C10 - Factors that Affect the Price of Wine Flashcards

1
Q

What are the seven broad brackets into which winemaking costs can be split?

A
Grape growing
Winemaking
Packaging
Transport, distribution and sales
Taxes
Retailers
Market forces
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2
Q

What are the costs associated with establishing a vineyard?

A

The land (especially in high-reputation regions)
Soil preparation
Cost of vines
Building the trellis

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3
Q

What is typically the largest production cost in an established vineyard?

A

Labour

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4
Q

How may the cost of labour be kept low?

A

By relying on a seasonal, casual workforce or mechanisation

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5
Q

How may labour costs be further reduced in an established vineyard?

A

By growers sharing labour or machines

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6
Q

Where are the money saving economies in vineyards less possible?

A

In steep vineyards and some isolated sites

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7
Q

Other than practical considerations, what else may affect the price of grapes?

A

Market forces

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8
Q

What are the most obvious costs involved in winemaking?

A

Equipping and maintaining the winery with necessary equipment

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9
Q

Give an example of winery equipment which can be shared (reducing costs)

A

Bottling facilities

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10
Q

Other than cost of equipment, what else must be considered regarding cost of winemaking?

A

Time kept at the winery before release

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11
Q

Why is time kept at the winery an important cost consideration in winemaking?

A

Storage facilities can be expensive to maintain
A lot of money is tied up in stock that cannot be sold to generate a profit straightaway (delay on sale is factored into the price of the wine)

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12
Q

Which main aspects of packaging factor into the cost of wine?

A

Bottles, labels, capsules, closures and cartons (design and purchase)

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13
Q

What kind of packaging is more costly?

A

Unusually shaped or heavy bottles

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14
Q

How can packaging costs be reduced?

A

By bottling in the market where the wine is to be sold

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15
Q

Why is it not always possible to bottle at the intended market?

A

This is only possible for large producers

It is not always permitted by local wine laws

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16
Q

Describe the role of taxes in the cost of wine

A

Nearly every government taxes alcoholic drink

Tax levels vary wildly from country to country

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17
Q

What is the logic behind taxation of alcoholic beverages?

A

This tax is seen as essential to controlling alcohol consumption by increasing retail price
The tax is an important source of government revenue

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18
Q

Describe the role of retailers in wine cost

A

Shops and generate will add money to the cost of wine so that they can make a profit

19
Q

Why is wine generally more expensive in restaurants than shops?

A

Restaurants expect to generate more profit from wine

The price also reflects the occasion, the environment and the level/style of service

20
Q

What is the broadest/largest determiner of the cost of wine?

A

Market forces (how much the destination market is prepared to pay)

21
Q

Pertaining to market forces, when may the retail price of a wine far outweigh the costs?

A

Where high demand exists for a product available in limited supply

22
Q

Give a wine type, the price of which has suffered the effects of high demand and limited supply

A

Bordeaux premium estate wines

23
Q

Give an example of an area where some vineyards have been unable to sustain themselves due to demand being too low

A

Some steep vineyard Mosel sites

24
Q

What are the three main types of wine producer?

A

Co-operatives
Merchants
Estates

25
Q

What is a wine co-operative?

A

A wine business owned by its members; typically grape growers

26
Q

What is the major advantage for a grower of co-operatives?

A

They are guaranteed a buyer

27
Q

What is the potential large disadvantage for winemakers of a co-operative?

A

They may not always have complete control over the quality of grapes supplied by their employers

28
Q

What quality can one expect from co-operative wineries?

A

Any (some produce the best wines of their area)

29
Q

Where are co-operatives most common?

A

In europe

30
Q

Why are co-operatives most common in europe?

A

Because vineyard holdings in europe are on average too small to run economically

31
Q

Describe wine merchants’ roles

A

They buy grapes, juice or wine from growers or co-operatives

32
Q

Why do merchants often have more control over their source material than co-operatives?

A

They have contracts with their suppliers

33
Q

What challenge can wine merchants face with regard to grape supply? Under what circumstances is this applicable?

A

Producers may be more selective with grapes, but in areas where demand can outstrip supply, it can be difficult to guarantee a regular supply of grapes

34
Q

On what scale do wine merchants operate?

A

They can operate on small, premium wine production or operate on a large scale, producing different wines

35
Q

Where are wine merchants most common?

A

Outside of Europe

36
Q

Why are wine merchants more common outside of europe?

A

Average vineyard holdings are larger and producers have to deal with less growers

37
Q

Which type of wine producer is most common amongst many of the large wine brands?

A

Merchants

38
Q

What is the french name for wine merchants?

A

Negociant

39
Q

Describe an ‘estate’ merchant

A

They make wine from only the grapes they grow

40
Q

Which type of wine producer typically makes on the smallest scale?

A

Estates

41
Q

What is the result of wine estates producing on a small scale?

A

It gives the producer the most control over the production process

42
Q

What is the big disadvantage for wine estates?

A

They tend to have fewer blending options as they rely purely on their own crops

43
Q

When is it particularly disadvantageous for a wine producer to have fewer blending options?

A

In years when growing conditions have been poor

44
Q

What is the french word sometimes used for estate?

A

Domaine