7. Other types of market Flashcards
What is the name of the monopoly market in Sweden?
Systembolaget.
What is the aim of a monopoly market?
Government-run monopoly of sale of alcohol aimed to promote the mindful consumption of alcohol.
What is a common feature of monopoly markets?
High levels of tax on alcoholic drinks typical.
Describe Sytembolaget’s fixed assortment process (5 steps).
1) Systembolaget tenders 4x/year for new products.
2) Approved tenders submit samples, which are blind tasted for approval.
3) Once selected, wines are re-tasted and chemically analysed.
4) Can take up to 8 months from tender to product launch in shops.
5) Once approved, the wine is available throughout all of Sweden - larger sales potential.
Which Canadian province has a private market for alcohol sales?
Alberta.
What negative consequence does a system such as Sweden’s have for consumers?
Higher levels of taxation.
Explain the purpose of Sweden’s Systembolaget monopoly.
To encourage thoughtful consumption of alcohol with an awareness of the health implications of excess consumption.
What does the research into market privatisation illustrate in opposition to a monopoly?
Leads to greater accessibility of alcohol and competition thus encourages downward price pressure and greater availability of cheap alcohol.
How does Systembolaget drive customer satisfaction?
By having an extensive range with highly knowledgeable staff.
What is the minimum age permitted to purchase alcohol at a Systembolaget?
20
What is Systembolaget’s Temporary Exclusive assortment?
These wines are purchased directly by the buyer and don’t need to go through the tender process. It’s a one time purchase of a fixed volume.
What is the fixed assortment in the context of Systembolaget?
These wines (all kinds of price points and volumes) have all gone through the tender process and won a listing in all or parts of the 448 retail stores. These wines will stay in the assortment as long as they sell enough volume compared to its competitors in the same price/product segment.
What is the temporary assortment in the context of Systembolaget?
The wines goes through a tender process as for the fixed assortment, but the difference from the fixed assortment is smaller volumes and a one-off purchase. If the product sells well it gets a re-purchase of the following vintage.
What is the order assortment in the context of Systembolaget?
These wines are registered by the importer on Systembolaget’s website/webshop and can be ordered and picked up in the consumer’s closest retail store. The wines have no distribution and marketing is needed to drive sales.
Where might products part of the order assortment be sold?
Online and also direct from the importer to bars and restaurants.
How might a producer or importer who sells via the order assortment qualify for sales via the permanent assortment?
By achieving strong online sales via the order assortment.
What are the USA’s three tiers?
1) Supplier
2) Distributor
3) Retailer
In the three-tier model, a producer/supplier can what?
Also be an importer but cannot distribute.
In the three-tier model, a distributor can what?
Import but cannot produce.
When was the three-tier system introduced and why?
1933 following prohibition to prevent pre-prohibition levels of drunkenness, crime, gambling and prostitution.
What are the four key benefits of the three-tier system?
1) Reduces producer monopolies
2) Provides additional jobs
3) Easier to regulate and collect taxes
4) Generates additional tax revenue
In the US at what legal level are alcohol sales controlled?
State level - each state has its own legislation.
What is a key disadvantage to alcohol companies of the state level legislation?
There are 52 different regulatory entities so knowledge of the complexities of each state is required by anyone selling to these states. Has led to the rise of compliance officers being required.
How many states permit inter-state sales between retailer and consumer?
14