Selling Directly to Retailers

Question 1

What is a ‘free’ market?

Answer 1

-where producers free to choose to sell directly to consumer or retailer through an intermediary

Question 2

What are the advantages of selling directly to retailers?

Answer 2

-no intermediary costs and margins= maximises profit
-producers free to decide which retailers stock their wines= final say how they are marketed= retaining control over brand image

Question 3

What are the disadvantages of selling directly to retailers?

Answer 3

-increased admin burden
-getting wine to retailer takes up time could be spending in vy/winery or force them to hire additional staff
-admin= arranging collection, transportation, delivery of wine
-exporting= import duties and taxes paid, packaging and labelling comply with relevant laws
-admin could be reduced if use freight forwarder, but additional costs
-producer may have to take on full financial risk if lost/stolen in transit
-if exporting to foreign market, takes time to build up relationships w retailers
-need to:
1. understand market
2. consumer preferences
3. legislation
4. to do properly= numerous time consuming and costly visits (although trade fairs beneficial)