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22 Cards in this Set
- Front
- Back
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What is estate production? |
An estate producer produces wine exclusively from their own vineyards, which are wholly owned or leased. |
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What are the advantages of estate production? (4) |
1. Retain control over the entire process from vineyard to bottle 2. Can choose the style of wine made and ensure quality assurance and quality control at every stage 3. Can market and sell their wines directly without using intermediaries 4. Take the full profit from the production and the sale of the wine |
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What are the disadvantages of estate production? (3) |
High capital cost (may need to hire winemaking equipment) Risk of high percentage crop loss due to vintage variation which impacts on cash flow Economies of scale are disadvantageous to small producers (small volume hard to justify the fixed expenses to produce the wine) |
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What are growers as a type of business in wine production? |
Growers do not produce their own wine, concentration on growing grapes, which they sell to a winemaker or merchant. |
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What are the advantages of being growers? (4) |
They can focus on producing the best possible grapes They require less capital expenditures They have a better cash flow as they are paid for grapes more quickly by vintage Growing popular grape varieties in prestigious wine regions gives them a financially stable business model
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What are the disadvantages of being a grower? (3) |
They are at risk from vintage variation (the sell price can vary in vinrages) When they have a poor vintage, they have less/no fruit to sell When supply exceeds demand, the price isn't profitable or even at a loss. |
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What are two options for growers to sell their fruit? |
Sell on a contract - more certainty but can sell grapes for less that it should be Sell on a spot market - the prices vary each time they sell grapes, when demand exceeds supply, grapes can be sold at a higher price while there's too much supply, the offered price results in a loss |
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What are grower-producers? |
They produce wine from their own grapes but then sell it to a merchant to mature and bottle. |
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What are the advantages and disadvantages of grower producers? |
Advantages: no cost for maturation or marketing Disadvantages: their profit is smaller than when selling the finished wine |
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What are merchants in the wine business? |
Merchants buy immature wine, mature it, and sell it under the merchant's name. |
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What are the advantages and disadvantages of merchants? |
Advantages: do not have the expense of buying and managing vineyards (Burgundy or Champagne, land is expensive, and seldom available on the market) Disadvantages: have little control over the grape growing and winemaking process. Many produce wine from grapes and juice and provide technical support to suppliers to meet their required quality and style. |
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What are grower-merchants? |
Grower-merchants own vineyards and produce wine from their own vineyards alongside wines made from bought-in grapes and juice. |
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What are the advantages and disadvantages of grower-merchants? |
Advantages: They can cover a wide range of wine from premium from their own vineyards and inexpensive and mid-priced wine from other growers Disadvantages: less control over grape growing practice of other growers |
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What are cooperatives? |
Cooperatives are owned by a group of growers and produce and sell wines made from grapes grown by the members. |
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What are the advantages (3) and disadvantages (3) of cooperatives? |
Advantages: They can pool financial resources collected from their members and can afford more expensive winemaking equipment and expertise than doing so individually The members can access expert viticultural and winemaking services as well as marketing, packaging, and sales services. Can make a large volume of inexpensive wine
Disadvantages: As their decisions are made democratically through consultation among members, the decision-making is long and slow If an opinion of some members is a minority, it can be ignored If they focus on volume, the quality of wine can be low
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What are custom crush facilities? |
A variety of the co-op model found mainly in North America, particularly in California. The difference is that growers do not own the facility, but rather pay each time they require its services |
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What are the advantages (3) and disadvantages (2) of custom crush facilities? |
Advantages: Growers don't need to invest in expensive equipment They can focus on grape growing and marketing They can access expertise of the professional winemakers Disadvantages: Less control over winemaking and the wine made by a facility Facilities may not be available when the grower wants to use it as they do not own it |
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What are virtual wineries? |
Winemakers who do not own vineyard land or winemaking facilities. |
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What are the advantages (2) and disadvantages (2) of virtual winemakers? |
Advantages: No investment in winemaking equipment Can focus on marketing their wines
Disadvantages: Little control over grape growing and winemaking No guarantee of the volume and quality of grapes from growers
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What are conglomerates? |
They are very large companies May have interests across a range of products (within or outside the alcoholic drinks sector) May own companies in the various stages of the supply chain from production (estate wineries, merchants) to distribution (distributors) |
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What is En Primeur? |
En Primeur is a method of selling wine before it has been bottled. Purchasers buy the wine while it is still in the barrel, and it remains in the producer's cellar until it is ready for bottling. The purchaser only receives the wine once it has been bottled, usually a few years later. The wines most commonly offered en primeur are from Bordeaux, Burgundy, the Rhône Valley, and Port, although other regions are adopting the practice |