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2)COPY OF MIXED CARDS - WSET > Wine Business > Flashcards

Wine Business Flashcards

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1
Q

What are the 4 factors that affect supply of wine?

A
  1. Production
  2. Human Factors
  3. Natural Factors
  4. Legislation
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2
Q

Why will production affect supply, and give an example?

A

The amount of wine produced will have a strong impact on the level of supply.
E.g. Globally, 90% of vineyards are used for wine production.

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3
Q

Give an example of a human factor that has affected supply.

A

In Spain, there has been the relaxation of laws banning irrigation and the increased use of more modern high density planting = INCREASED PRODUCTION

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4
Q

Give an example of a natural factor that affects supply.

A

Variation in weather conditions from year-to-year.
E.g. in 2017, spring frosts, hailstorms and severe heatwaves devastated Europe. There was a 14% fall in production compared to 2016.

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5
Q

Give another example of a natural factor that affects supply.

A

Climate change - e.g. serious droughts in South Africa.

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6
Q

Give an example of a legislative factor that affects supply.

A

Increasing the number of GI’s (Geographical Indications) around the world - brings supply & demand more in line.

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7
Q

Give an example of a legislative factor that has increased supply.

A

Prosecco DOC - demand is rising, so there is pressure to extend the permitted production area = greater supply, but dilution in overall quality.

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8
Q

Give an example of a legislative body that has affected supply.

A

The Comite Champagne.

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9
Q

What are 4 factors that have REDUCED supply?

A
  1. Vine Pull schemes
  2. EU restrictions on planting new vineyards
  3. Conversion of land to other uses
  4. Abandonment of rural areas
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10
Q

Why was the ‘Vine Pull scheme’ initiated?

A

Because in the mid-1980s, EU production was greater than demand. The surplus was called the ‘wine lake’.

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11
Q

Describe the ‘Vine Pull scheme’.

A

The national governments and EU paid growers to pull up poor quality vines in Southern France, Italy & Spain.

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12
Q

Why is vineyard land converted to other uses?

A

Because grapes for wine are a low value agricultural crop.

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13
Q

Give an example of where vineyard land has been converted to other uses.

A

Elgin in South Africa - removing vineyards and replacing with apples = greater financial return.

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14
Q

Why are rural areas being abandoned?

A

Because there is a trend for younger people to leave rural areas and go to live and work in urban areas = reduction of available workforce.

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15
Q

What 3 factors affect demand of wine?

A
  1. Social
  2. Economic
  3. Legislative & Political
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16
Q

Over the course of the 2000’s, what has happened to global wine consumption?

A

Increased rapidly in the first part of the 2000s, and fell back after the global financial crisis of 2008.

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17
Q

Where is demand for wine decreasing?

A

Traditional wine-drinking countries (e.g. France, Italy) - static or falling.

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18
Q

Where is demand for wine increasing?

A

China - over the last 2 decades amongst the growing middle-class group.

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19
Q

What are 3 examples of economic factors that influence the demand for wine?

A
  1. Strength of the economy.
  2. Fluctuations in currency exchange.
  3. Changes to the market.
20
Q

What happens to the demand for wine when disposable income falls?

A

Wine consumers trade down to cheaper wines, or switch to less expensive drinks, e.g. beer.

21
Q

What is the downside to a weak currency?

A

It costs producers more to import equipment & supplies (e.g. barrels, corks)

22
Q

Give an example of a change to the market which might influence demand for wine.

A

If a supermarket has run out of Echo Falls White Zinfandel, demand for Blossom Hill White Zinfandel might increase.

23
Q

What are 4 examples of legislative & political factors that influence the demand for wine?

A
  1. Laws prohibiting or limiting the sale of alcohol.
  2. Government policies to reduce alcohol consumption.
  3. Taxation
  4. Wine Laws
24
Q

Give an example of a law prohibiting or limiting the sale of alcohol.

A

State-owned monopolies, e.g. Sweden.

25
Q

Give an example of a government policy to reduce alcohol consumption.

A

Scotland’s ‘Minimum Unit Pricing’ to reduce availability of cheap alcohol.

26
Q

What is the catch-22 of taxation on alcohol?

A

It reduces consumption due to higher prices BUT alcohol is a major revenue generator for many governments.

27
Q

Where in the world has a wine law seen the decrease in demand?

A

In China - their ‘lavish gifting’ was stopped by Xi Jinping in 2012. Demand for ‘Bordeaux Premier Cru Classe’ and ‘Grand Cru Burgundy’ dropped almost immediately.

28
Q

What are 4 reasons why wine consumption is falling in certain areas?

A
  1. Younger people drinking less wine
  2. Health concerns
  3. Changes in lifestyle.
  4. Reduced availability of cheap wine.
29
Q

What are 3 reasons why demand for wine has increased?

A
  1. Changing consumer preferences (rise in rose & prosecco)
  2. Changes in reputation (awards, good reviews from leading critics)
  3. Changes in spending pattern
30
Q

Define ‘Excise Duty’.

A

An indirect tax designed to discourage the purchase of particular goods.

31
Q

Which country’s excise duty has greatly reduced demand for sparkling wine and why?

A

Republic of Ireland - excise duty on still = 3.19 euros a bottle, excise duty on sparkling = 6.37 euros a bottle.

32
Q

Which country has abolished excise duty on wine altogether?

A

Hong Kong in 2008.

33
Q

What is ‘customs duty’?

A

Duty on imported goods - generate revenue & encourage sale of domestic rather than imported goods.

34
Q

Describe the EU free-trade area.

A

Member states can import & export goods between themselves tariff-free.

35
Q

Define ‘Embargo’.

A

A country bans imports from or exports to a particular country.

36
Q

Define ‘Supply Chain’.

A

The network of organisations and activities involved from the creation of a product through to its distribution and sale to the final consumer.

37
Q

What are grape growing costs?

A

The initial costs of establishing the vineyard, and the ongoing costs of managing it.

38
Q

What are 11 points of vineyard establishment?

A
  1. Buying or renting land
  2. Surveying the land
  3. Site clearance
  4. Building access roads
  5. Buying & planting vines
  6. Buying stakes & wires
  7. Installation of deep drainage channels & pipework
  8. Irrigation system
  9. Protection against weather hazards
  10. Protection from animal pests
  11. Buying machinery and equipment.
39
Q

Define ‘Capital Costs’.

A

The costs incurred in establishing a business.

40
Q

How can capital costs be funded?

A

Loans, investors, governments offering subsidies to prospective producers to help with capital costs.

41
Q

What are 5 costs of vineyard management?

A
  1. Labour
  2. Machinery and equipment
  3. Vineyard treatments
  4. Water
  5. Electricity
42
Q

What are the 4 stages of winemaking costs?

A
  1. Winery establishment
  2. General winemaking
  3. Maturation
  4. Packaging
43
Q

What are 3 costs involved in winery establishment?

A
  1. Land
  2. Building the winery
  3. Fitting it out with equipment
44
Q

What are 6 costs involved in general winemaking?

A
  1. Labour
  2. Machinery & equipment running
  3. Winery materials
  4. Bought-in fruit
  5. Water
  6. Electricity
45
Q

What are 4 costs involved in maturation?

A
  1. Storage space
  2. Vessels
  3. Labour
  4. Loss of cashflow
46
Q

What are 2 costs involved in packaging?

A
  1. Materials

2. Bottling line

47
Q

Give an example of a wine that has considerable costs in maturation?

A

Brunello di Montalcino (only be released the January five years after harvest).

2)COPY OF MIXED CARDS - WSET (34 decks)

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