highlights 2 Flashcards
Factors influencing the demand for wine – social factors
S H a R P
- changes in spending patterns
- consumption habits
- changes in reputation
- consumer preferences
Factors influencing the demand for wine- economic factors
F a C E
- fluctuation in the currency exchange
- changes to the market
- economy strength
Factors influencing the demand for wine- legislative and political factors
W I L T in G
- wine laws
- international trade
- laws prohibiting or limiting the sale of alcohol
- taxation
- government policies to reduce alcohol consumption
What are the contributing factors that are factored into the price of a bottle of wine? (supply side)
PLOWing MTS
- Production -Growing costs
- Legislation -Marketing costs
- Over/ Under -Transportation costs
- Winemaking costs -Sales Costs
- Importation costs
Factors influencing Supply of wine
-production – what are the influencing factors of supply?
C A V E H A N
reasons for loss other
- Conversion to other uses -Human factors
- Abandon rural area -Area under vine
- Vine pull schemes -Natural Factors
- EU restriction on planting new vineyards
Reasons for consumption of wine to be falling?
C H e R r Y
-changes in lifestyle- shorter mealtime, traditional of drinking at lunch is increasingly forbidden by employers
- health concerns- increasing awareness of negative health effects
- reduced availability of cheap wine
- younger people drinking less- old fashioned & turn to other drinks – Spending less time in bars, contact friends through social media
Factors influencing Supply of wine -grape growing costs
-Beyond purchasing the land, what are other initial costs of establishing the vineyard?
S C A B S W I M P
- Survey -Stakes/ trellising
- Clear -Weather hazzards
- Access roads -Irrigaion / drainiage
- Buying plants -Machinery / equipment
- pest protection
Factors influencing Supply of wine -grape growing costs
-ongoing costs of managing the vineyard and producing grapes that may start as soon as the vines are planted & before productivity?
T I M E M e L d
-Treatments: Conventional: herbicide, fungicide, insecticides
Organic/ biodynamic; may use Sulphur powder or Bordeaux mix
- Irrigation if needed
- Materials: replacement vines & trellising
- Electricity- for irrigation systems, bird scares, frost protection equip
- Machinery / equipment running à fuel & maintenance
- Labor costs - seasonal, annual skilled
Factors influencing Supply of wine -winemaking costs
I P M P
-Initial costs of establishing the winery
-producing wine
-maturing wine
-packaging wine
Factors influencing Supply of wine- wine making costs:
-producing the wine costs include?
F L E W M e M
*Fruit-buying fruit vary with quality & vintage. Blend in cheaper varieties
*Labor- some full time staff & harvest labor to Unloading crates, moving equip
*Electricity- for refrigeration, ventilation, presses, pumps, lighting
*Water- uses large volumes of water for cleaning, invest in water treatment plants
*Machinery & equipment- fuel, electricity, maintenance
*Materials- sugar for enrichment, de-acidification agents, yeasts, carbon dioxide, inert gasses, fining and filtering agents
Factors influencing Supply of wine
-sales costs
P L E a S e D M
Property costs for on/ off prem
Labor
Equipment & material
Storage
Delivery
Margin
The Impact of Legislation on the Cost of Wine
Cost is affect by types of legislations:
S M a L D o T T
Subsidies Duties
Minimum Pricing Taxes
Labeling law Trade barriers
List type of producer engaged in the production of wine?
M E G G a V a C C C
Merchant Virtual Winemakers/ Wineries
Estate Co-Operatives
Growers Custom Crush Facilities
Grower-Producer Conglomerates
The Impact of Fluctuations in Currency on the Cost of Wine
-mitigation methods to a fluctuation exchange rate include?
F E B T O O L
- Fixing price in the currency of the importer on date of ordering
- Entering a contract to fix the exchange rate
- Buying currency to cover specific order
- Trading in USD/EUR -Options
- open an account in an overseas bank
- open a foreign currency account in a local bank
Disadvantages of a free market for the producer selling directly to retailers?
F A C T D E E L
Freight forward Delivery
Administrative Burden Extra staff
Collection Exported duties/ taxes
Transportation Label/ package compliace
