Businesses/Markets Flashcards
Advantages to Estate Wineries?
Control entire process
Obtain entire profit
Marketing benefits for authenticity
More financially viable due to reusing equipment
Disadvantages to Estate Wineries?
Cost of equipment
Cost of managing/running vineyard/winery
More vintage variation
Higher cost in bad vintage
Advantages to Growers?
Cash on sale
No marketing/winery costs
All efforts focused on grape quality
Disadvantages to Growers?
Vintage variation risk
Supply/demand risk
Options for growers to sell grapes?
Short-term contract
Long-term contract
Spot market
Role of a merchant?
Buy wine from a grower-producer to mature and bottle
Advantage & Disadvantage of Grower-Producer?
No maturation/marketing costs
Smaller profit
Advantages of merchants?
No vineyard costs
Flexibility in poor vintages
Flexibility of type of production
Disadvantages of merchants?
No control over growing/winemaking Cost variation (spot market)
What is En Primeur?
Wine futures
Purchased while still in barrel
Cheaper/easier on purchasers, funds producers
Advantages of co-ops?
Pooled financial resources
Shared equipment
Expert services
Disadvantages of co-ops?
Democratic process - can be slow
Pay on volume and/or quality of entire portfolio
Not all profits received - re-invested in technology
Advantages of Custom Crush?
No equipment costs
Expertise of professional winemaker
Disadvantage of custom crush?
No control on style
Define virtual winemakers?
Individuals who do not own a winery or a vineyard; they purchase fruit/custom crush and then market their own brand
Advantages of conglomerates?
Control at all stages
Significant negotiating power
Regional offices in significant markets
Other alternatives if supply issue
What is HoReCa?
Hospitality sector
Hotels/Restaurants/Cafes/Catering
Advantages to selling directly to retailers?
No intermediary costs
Control on who carries their product
Controlled brand image/marketing
Disadvantages to selling directly to retailers?
Administrative burden Collection/transportation/delivery Import taxes/compliance Financial risk Lack of relationships in foreign market Lack of knowledge of foreign market
Advantages of a distributor?
Knowledge of local market Can arrange introductions/trade shows Take on administrative burden Experienced staff Greater resources One point of contact for retailer
Disadvantages of a distributor?
Reduced profits Get lost in large portfolio Loss of control in where product is sold/how it is marketed Can be dropped Time to select the right partner
Define a joint venture?
Two comparably-sized companies that partner
Typically at different stages in the supply chain to avoid intermediary costs
Differences between brokers and distributors?
Brokers have lower fees and take on less risk/responsibilities
Generally 2% to arrange a deal
Methods of direct sales to consumers?
Cellar door
Events
Wine club
Online
Benefits of cellar door?
Engage with consumers Tastings Build brand awareness and loyalty Word-of-mouth marketing New product trial with direct feedback (less market research) Can be at any location
Risks of selling to supermarkets?
Strong negotiating power Loss of control over pricing Lots of competition Promotion costs/fees Delisting
What differentiates deep discounters from supermarkets?
Lower profit margin Basic display Limited products Primarily private labels Closeout items
Advantages to online retail?
Larger variety
Warehouse vs expensive storefront
Disadvantages to online retail?
Delivery costs Staff to answer questions Website quality Technical support Constant updates
What type of retailer is likely to carry allocated items?
Wine investment companies
Berry Bros & Rudd, Farr Vintners, Fine & Rare
Types of bars?
Specialty bars
General bars
Types of restaurants?
Non-destination restaurants
Casual dining
Fine dining
Define monopoly market, and name two examples?
100% government controlled alcohol sales
Sweden and Canada
What is the retail market of Sweden?
Systembolaget
What is the government control in Ontario?
LCBO
Liquor Control Board of Ontario
What enacted prohibition in the US?
Volstead Act
Types of states in the US Three Tier System?
Control, Open, Franchise
How has the number of wineries and distributors in the US changed in recent years?
Distributors down from 3000 to 1200
Wineries up from 2000 to 9500
