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WSET L4 D2 2024 > 3. Types Of Businesses > Flashcards

3. Types Of Businesses Flashcards

1
Q

What are the different types of businesses engaged in wine production

A
  • Estates
  • Growers
  • Grower-producers
  • Co-operatives
  • Custom crush facilities
  • Virtual winemakers/wineries
  • Conglomerates
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2
Q

What is an estate producer

A

Produces wine from its own vineyards (owned/leased)

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3
Q

What are the advantages of estate production

A
  • Control over growing, producing and bottling
  • All profit goes directly to estate, especially when not using intermediates for the sale
  • Marketing tool: the story (estate-bottled)
  • Large estates benefit from economies of scale (re-use equipment for different wines)
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4
Q

What are the disadvantages of estate production

A
  • Cost of managing vineyard and running winery (equipment like bottling line may need to be hired)
  • Possible loss of crop (higher prices to cover costs)
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5
Q

Give an example of an estate

A

Chateau Margaux on the right bank in Bordeaux, blend of Cabernet Sauvignon, Merlot and Cabernet Franc

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6
Q

What is a grower

A

Some growers choose not to produce wine, concentrating solely on growing grapes, that they sell to a winemaker or merchant

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7
Q

What are the advantages of growers

A
  • Small vineyards can not justify the cost of buying or hiring equipment
  • Better cashflow, when the grapes are sold instead of when the wine is sold
  • Focus on quality grapes
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8
Q

What are the disadvantages of growers

A
  • Vintage variation
  • Fluctuations in supply and demand
  • Fluctuations in price
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9
Q

What are the options for growers when selling their grapes

A
  • Contract with producer or merchant: gives security and a strong working relationship. When quality is too low, grapes can be rejected or price drops
  • Spot market: higher risk but greater reward
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10
Q

Give an example of a grower

A

Andy Beckstoffer, Beckstoffer Vineyards: Cabernet Sauvignon on prime sites in Napa Valley

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11
Q

What is a grower-producer

A

When a grower produces wine from its grapes, and sells it to a merchant to mature and bottle

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12
Q

What are the advantages of grower-producers

A
  • No need for maturation (barrels and cellar space)
  • No need for marketing and sales
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13
Q

What are the disadvantages of grower-producers

A
  • Smaller profit than if they were to sell the finished wine
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14
Q

Give an example of a grower-producer

A

Fairly common in Burgundy

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15
Q

What is another word for merchant

A

Négociant

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16
Q

What is a négociant

A

They buy immature wine from a grower-producer. They sometimes blend wines from different producers, then bottle and sell it under the merchants name

17
Q

What are the advantages of merchants

A
  • No expense of buying and managing a vineyard
  • Flexibility in bad vintage
18
Q

What are the disadvantages of merchants

A
  • Little control over grape growing and winemaking (solution: make the wine themselves, or offer technical support to growers/growers-producers)
  • In bad vintages, buying on the spot market increases price of the grapes
  • In popular regions such as Burgundy and Napa Valley, prices have risen (solution: longterm contracts)
19
Q

Give examples of merchants

A
  • Champagne
  • Micro-négociants in Burgundy specialise in single vineyard wine, with a lot of influence on growing
  • Bordeaux: deal in finished wine in bulk or bottle
20
Q

Explain “en primeur”

A

After WOII, the châteaux in Bordeaux struggled to survive financially. By selling wine in barrel, they generate cashflow more early, covering production costs up to bottling. Merchants buy a proportion of the stock and sell to distributors/retailers.

21
Q

What are the advantages of buying “en primeur”

A
  • Cheaper
  • Chance to buy before sold out
22
Q

Give examples of regions where “en primeur” is common practice

A
  • Bordeaux
  • Burgundy
  • Rhône
  • Super Tuscans
  • Vintage Port
23
Q

What is a grower-merchant

A

When merchants own a vineyard and produce wine from these grapes, alongside wine from bought-in grapes. Possibly under the same name, or under a different name.

24
Q

Give examples of grower-merchants

A
  • E. Guigal in the Rhône Valley: single-vineyard wines in Côte-Rôtie, and wine from villages (Crozes-Hermitage and Gigondas) and generic Côtes du Rhône from bought-in grapes
  • Domaine Dujac in Burgundy from its own grapes/ Dujac Père et Fils from bought-in grapes
25
Q

What are co-operatives

A

Owned by its members: a group of growers, producing wine with democratic control. Growers are paid a part of profits by volume or by quality. Range in size from single village to largest wine companies in the world

26
Q

What are the advantages of co-operatives

A
  • Pool financial recourses, affording expensive equipment/expertise/marketing
  • A part of profits can be invested in latest technology, research, marketing and labelling
  • Large companies can benefit from economies of scale
27
Q

What are the disadvantages of co-operatives

A
  • Management must consult members before making decisions: takes time, and does not always please everyone
28
Q

Give examples of co-operatives

A
  • Plaimont in south-west France
  • Badischer Winzerkeller in south Germany

Own-label wines:
- La Chablisienne in Chablis
- Mont Tauch in Fitou

29
Q

What are Custom Crush Facilities

A

A variant of co-operative, where growers do not own the facility, but they pay everytime they use it

30
Q

What are the advantages of custom crush facilities

A
  • Quick decision making, without the need for approval of other members
  • No need for investment in equipment
  • Focus on growing and marketing
31
Q

What are the disadvantages of custom crush facilities

A
  • A third party making the wine, needs a good working relationship and trust
32
Q

Give an example of custom crush facilities

A

Mainly found in California

33
Q

What are virtual wineries

A

Mainly in North America, where winemakers who do not own vineyard land nor winemaking facilities. They buy grapes or juice, and then use custom crush facilities or rent facilities in a winery

34
Q

What are conglomerates

A

Large companies, sometimes with interests in not only wine, who often own many smaller businesses, from production to distribution

35
Q

What are the advantages of conglomerates

A
  • Great control at all stages of the route to market
  • No need to pay intermediates
  • Negotiating power
36
Q

Give examples of conglomerates

A

Wine only:
- E&J Gallo (Gallo Family Vineyards, Barefoot)

Luxury goods:
- Moët Hennessy-Louis Vuitton (Moët&Chandon, Veuve Clicquot, Cloudy Bay NZ)

Insurance companies:
- AXA (Top estates in Bordeaux and Burgundy)

37
Q

Give examples of a large, medium and small company

A
  • E&J Gallo, California, USA
  • Michele Chiarlo, Piemonte, Italy
  • Felton Road, Central Otago, New Zealand

WSET L4 D2 2024 (14 decks)

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