Price

Question 1

What are the 2 categories for Production Costs?

Answer 1

Grape Growing and Winemaking

Question 2

What are 5 costs in Grape Growing?

Answer 2

Cost of Land
Preparation of Soil
Purchase and Planting of Vines
Trellises and/or other Vineyard Equipment
Labor

Question 3

About how long does it take to see a return on starting a vineyard and why?

Answer 3

Many years - vines do not produce grapes until the 3rd year after planting

Question 4

What is the largest production cost?

Answer 4

Labor

Question 5

How might the most expensive Grape Production cost be mitigated?

Answer 5

Using a casual/seasonal workforce instead of year-round staff
Mechanisation

Question 6

How might the costs of labor and/or mechanization/equipment be mitigated? In what cases would this not be an option?

Answer 6

By sharing between vineyards

Seasonal workers are not likely an option for Vineyards in very isolated areas
Mechanization is not possible for sites with extremely steep slopes

Question 7

What is the biggest expense on the Winemaking side of production? What can be done to mitigate this (include a specific example)?

Answer 7

Equipment

Some equipment can be shared between wineries (eg, bottling facilities)

Question 8

What are the 2 main expenses on the Winemaking side of production and how cab each be necessary?

Answer 8

Equipment - sorting, vinification, maturation, bottling

Storage - for maturation periods or stock that hasn’t sold yet

Question 9

About how long does it take to see a return on starting a winery and what are the two main reasons for this?

Answer 9

It could take many years for a wine to be ready for release depending on the style of wine or local laws regarding aging, time spent on lees, etc. then depending on market conditions stock may need to be stored for some time at the expense of the winery.

Question 10

What are the 5 costs of Packaging wines (and 2 ways that they cost a winery)? What is a way to mitigate this, and in what cases might it not be an option?

Answer 10

Bottles, Labels, Capsules, Closures, & Cartons - Design and Purchase
Packaging can be done more cheaply if a wine is shipped in bulk and packaged closer to the market where it is to be sold - this is not generally an option for smaller production wineries or where it is prohibited by local wine law

Question 11

What are 3 additional costs to wineries when trying to get their wine to market? How are these generally handled, and how do some wineries avoid them?

Answer 11

Transport, Distribution, and Sales
These are highly regulated in most countries and most wineries will need to rely on other businesses to carry these tasks out. Some wineries avoid these costs by only selling to visitors at the winery.

Question 12

What are 2 factors in the cost of wine to the consumer?

Answer 12

Taxes and Retailers

Question 13

What are the 2 main purposes of Taxes on wine?

Answer 13

To control consumption by increasing the price

To provide a source of revenue for governments

Question 14

Which Retailers will generally have the highest markup on the price of wine? Why?

Answer 14

Restaurants - they expect to generate more profit from wine sales than shops do and the price takes into account the occasion, environment, and level of service.

Question 15

What is the ultimate factor that decides the price of a bottle of wine, and whether the costs of producing it are viable or not?

Answer 15

Market Forces

Question 16

What are the 3 main types of wine producer?

Answer 16

Co-operatives, Merchants, and Estates

Question 17

How do co-operatives operate? What are the benefits and potential drawbacks of this?

Answer 17

Members of the co-operative send their grapes to the winemaking facility owned by the co-operative.
This guarantees a buyer for a member’s grapes, but it therefore does not guarantee the quality of the grapes the winemaker must use.

Question 18

Where are co-operatives most common, and why?

Answer 18

Europe - because most vineyard owners own such small vineyard areas that it is not economical to vinify and sell their own wines

Question 19

How do Merchants operate?

Answer 19

They buy grapes, juice, or wine from growers or co-operatives.

Question 20

Are Merchants small or large scale producers?

Answer 20

Both. They can operate on a small scale focusing on premium wines or operate on a large scale producing wines of a range of quality levels.

Question 21

Where are Merchants most common?

Answer 21

Outside of Europe

Question 22

What is the French name for a Merchant?

Answer 22

Negociant

Question 23

What are the benefits to a Merchant and its suppliers?

Answer 23

A Merchant can generally reject grapes that it does not consider suitable. Some producers have contractual agreements with Merchants which helps guarantee a place to sell their grapes to.

Question 24

What is a drawback for Merchants?

Answer 24

Where grapes are in high demand, it may become difficult to to guarantee a regular supply of suitable grapes.

Question 25

How do Estates operate?

Answer 25

Estates make wine only from grapes that they grow.

Question 26

Are estates typically large or small scale?

Answer 26

Small.

Question 27

What is the French name for Estates?

Answer 27

Domaine

Question 28

What is the main benefit and the main drawback for Estate producers?

Answer 28

They have the greatest amount of control over their product
They may have fewer blending options to produce a quality wine in years that were bad for any part of their grape harvest