Low-volume, Super Premium Cabernet Sauvignon Flashcards
Global over-supply
- Volumes are low
- Little impact on sales
Strength of the economy
- Volumes are small
- Buyer are less likely to be at risk during recession
- Little impact on sales
Profit margin in relation to volume of wine sold
- High margin per unit
- Low-volume sales
Costs of grapegrowing (12x75cl)
Almost $300
Costs of winemaking (12x75cl)
Over $400
Why is grape growing more expensive
Labour, due to a number of likely factors:
- More interventions in the vineyard (pruning, leaf removal, crop thinning etc)
- More manual work
- No benefit from economies of scale
Why is winemaking more expensive
- Oak: new oak barrels vs oak chips
- Cellar overheads: 18 months maturation vs 2 months
- Cellar overheads: individual barrels vs in bulk
- Quality materials: glass, closures, labels, case packaging
- Higher standard for materials
- Less benefit from economies of scale
Grape growing costs as a percentage of total production costs
70%
Choice of retailer in a free market
Specialist retailers and fine dining restaurants:
- Small volume
- High price
- High-involvement consumers
How likely is selling direct to the retailer in a free market
Unlikely
- Inefficient to deal with many different small retailers
How likely is selling to a retailer via an intermediary
Most likely via an agent, distributor or broker
- Know the target market
- Handle many, small outlets
- Focus on production
- Costs get absorbed in high price
Joint venture is unlikely due to small volume
How likely is selling directly to the consumer
Cellar door and clubs: very likely
- Experience
- Exclusive offers
- Brand loyalty
Events and online: unlikely
- Not enough volume
How likely is price promotion as a form of promotion
Unlikely
- Devalue brand image
- Small volume
How likely are competitions as a form of promotion
Unlikely
- Price is too high
How likely are competitions as a form of promotion
Unlikely
- Price is too high
How likely is limited edition presentstion as a form of promotion
Possible
- Contribute to luxury brand image
- Investment potential
How likely are tastings as a form of promotion
Unlikely
- Small volume
- More likely: paid tastings by retailers
How likely are staff incentives as a form of promotion
Unlikely
- Limited volume
How likely is staff training as a form of promotion
Likely
- Knowledge is needed
How likely is advertising as a form of promotion
Possible
- Specialist wine publications aim for high-involvement consumers
How likely is social media as a form of promotion
Unlikely
- Difficult to reach limited number of potential consumers
How likely is a website as a form of promotion
Likely
- Reasonable cost
How likely is PR as a form of promotion
Unlikely
- Unless targeted at top wine journalists and influencers
How likely is sponsorship as a form of promotion
Unlikely
- Company is unlikely to be big enough
- Small volume would not meet demand
How likely are events as a form of promotion
Unlikely
- Unless small, prestigious events
- Branded free merch is an option
How likely are reviews and awards as a form of promotion
Possible
- Samples for competitions, especially for unknown regions
- High-involvement consumers can be influenced
- Respected critics can increase investment potential
How likely is wine tourism as a form of promotion
Possible
- Determined by volume available and producer preference
