Low-volume, Super Premium Cabernet Sauvignon

Question 1

Global over-supply

Answer 1

• Volumes are low
• Little impact on sales

Question 2

Strength of the economy

Answer 2

• Volumes are small
• Buyer are less likely to be at risk during recession
• Little impact on sales

Question 3

Profit margin in relation to volume of wine sold

Answer 3

• High margin per unit
• Low-volume sales

Question 4

Costs of grapegrowing (12x75cl)

Answer 4

Almost $300

Question 5

Costs of winemaking (12x75cl)

Answer 5

Over $400

Question 6

Why is grape growing more expensive

Answer 6

Labour, due to a number of likely factors:

• More interventions in the vineyard (pruning, leaf removal, crop thinning etc)
• More manual work
• No benefit from economies of scale

Question 7

Why is winemaking more expensive

Answer 7

• Oak: new oak barrels vs oak chips
• Cellar overheads: 18 months maturstion vs 2 months
• Cellar overheads: individual barrels vs in bulk
• Quality materials: glass, closures, labels, case packaging
• Higher standard for materials
• Less benefit from economies of scale

Question 8

Grape growing costs as a percentage of total production costs

Answer 8

70%

Question 9

Choice of retailer in a free market

Answer 9

Specialist retailers and fine dining restaurants:
- Small volume
- High price
- High-involvement consumers

Question 10

How likely is selling direct to the retailer in a free market

Answer 10

Unlikely
- Inefficient to deal with many different small retailers

Question 11

How likely is selling to a retailer via an intermediary

Answer 11

Most likely via an agent, distributor or broker
- Know the target market
- Handle many, small outlets
- Focus on production
- Costs get absorbed in high price

Joint venture is unlikely due to small volume

Question 12

How likely is selling directly to the consumer

Answer 12

Cellar door and clubs: very likely
- Experience
- Exclusive offers
- Brand loyalty

Events and online: unlikely
- Not enough volume

Question 13

How likely is price promotion as a form of promotion

Answer 13

Unlikely
- Devalue brand image
- Small volume

Question 14

How likely are competitions as a form of promotion

Answer 14

Unlikely
- Price is too high

Question 15

How likely are competitions as a form of promotion

Answer 15

Unlikely
- Price is too high

Question 16

How likely is limited edition presentstion as a form of promotion

Answer 16

Possible
- Contribute to luxury brand image
- Investment potential

Question 17

How likely are tastings as a form of promotion

Answer 17

Unlikely
- Small volume
- More likely: paid tastings by retailers

Question 18

How likely are staff incentives as a form of promotion

Answer 18

Unlikely
- Limited volume

Question 19

How likely is staff training as a form of promotion

Answer 19

Likely
- Knowledge is needed

Question 20

How likely is advertising as a form of promotion

Answer 20

Possible
- Specialist wine publications aim for high-involvement consumers

Question 21

How likely is social media as a form of promotion

Answer 21

Unlikely
- Difficult to reach limited number of potential consumers

Question 22

How likely is a website as a form of promotion

Answer 22

Likely
- Reasonable cost

Question 23

How likely is PR as a form of promotion

Answer 23

Unlikely
- Unless targeted at top wine journalists and influencers

Question 24

How likely is sponsorship as a form of promotion

Answer 24

Unlikely
- Company is unlikely to be big enough
- Small volume would not meet demand

Question 25

How likely are events as a form of promotion

Answer 25

Unlikely
- Unless small, prestigious events
- Branded free merch is an option

Question 26

How likely are reviews and awards as a form of promotion

Answer 26

Possible
- Samples for competitions, especially for unknown regions
- High-involvement consumers can be influenced
- Respected critics can increase investment potential

Question 27

How likely is wine tourism as a form of promotion

Answer 27

Possible
- Determined by volume available and producer preference