Types of Business

Question 1

Production of wine

What is custome crush facilities

Answer 1

• A variant of the co-operative
• Growers do not own the facility, but rather pay each time they require its services
• Growers can focuss their attention on grape growing and marketing

Question 2

Production of wine

What are the advantages and disadvantages of custom crush facilities

Answer 2

Advantages
* (in contrast to a co-operative) quick decision making
* no need to invest in expensive equipment
* expertise of the professional winemakers

Disadvantages
* possible lack of control -> good working relationship required

Question 3

Production businesses

the advantages and disadvantages of operating as an estate?

Answer 3

Advantage
- retains control over the entire process
- take all the profit from the production + if sell directly, the full profit from the sale of the wine
- marketing benefits: authenticity, story

Disadvantages
- cost of managing the vineyard, equipping, running winery
- difficult vintage(e.g. hail, spring frost) nil or small productions - higher price/willingness to pay/not necessarily recover the costs of production

Question 4

Production Businesses

the advantages and disadvantages of operating as a member of a co-operative?

Answer 4

advantage
Member’s financial resource pool allow expensive equipment, expertise

disadvantage
Democratic control - slow decision making, results are not always liking to an individual member

Question 5

Explain the implact of fluctuations in currency on the cost of wine

Answer 5

constant fluctuation of the exchange rate between those two currencies can affect the price of the wine considerably.

Question 6

Monopoly market

Describe Systempolaget’s advantages or disadvantages from producers’ point of view

Answer 6

Advantage
* the system give smaller producers the same access to the market as larger ones (based on quality alone)
* potential to sell larger volumes (as availability throughout Sweden)

Disadvantage
* a lengthy process; usually takes 7 - 8 months
* it is much harder to enter
* a considerable amount of bureaucracy to deal with

Question 7

Wine Investment

Risks of buying wine at auction?

Answer 7

• inappropriate storage conditions
• fraud

Question 8

En Premeur

Risks of en primeur?

from purchasers point of view

Answer 8

• In theory, the price will go up once the wine has been matured and bottled.
• In reality, this is not quaranteed

wines sold en premeur tend to be produced only in limited quantities - may be the only opportunity to buy them.

Question 9

Promotion

How PRdiffers from advertising?

Answer 9

Advertising seeks to draw attention to and promote a specific product or range of products
PR is to give the business the most favourable image possible in the mind of consumers

Question 10

Marketing

5 Ps

Answer 10

product
price
people
place
promotion

Question 11

Transportation cost

Key advantage of bulk transportation?

Answer 11

the wine in tank is much lighter than in bottle
a standard shipping container can hold
- 9,000 - 10,000 litres of bottled wine
- 24,000 litres in flexitanks
- 26,000 litres in ISO tanks

Question 12

Retail Sector

How and Why Deep Discounters have become dominant in some markets?

Answer 12

How: low prices by keeping their costs down
- lower profit margin, basic store, limited range, stock major brands, buy direct from producers

Why: low overheads, price competitiveness, appealing to producers(opportunity to sell volume in private label, more margin)