Challenges of Oversupply and Undersupply

Question 1

List the problems producers/wineries face when there is an oversupply of wine

Answer 1

1. Prices tend to fall due to there being cheaper options
2. If their wine doesn’t sell quick enough, they might have left over wine in tank/bottle
3. In order to get some money back, producers may be forced to sell below production cost
4. By selling below production cost, it devalues their brand

Question 2

What are some good options for producers who have an oversupply of wine?

Answer 2

1. To have the wine under a second label

2. To have the wine under a special label for super markets or restaurant.

Question 3

What is more common, a global oversupply of wine, or a global undersupply of wine?

Answer 3

Oversupply

Question 4

List some typical examples where you might see demand being higher than the supply

Answer 4

• Cult Napa Wines (Grace Family)
• Premier Cru Classe Bordeaux
• Grand Cru Burgundy

Question 5

What are the main issues that producers have to take into consideration if they have a bad harvest?

Answer 5

1. Not having any wine to sell depending on how bad the harvest was.
2. If the producer had a contract with a distributor/importer and were not able to fill the contract, they may be penalized
3. Worse yet, the producers may have their contract cancelled.