Chapter 1.2.3. D2 Flashcards
What are the factors that influence the demand for wine?
Factors influencing demand for wine include:
* Social & Cultural Factors
* Economic Factors
* Legislative & Political Factors
* Branding & Market Trends
Each of these factors plays a significant role in shaping consumer preferences and purchasing behaviors.
How do social and cultural factors affect wine demand?
Social and cultural factors shape wine demand through consumer behavior, traditions, and lifestyle trends.
Changing consumption habits, demographics, and health concerns are key aspects.
What has been the trend in global wine consumption since the early 2000s?
Global wine consumption grew in the early 2000s but slowed after the 2008 financial crisis.
Sparkling wine and rosé consumption increased during this period.
Which generations are drinking less alcohol overall?
Younger generations, particularly Millennials and Gen Z, are drinking less alcohol overall.
This trend is influenced by health-conscious behaviors.
What economic factor can lead consumers to switch to cheaper wines?
During economic downturns, consumers switch to cheaper wines or other alcoholic drinks.
This reflects changes in consumer spending patterns based on financial stability.
How do currency fluctuations impact wine prices?
Currency fluctuations affect wine prices by making imported wine more expensive when a country’s currency weakens.
A strong local currency can make imported wine cheaper.
What role do government policies play in wine demand?
Government policies impact wine demand through regulations, taxation, and trade agreements.
These include age restrictions, advertising bans, and drink-driving laws.
What is the impact of high excise taxes on wine?
High excise taxes reduce affordability and can decrease wine demand.
For example, Ireland has a high duty on sparkling wine.
How do strong brands influence wine prices?
Strong brands command higher prices and boost demand through wine reviews and awards.
Brands like Moët & Chandon and Château Margaux are examples.
What are the production factors that influence the supply of wine?
Production factors include:
* Weather & Climate Change
* Vineyard Area & Government Regulations
* Human Factors
These factors affect the quantity and quality of wine produced.
What is the effect of climate change on wine production?
Climate change affects traditional wine regions by impacting factors like temperature and acidity levels.
For example, warmer temperatures can impact Bordeaux’s acidity.
What are Protected Designations of Origin (PDO)?
PDOs are strict regulations on grape varieties, yields, and winemaking to protect wine origin.
Examples include Champagne and Barolo.
What challenges arise from over-supply in the wine market?
Over-supply leads to:
* Discounting & Brand Damage
* Wine Lake & Vine Pull Schemes
This can hurt the prestige of brands and lead to unsold stock.
What happens during under-supply in the wine market?
Under-supply causes prices to rise, and consumers may switch to alternatives.
Luxury wines can increase in price significantly.
What are the main costs associated with grape growing?
Grape growing costs include:
* Land Costs
* Vineyard Establishment Costs
* Vineyard Management Costs
These costs vary based on region and management style.
What factors influence land costs in wine production?
Land costs are influenced by location and prestige.
For example, Napa Valley land is significantly more expensive than Central Valley.
What are some winemaking costs?
Winemaking costs include:
* Winery Capital Costs
* Labor & Production Costs
* Maturation Costs
* Packaging Costs
Each of these contributes to the final price of the wine.
What types of transportation and logistics costs are involved in the wine supply chain?
Transportation and logistics costs include:
* Shipping Methods
* Transport Types
* Storage & Warehousing
These aspects affect the overall cost and quality of wine distribution.
What impact do import tariffs have on wine prices?
Import tariffs increase wine costs, making some wines pricier in certain markets.
For instance, EU tariffs on Australian wines can raise their prices.
How do retailer markups vary in wine sales?
Retailer markups vary significantly, with supermarkets marking up around 10% and restaurants marking up 200–300%.
This reflects the different sales strategies and consumer expectations.
What are the types of wine businesses involved in production and sales?
Types of wine businesses include:
* Estates (Châteaux, Domaines)
* Growers
* Grower-Producers
* Merchants
* Grower-Merchants
* Cooperatives
Each type has unique approaches to sourcing and production.
What are the advantages of estate wineries?
Advantages of estate wineries include:
* Full control over vineyard and winemaking
* Ability to charge premium prices
* Strong branding potential
These factors contribute to higher quality assurance.
What challenges do grower-producers face?
Challenges for grower-producers include:
* High costs of farming and winemaking
* Limited production
These challenges can make scaling the business difficult.
What is the business model of cooperatives?
Cooperatives involve small growers pooling resources to produce wine under a collective brand.
This model helps reduce costs and provides consistent marketing.
What are cooperatives in the wine industry?
Groups of small growers pooling resources to produce wine.
Examples include La Chablisienne and Cave de Tain.
What is the business model of cooperatives?
Members own vineyards but share production facilities and make regional wines under a collective brand.
What are the advantages of cooperatives?
- Reduces costs for small growers
- Provides consistent marketing and distribution
What are the challenges faced by cooperatives?
- Less control for individual growers
- Varied quality levels
What are custom crush facilities?
Wineries offering winemaking services to individuals or businesses.
What are the advantages of custom crush facilities?
- Low startup costs for new wine brands
- Access to high-end winemaking equipment
What are the challenges of using custom crush facilities?
- Clients rely on third-party facilities, limiting control
- Custom crush services can be expensive
What are virtual wineries?
Brands that source wine from others and sell under their own label.
What is the business model of virtual wineries?
No vineyards or winery ownership; 100% outsourced production.
What are the advantages of virtual wineries?
- No land or equipment investment = lower costs
- Can adapt to market trends quickly
What are the challenges of virtual wineries?
- No control over farming or winemaking
- Brand perception depends on partnerships with producers
What are conglomerates in the wine industry?
Multinational corporations owning multiple brands and wineries.
What is the business model of conglomerates?
Own many wineries across regions with a diversified portfolio.
What are the advantages of conglomerates?
- Strong distribution networks worldwide
- Efficient operations reduce costs
What are the challenges of conglomerates?
- Can struggle with brand authenticity
- Market-driven production may compromise terroir expression
What does selling directly to retailers entail?
Wineries sell directly to supermarkets, specialist wine shops, or restaurants without using a distributor.
What are the types of retailers wineries sell to?
- Supermarkets & Large Retail Chains
- Specialist Wine Shops
- Fine Wine Merchants
- Restaurants & Hotels
What are the advantages of selling directly to retailers?
- Higher profit margins
- More control over brand positioning & pricing
- Better marketing and promotions
What are the challenges of selling directly to retailers?
- Requires a strong sales team
- Retailers demand bulk quantities
- Retailers push for discounts
What is the role of a distributor in wine sales?
Distributors act as intermediaries between wineries and retailers.
What are the types of distributors?
- Large-Scale Distributors
- Specialist & Fine Wine Distributors
- Regional Distributors
What are the advantages of using a distributor?
- Wider market reach
- Simplifies logistics
- Better access to foreign markets
What are the challenges of using a distributor?
- Distributors take a margin
- Less control over branding and pricing
- Difficult to stand out
What is a joint venture in the wine industry?
Two or more companies collaborate to distribute wine in a market.
What are the advantages of a joint venture?
- Reduces financial risk
- Leverages partner’s distribution network
- Helps small wineries expand internationally
What are the challenges of a joint venture?
- Shared decision-making can slow operations
- Profit-sharing reduces direct earnings
- Conflicts over branding, pricing, and strategy
What is the role of a broker in wine sales?
Brokers act as intermediaries between wineries and buyers.
What are the advantages of using a broker?
- Access to exclusive buyers and collectors
- Brokers are well-connected
- Useful for small wineries
What are the challenges of using a broker?
- Brokers charge commissions
- No guarantee of sales
- Limited control over brand representation
What does Direct-to-Consumer (DTC) sales include?
Cellar door sales, wine clubs, online stores, and subscriptions.
What are the advantages of DTC sales?
- Highest profit margins
- Direct customer relationships
- Flexibility in pricing and promotions
What are the challenges of DTC sales?
- High marketing costs
- Shipping restrictions
- Limited reach compared to supermarket distribution
What is the profit margin for direct-to-retailers?
High
What is the market reach for distributors?
Wide
What is the brand control for joint ventures?
Shared
What is the best distribution method for boutique wineries?
DTC (Online & Cellar Door)
True or False: Large producers primarily use distributors for mass sales.
True
Fill in the blank: Joint ventures help wineries expand _______.
[internationally]
