Factors that Affect the Price of Wine Flashcards
What are the 3 major types of wine producers?
- Co-operatives
- Merchants/ Négociants
- Estates/ Domaines
What are some characteristics of Co-operatives?
-Winery own by members of the co-op. (growers) who sell their grapes the the winery.
-Winery operated by employees of the co-op.
-Winemaker has little control on the quality of grapes
-Some coops, however produce premium wines
-Mostly in EU where the average holding size is small
What are some characteristics of Merchant Houses?
-Merchant purchase grape/ juice to growers or co-ops.
-Have contracts over years with (in theory) higher quality control than co-ops.
-Exist in small and large scales especially outside of EU
-Many large wine brands follow this business model
What are some characteristics of Estates/ Domaines?
Businesses making wines from grapes they produce themselves at a smaller scale than Merchants or Co-ops
-Total control from the vineyard to bottling means that full responsibility rests on the producer
-Because of the small quantities produced, more vulnerable to bad harvest and weather hazards.
What are some costs associated with Viticulture?
-Cost of real estate
-Time and investment to set-up a new vineyard
-Labor cost associated with vineyard work
-Meccanization & seasonal workers not always possible
-Price of grape affected by market forces
What are some costs associated with Winemaking?
-Cost of initial investment (high tech) is expensive
-Bottling costs can be shared by producers for saving
-Where maturation is legal requirement, the cost of storage overtime can be expensive +
-Wine stored for years does not generate revenue immediately, which causes cash flow problem
What comprises packing expenses?
Bottles, Labels, Closures, Capsules, Cartons all need to be designed and purchased.
What are some costs associated with transport distribution and sales?
Selling at the winery is typically inexpensive compared to far domestic and international markets: Shipping, compliance to regulations and taxes are all factors affecting the price of wine.
What are some expenses associated with retail stores and restaurants selling wines?
Occupation costs (Rental costs), décor, atmosphere, service costs and desired profit mark-ups by these businesses add to the final cost of wine to the consumer.
