
  • generally, stock well know & popular regions/ grape
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4
Q

Reaching the end consumer - Supper markets

Disadvantages of Supper markets from producer direction?

A
  • well-known brands that attract consumers
  • do not promote customer loyalty
  • consumer can price shop
  • producers (to reduce price shop) make private labels
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5
Q

Reaching the end consumer - Supper markets

-private labels define?

A
  • 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
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6
Q

Reaching the end consumer - Supper markets

-private labels- from producer’s characteristics

A
  • 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
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7
Q

Reaching the end consumer - Supper markets

-private labels- producer’s risks

A

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

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8
Q

Reaching the end consumer - Supper markets

premium supermarkets

A

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

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9
Q

Reaching the end consumer - Deep discounters

Defined?

A

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

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10
Q

Reaching the end consumer - Deep discounters

-how does the busines model work?

A

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

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11
Q

Reaching the end consumer - Deep discounters

-shop is often basic?

A
  • goods stacked on pallets vs. shelves
  • not prime retail location

-lower rent areas

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12
Q

Reaching the end consumer - Deep discounters

-product range is limited

A
  • 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
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13
Q

Reaching the end consumer - Deep discounters

-rarely stock major brands

A

-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

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14
Q

Reaching the end consumer - Deep discounters

-buy direct from producers

A

-cutting intermediary costs

-Tend not to charge supplier to stock products

-producers don/t have to cover the cost of any price promotions

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15
Q

Reaching the end consumer - Deep discounters

-small amounts of specialty items?

A
  • 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
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16
Q

Reaching the end consumer - Convenience retailers

A

-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

17
Q

Reaching the end consumer - Specialist wine retailers

A

-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

18
Q

Reaching the end consumer - Specialist wine retailers

-Why a smaller producer would be attracted to a wine retailer?

A
  • 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
19
Q

Reaching the end consumer - Specialist wine retailers

-high involvement consumer define?

A

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

20
Q

Reaching the end consumer - Hybrids

A

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

21
Q

Reaching the end consumer - Online Retailing

A
  • 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
22
Q

Reaching the end consumer - Online Retailing

-advantage to online retailer?

A

-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
23
Q

Reaching the end consumer - Online Retailing

-disadvantage to online retailer?

A

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

24
Q

Reaching the end consumer - Online Retailing

-characteristics of a good website?

A
  • 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

25
Q

Reaching the end consumer - Global Travel Retail

A

-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
26
Q

Reaching the end consumer - Wine Investment company

A

-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
27
Q

Wine Investment

A

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
28
Q

fine wine

A

- 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
29
Q

How do investors buy wines for their investment company?

A
  • 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

WSET D2 Wine Business (12 decks)

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