Chapter 4 5 6 7 D2

Question 1

What is one advantage of selling wine directly to retailers?

Answer 1

Higher Profit Margins

Avoids costs and markups added by intermediaries.

Question 2

What is a disadvantage of selling wine directly to retailers?

Answer 2

Increased Administrative Burden

Producers must handle logistics, compliance, and invoicing.

Question 3

What role does a distributor play in wine distribution?

Answer 3

A distributor buys wine from producers and sells it to various retailers and hospitality businesses.

Question 4

What is a key advantage of appointing a distributor?

Answer 4

Market Expertise

Distributors have established relationships with retailers and knowledge of consumer preferences.

Question 5

What is a disadvantage of using a distributor?

Answer 5

Lower Profit Margins

Distributors take a percentage of sales, reducing the producer’s profits.

Question 6

What is a potential benefit of establishing a joint venture?

Answer 6

Shared Resources and Costs

Helps reduce financial risk and investment needed for market entry.

Question 7

What is a disadvantage of a joint venture?

Answer 7

Loss of Independence

Decision-making is shared, reducing producer control.

Question 8

What is the primary function of a broker in wine distribution?

Answer 8

Brokers connect wine producers with potential buyers but do not take ownership of the wine.

Question 9

What is an advantage of using a broker?

Answer 9

Specialist Market Knowledge

Brokers have access to niche markets (e.g., bulk wine, premium wines).

Question 10

Fill in the blank: Selling Directly to Consumers (DTC) includes cellar door sales, wine clubs, online sales, and _______.

Answer 10

direct sales at events.

Question 11

What is a key advantage of DTC sales?

Answer 11

Highest Profit Margins

No intermediary costs.

Question 12

What is a disadvantage of DTC sales?

Answer 12

High Administrative Costs

Requires staff, logistics, and marketing investment.

Question 13

What are on-premises sales?

Answer 13

Wine sold in businesses where it is consumed on-site, such as restaurants and bars.

Question 14

What is an advantage of on-premises sales for producers?

Answer 14

Stronger Brand Exposure

Helps establish reputation, especially in fine dining.

Question 15

What is a disadvantage of on-premises sales?

Answer 15

Limited Sales Volume

Restaurants and bars buy smaller quantities compared to supermarkets.

Question 16

What are off-premises sales?

Answer 16

Wine sold in stores where it is taken home for later consumption, such as supermarkets and wine shops.

Question 17

What is an advantage of off-premises sales for producers?

Answer 17

Larger Sales Volumes

Supermarkets and retailers can move thousands of bottles per year.

Question 18

What is a disadvantage of off-premises sales?

Answer 18

Lower Profit Margins

Retailers negotiate bulk discounts and charge listing fees.

Question 19

What are specialized wine retailers known for?

Answer 19

Focusing on premium wines, smaller producers, and niche markets.

Question 20

What is a key advantage of specialist wine retailers?

Answer 20

Higher Price Points

Consumers are willing to pay more for expert advice and curated selections.

Question 21

What is a disadvantage of specialist wine retailers?

Answer 21

Lower Sales Volumes

These stores sell fewer bottles than supermarkets.

Question 22

What is a characteristic of hybrid retailers?

Answer 22

Combining retail sales with a wine bar or tasting room.

Question 23

What is an advantage of hybrid retailers?

Answer 23

Encourages Exploration

Consumers are more likely to try new wines when they can taste first.

Question 24

What is a disadvantage of hybrid retailers?

Answer 24

Higher Operational Costs

Running both a retail store and a bar requires more staff and licenses.

Question 25

What is a key characteristic of online retailing for wine?

Answer 25

Consumers buy wine directly from websites, marketplaces, or subscription models.

Question 26

What is an advantage of online retailing?

Answer 26

Wider Market Reach ## Footnote Allows producers to sell globally without geographic limitations.

Question 27

What is a disadvantage of online retailing?

Answer 27

Shipping Regulations ## Footnote Some countries and states restrict alcohol delivery.

Question 28

What is a key feature of global travel retail?

Answer 28

Wine sold in airports, seaports, and international travel hubs.

Question 29

What is an advantage of global travel retail?

Answer 29

Global Exposure for Brands.

Question 30

What is a disadvantage of global travel retail?

Answer 30

Expensive Retail Space ## Footnote High rental costs reduce profit margins.

Question 31

What type of restaurants are considered destination restaurants?

Answer 31

Fine Dining Restaurants.

Question 32

What is an advantage of selling wine in restaurants?

Answer 32

Premium Pricing ## Footnote Wine markups are 2-3 times the retail price.

Question 33

What is a disadvantage of selling wine in restaurants?

Answer 33

Limited Control Over Sales ## Footnote Success depends on staff knowledge and recommendations.

Question 34

What is a significant advantage of selling wine in restaurants?

Answer 34

Premium Pricing – Wine markups are 2-3 times the retail price.

Question 35

What is a disadvantage of selling wine in restaurants?

Answer 35

Limited Control Over Sales – Success depends on staff knowledge and recommendations.

Question 36

What is the main focus of Chapter 7?

Answer 36

Wine markets that do not operate under a free-market system.

Question 37

What is a monopoly market?

Answer 37

A market where the government controls the retail sale of alcohol.

Question 38

Name an example of a monopoly market.

Answer 38

Sweden: Systembolaget is the only legal retail store for alcohol sales.

Question 39

What are key characteristics of monopoly markets?

Answer 39

* Government-regulated pricing * Limited promotional opportunities * High alcohol taxes * Strict product selection process

Question 40

What is a challenge for producers in monopoly markets?

Answer 40

Difficult Market Entry – Approval is lengthy and competitive.

Question 41

What is an opportunity for producers in monopoly markets?

Answer 41

Stable Market with Reliable Demand – Once listed, wines gain exposure across the entire country.

Question 42

How does Sweden’s Systembolaget work?

Answer 42

Four times a year, Systembolaget issues tender requests for wines; wineries must register with an approved importer before submitting samples.

Question 43

What is the USA’s three-tier system?

Answer 43

A system requiring that producers sell to licensed distributors, who then sell to retailers, and retailers sell to consumers.

Question 44

What is a challenge for producers in the USA’s three-tier system?

Answer 44

Expensive Distribution Costs – Wineries must pay distributors a percentage of sales.

Question 45

What is an opportunity for producers in the USA’s three-tier system?

Answer 45

Large Market with High Demand – The USA is one of the world’s biggest wine consumers.

Question 46

True or False: In the USA’s three-tier system, producers can sell directly to consumers in most states.

Answer 46

False

Question 47

What is a disadvantage of the USA’s three-tier system for small wineries?

Answer 47

Difficult Market Entry for Small Wineries – Distributors prefer to work with larger, well-known brands.

Question 48

What are the final thoughts on Chapter 7 regarding monopoly markets?

Answer 48

Monopoly markets offer stable demand but have strict regulations.

Question 49

Fill in the blank: The USA’s three-tier system makes distribution _______.

Answer 49

[challenging]

Question 50

What is a characteristic of monopoly markets regarding product promotion?

Answer 50

Limited promotional opportunities – Monopoly stores do not advertise brands.

Question 51

What is a challenge related to compliance in the USA’s three-tier system?

Answer 51

State-by-State Regulations – Each state has different laws, making compliance complex.