D2 Feedback Test Flashcards
Advantages of a mid-sized winery purchasing a bottling line (6):
- Contract bottling: can rent out usage of the bottling line to smaller wineries for $$.
- Once purchased, can be re-used again and again, as opposed to using outside facilities for $ each time.
- Eliminates risk of spoilage as wine travels from winery to facility.
- Efficiency: having bottling line in the winery streamlines the process, cuts down travel time/expense.
- Ability to bottle smaller cuvées, smaller runs.
- Available any time, especially important during peak bottling times.
Disadvantages of a mid-sized winery purchasing a bottling line (9):
CapEx
- Expensive piece of equipment, funds may need to be borrowed from investors, banks.
- Will take a long time to see return on investment.
- Lots of $$ for a piece of equipment typically only used once a year.
Space
- For a mid-sized (as opposed to large) winery, a bottling line will take up a lot of space that could be used for storing maturing wine, equipment, etc…
- Storing packaging materials will also require space.
Costs
- Labor costs for specially trained staff to run.
- Ongoing costs for maintenance and packaging.
- Significant energy costs (electricity).
- May limit packaging options (eg. if a ltd. edition bottle design were desired, may not conform to bottling line).
Describe ‘Ladder Branding’ and how a wine brand can use it within their product range (4):
- Ladder Branding refers to the practice of selling a number different products under the same brand at ascending price tiers and quality levels.
- Doing so can penetrate different market segments and appeal to customers of differing involvement levels.
- The highest (aspirational) ‘rung’ of the ladder will often cast a positive glow on the entire product line, even if it is the most expensive, least widely available, and most infrequently purchased.
- This can also encourage customers who typically only purchase the brand’s lower-rung products to ‘trade-up’ and try out the more prestigious/expensive one(s).
Identify and describe the 3 Rungs of a typical ‘Ladder Brand’:
- ACCESSIBLE: The least expensive, most widely available and frequently purchased wine in the line. These wines provide good brand visibility.
- STRETCH: Wines that are more expensive and of a higher quality level than the accessible rung. Affordable, but only for special occasions.
- ASPIRATIONAL: The brand’s most expensive and rare wines, rarely purchased and only by the very affluent.
Using a specific example, show how a Champagne house uses a Ladder Branding system for the ACCESSIBLE rung:
ACCESSIBLE: eg. Pol Roger NV.
The Non-Vintage release from a Champagne house is a typical example of wine at the Accessible ‘rung’. It is the least expensive to make, can be made in very large quantities and maintain its quality/style from year to year, since in isn’t marked by vintage variation. It is typically of very good quality and sold at standard - premium prices. Usually widely available, possibly at supermarkets, wine shops, casual and fine dining restaurants.
Using a specific example, show how a Champagne house uses a Ladder Branding system for the STRETCH rung:
STRETCH: eg. Pol Roger Vintage.
The next step up would be a vintage cuvée. More expensive to produce because the wine must age longer on its lees and the wine must come from a single vintage, meaning it can only be made in smaller quantities. In Champagne, vintages are typically only ‘declared’ in years that display the most favorable weather conditions. Typically of very good - outstanding quality, sold at premium-super premium prices.
Using a specific example, show how a Champagne house uses a Ladder Branding system for the ASPIRATIONAL rung:
ASPIRATIONAL: eg. Pol Roger Cuvée Sir Winston Churchill.
The house’s best wine. Typically a vintage Champagne and only produced in the very best years, this wine is the brand’s most expensive to produce, produced in the smallest quantities and the most exclusively available. Usually of outstanding quality, super-premium priced and only available at the very best specialist retail shops and fine dining restaurants.
How can a Specialist Retail Store compete with a Supermarket:
PRODUCT (6)
- specialist retailers: smaller producers from lesser-known regions, producing wines from more niche varietals. No big brands.
- Very good - Outstanding quality, Standard - Super Premium prices.
- can specialize in specific types of wine, e.g. organic / biodynamic wines (La Cave des Papilles in Paris) or luxury, investment-grade wines (Hedonism in UK).
- supermarkets: typically only bigger, recognizable brands, major regions and grape varietals. Acceptable-Good quality wines, value - standard prices.
- since supermarkets stock bigger brands, customers are more able to compare pricing with other outlets, does not encourage loyalty.
- specialist retailers stock more limited availability wines, less likely to be “price-shopped” by consumers.
How can a Specialist Retail Store compete with a Supermarket:
PRICE (5)
- Although supermarkets will typically sell wine at much higher volumes than specialist wine stores, it will be at a lower margin (typically 20-30%).
- on the contrary, specialist retailers sell lower volume but at higher margins (30-50%).
- Because they typically stock wines from smaller producers or lesser-known regions/styles, customers will not be able to compare prices as much.
- supermarkets will typically offer price discounts or ‘sales’, lowering the margin earned, and the costs of which are passed on to the producer.
- as specialist retailers do not typically have the purchasing power of supermarkets, they tend to stock smaller production wines, which is a good opportunity for smaller, lesser-known producers.
How can a Specialist Retail Store compete with a Supermarket:
PEOPLE (5)
- specialist retailers appeal to a much different segment: high-involvement wine drinkers, eg. Engaged Explorers, who buy wines at above-average prices, are eager to explore new regions/grape varietals, typically highest-spending at both on/off-premise locations.
- highly-trained staff able to make recommendations based on customer preferences, food pairings, purchasing history. More direct customer engagement.
- staff can ‘hand-sell’ more expensive bottles. Develop relationships with customers creating store loyalty.
- typically no such trained staff at supermarkets, appeals to lower-involvement customers who spend less on wine, eg. Senior Bargain Hunters.
- no loyalty developed at supermarkets because most shoppers will search for the least expensive retailer of the wine they seek.
How can a Specialist Retail Store compete with a Supermarket:
PLACE (2)
- Specialist retailers need less space, therefore their property costs will be less (depending on where they are located).
- As supermarkets stock other items besides wine, they must allow for extra space for those products, and employ a larger staff to stock, clean, etc…
How can a Specialist Retail Store compete with a Supermarket:
PROMOTION (3)
- supermarkets will rely more on price promotions and discounts, the costs of which are passed onto producers.
- specialist retailers can promote products in more directly engaging ways, eg. in-store tastings (with staff or a producer) and classes.
- opportunity for hybrid model, selling wine for on-premise consumption as well = greater sales overall, “try before you buy” encourages lower-involvement drinkers to purchase unfamiliar wines, regularly rotating selection of wines will create repeat business.
