Price of Wine

Question 1

Category

What are the costs through the supply chain?

Answer 1

Grape growing costs: vineyard establishment, vineyard management
Winemaking costs: winery establishment, general winemaking, maturation, packaging costs
Transportation costs: types of transportation, bulk transportation, insurance
Importation costs: taxes and duties, distributors’ margin
Sales costs: property costs, labour, equipment and materials, storage costs, delivery costs, margin at the point of sale
Marketing costs: labour(in-house vs third party), design and production of bottles and labels, marketing campaign

Question 2

Command verb

‘Evaluate’

Answer 2

to judge the quality, importance, amount or value of something.

Describe - Explain - Advantages - Disadvantages - Conclude

Question 3

Costs through the supply chain

What are the costs associated with winemaking costs?

Answer 3

Capital costs(winery establishment) + operating costs(producing, maturing, packaging)
Winemaking Costs: grape growing costs or the cost of bought-in-fruit, labour, machinery and equipment running costs, winery materials, water, electricity, maturation, packaging, depreciation

Question 4

supply and demand

What are the economic factors that influence the demand for wine?

Answer 4

Strength of the economy:
disposable income ↓ consumers are likely to trade down e.g. GFC & Champagne
disposable income ↑ willing to buy more expensive wine e.g. Chinese middle class & Bordeaux/Burgundy

Fluctuations in currency exchange:
wine-exporting country’s currency ↑ stable price/lost sale or decreased price/lost profit
wine-exporting country’s currency ↓ it costs producers more to import equipment and supplies, benefit from competitive price e.g. Argentinian wines

Changes to the market:
new companies and products are always entering, while others disappear. If a product disappears from a particular market, supply decreases, create opportunities for the competition.