C10 - Factors that Affect the Price of Wine Flashcards
What are the seven broad brackets into which winemaking costs can be split?
Grape growing Winemaking Packaging Transport, distribution and sales Taxes Retailers Market forces
What are the costs associated with establishing a vineyard?
The land (especially in high-reputation regions)
Soil preparation
Cost of vines
Building the trellis
What is typically the largest production cost in an established vineyard?
Labour
How may the cost of labour be kept low?
By relying on a seasonal, casual workforce or mechanisation
How may labour costs be further reduced in an established vineyard?
By growers sharing labour or machines
Where are the money saving economies in vineyards less possible?
In steep vineyards and some isolated sites
Other than practical considerations, what else may affect the price of grapes?
Market forces
What are the most obvious costs involved in winemaking?
Equipping and maintaining the winery with necessary equipment
Give an example of winery equipment which can be shared (reducing costs)
Bottling facilities
Other than cost of equipment, what else must be considered regarding cost of winemaking?
Time kept at the winery before release
Why is time kept at the winery an important cost consideration in winemaking?
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)
Which main aspects of packaging factor into the cost of wine?
Bottles, labels, capsules, closures and cartons (design and purchase)
What kind of packaging is more costly?
Unusually shaped or heavy bottles
How can packaging costs be reduced?
By bottling in the market where the wine is to be sold
Why is it not always possible to bottle at the intended market?
This is only possible for large producers
It is not always permitted by local wine laws
Describe the role of taxes in the cost of wine
Nearly every government taxes alcoholic drink
Tax levels vary wildly from country to country
What is the logic behind taxation of alcoholic beverages?
This tax is seen as essential to controlling alcohol consumption by increasing retail price
The tax is an important source of government revenue
Describe the role of retailers in wine cost
Shops and generate will add money to the cost of wine so that they can make a profit
Why is wine generally more expensive in restaurants than shops?
Restaurants expect to generate more profit from wine
The price also reflects the occasion, the environment and the level/style of service
What is the broadest/largest determiner of the cost of wine?
Market forces (how much the destination market is prepared to pay)
Pertaining to market forces, when may the retail price of a wine far outweigh the costs?
Where high demand exists for a product available in limited supply
Give a wine type, the price of which has suffered the effects of high demand and limited supply
Bordeaux premium estate wines
Give an example of an area where some vineyards have been unable to sustain themselves due to demand being too low
Some steep vineyard Mosel sites
What are the three main types of wine producer?
Co-operatives
Merchants
Estates
