Factors that affect the Price of Wine Flashcards
What are the main factors affecting the price of wine ?
- Production costs
- Packaging
- Transport, distribution andn sales
- Taxes
- Retailers
- Market Forces
Where do some of the production costs come from?
- Growing the grapes
- Winemaking
What are some of the things that affect the cost of grape growing?
If land is purchased
- The location and reputation has a price
- The soil needs to be prepared
- Vines might need ot be bought an planted
- Takes many years to see a return on investmengs
Labour
What are two ways of lowering production costs?
Use seasonal workforce
Machine harvesting
What are some of the costs that go into winemaking?
- Purchasing and maintaining equipment
- Bottling, be it on-premise or a mobile bottler
- Amount of time the wine need to be kept before release for sale. Wine in vessels that aren’t generating any revenue (they’re aging yet taking up space in the winery or cave)
- Storage facilities are expensive to maintain
What is a way to lower winemaking cost?
Share equipment with other winemakers such as bottling faciliies
What are some of the things that go into packaging costs?
- Bottles
- Labels
- Capsules
- Closures
- Cartons
- Shippers
What is a way to lower packaging cost?
- Export wine in bulk and bottle it in the market where it is to be sold, but on ly an option for large producers and not always permitted by local laws
What are some of the things that go into the cost of transporting, distributing and selling wine?
Very complex and highly regulated. Producers rely on other businesses to transport and distribute their wines
Choosing partners who offer both value for money and access to reliable sales
How taxes are influencing the price of wine ?
- the level of taxes charged varies signifiantly from country to country but can add substantially to the price of a bottle of wine
- Important source of revenue for government and helps control consumption
How retailers are influencing the price of wine ?
- wines cost more in restaurant to make a profit, an takes into account occasion, environment and level of service
What is a major market force that can determine the price of a wine, whether it’s in a restaurant or a store?
How much the destination market is prepared to pay for it
Consumer demand
When a wine is allocated, in high demand, or if the vintage being released was a short vintage, the prices tend to increase.
Conversely, when wines are not in demand they might not be profitable and struggle due to lack of demand.
What are the three main types of wine producer
- Co-operatives
- Merchants
- Estates
What is a wine co-op (or co-operative)?
- Owned by their members, typically grape growers
- Deliver grapes to a winery that is owned by the co-opreative and run by a winemaking team that is employed by the co-operative
- Guarantee a buyer for their grapes
- Challeingng for winemaker who might not always control over the quality of the grapes
- Local co-op regularly produces some of the best wines from the area.
- Common in Europe because average vineyard holding is so small that is rarely economical to produce and market.
In terms of being a wine producer, what is merchant (aka négociant)?
- Merchants will buy grapes, juice, or finished wine from growers and/or co-ops.
- Merchants have contrats with suppliers and have greater control over their souirce material
- Merchants can be big or small, and they usually make a range of quality levels.
- Merchants are common outside of Europe, where growers have larger holdings and where producers only have to deal with a small number of growers
Many of the large wine brands are made this way
