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D2 > Factors Affecting Price > Flashcards

Factors Affecting Price Flashcards

1
Q

What happens to volume if supply exceeds demand?

A

Prices fall - consumers driven to cheaper alternative

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2
Q

Factors that influence wine demand?

A

Social
Economic
Legislative/Political

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3
Q

Top 5 wine consumption countries?

A 
USA
France
Italy
Germany
China
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4
Q

Social reasons leading to a decline in wine consumption?

A 
Younger people drinking less wine
Health concerns
Busy modern lifestyles
Reduced availability of cheap wine
Changing consumer preferences
Changes in reputation
Changes in spending pattern
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5
Q

Economic factors relating to demand?

A

Strength of economy
Currency fluctuation
Emerging producers/current market price

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6
Q

Legislative and political factors influencing the sale of wine?

A 
Laws prohibiting/limiting alcohol sales
Government policies on consumption (BAC/minimum unit price)
Taxation
International trade
Wine laws/new GIs
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7
Q

Top 5 wine producing countries?

A 
Italy
France
Spain
USA
Argentina
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8
Q

Potential challenges to the production of wine?

A 
Area under vine
Restrictions on new vineyards (EU)
Conversion of vineyard land - more profitable crop
Abandonment of rural areas
Vintage conditions
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9
Q

Challenges of oversupply of wine?

A

Unsold wine
Sold for a loss to free space
Sell to a new market
Find a new method - second label

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10
Q

Challenges of undersupply of wine?

A

Strained business relationships

Switch to cheaper alternative

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11
Q

Examples of price sensitive markets?

A

Germany

UK

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12
Q

Countries with tariff-free trade with EU?

A

Chile

South Africa

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13
Q

Top 5 countries for area under vine?

A 
Spain
China
France
Italy
US
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14
Q

What is the wine lake?

A

Surplus of wine in the 1980s in Europe due to overproduction

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15
Q

Describe the correlation between area under vine and production levels.

A

Used to be a closer correlation, but human factors have allowed increased production with less area under vine.

  • Law changes, i.e. increased irrigation
  • Correct varietal choices, rootstocks, clones
  • Better treillising and training
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16
Q

What influences grape growing cost?

A

Vineyard establishment

Ongoing costs of maintenance and production

17
Q

Costs of vineyard establishment?

A

Cost of land based on quality/availability
Surveying/clearing land
Building access roads
Buying/planting vines
Installing drainage/irrigation/trellising equipment
Hazard and pest protection
Buying machinery/equipment

18
Q

What are capital costs?

A

Initial costs of setting up the vineyard, budgeted in advance

19
Q

Costs of vineyard management?

A 
Labor
Machinery/equipment operating costs
Treatments
Water
Electricity
20
Q

Winemaking costs?

A 
Building the winery
Labor
Machinery/equipment operating costs
Materials for winemaking interventions
Purchased fruit
Water
Electricity
Maturation space/time/equipment
Packaging
21
Q

Four methods of transporting wine, most expensive to least?

A

Air
Road
Rail
Sea

22
Q

Current import % of wine by bulk transport?

A

38% globally

  • 58% German
  • 35% UK
  • 24% US
23
Q

Options for bulk wine transport containers?

A

Plastic flexitanks in steel shipper (common)

Non-flexible ISO tanks

24
Q

Litres transported in bottle vs bulk?

A

Bottle - 9000-10000L
Bulk flexitank - 24000
Bulk ISO tank - 26000

25
Q

Importation costs?

A

Label adjustments to meet local laws

Distributor fees

26
Q

Sales costs?

A 
Property costs
Labor
Equipment/materials
Storage
Delivery
Competitive margins
27
Q

Marketing costs?

A

Labor
Design/production of bottles/labels
Marketing campaign

28
Q

Define options.

A

Taking a reserve on a certain amount of wine at an agreed price

29
Q

Ways to protect against currency fluctuation

A 
Options
Fixing price in importer's currency
Buying currency to cover specific orders
Entering fixed exchange rate contract
Conducting trading in USD/EUR
Opening a foreign currency account locally
Opening an account overseas

D2 (3 decks)

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