C10 - Factors that Affect the Price of Wine (reviewed) 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
Cost can be managed -
relying on a seasonal, casual workforce or mechanisation
By growers sharing labour or machines (e.g., Bottling facilities)
Less possible in steep vineyards and some isolated sites
What are the most obvious costs involved in winemaking?
Equipping and maintaining the winery with necessary equipment
Other than cost of equipment, what else must be considered regarding cost of winemaking?
Time kept at the winery before release
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)
Unusually shaped or heavy bottles are most costly
Can be reduced by bottling in the market where the wine is to be sold (only possible for large producers and 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
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
Give an area where some vineyards have been unable to sustain themselves due to demand being too low
Bordeaux premium estate wines
Some steep vineyard Mosel sites
What are the three main types of wine producer?
Co-operatives
Merchants
Estates
What is a wine co-operative?
A wine business owned by its members; typically grape growers
Grower of co-operatives are guaranteed a buyer
Winemakers of a co-operative may not always have complete control over the quality of grapes supplied by their employers
Where are co-operatives most common?
In Europe - Because vineyard holdings in Europe are on average too small to run economically