Free Flashcards DipWSET D2: Wine Business (Deck 2)

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[h] DipWSET D2 SET 2

[i] DipWSET D2 – Wine Business Flashcards

Deck 2

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[start]

[q unit=”2″ topic=”2″] VINEYARD ESTABLISHMENT 1st COST

[a] BUYING or RENTING THE LAND 

[q unit=”2″ topic=”2″] THE PRICE OF THE VINEYARD REFLECTS
(cost of buying)

[a] THE POTENTIAL TO PRODUCE HIGH QUALITY FRUITS 

[q unit=”2″ topic=”2″] EFFECT OF SCARCITY OF LAND ON BUYING A VINEYARD
(area under G.I. for instance)

[a] INCREASES VINEYARD PRICE
(GIs & PDOs limit the area of land available) 

[q unit=”2″ topic=”2″] COSTS BEFORE ESTABLISHING THE VINEYARD

[a] 1- SURVEYING THE LAND

2- SITE CLEARANCE
(removing large rocks & vegetation)

3- BUILDING ACCESS ROADS
(to the vineyard & within the rows) 

[q unit=”2″ topic=”2″] WHY SRUVEYING THE LAND BEFORE ESTABLISHING A VINEYARD

[a] 1- TO CHECK SUITABILITY TO VITICULTURE

2- TO IDENTIFY THE BEST GRAPE VARIETY FOR THAT LAND 

[q unit=”2″ topic=”2″] HOW TO SURVEY A LAND BEFORE ESTABLISHING A VINEYARD

[a] 1- SATELLITE IMAGING

2- SOIL SAMPLES

3- GEOLOGICAL STUDIES 

[q unit=”2″ topic=”2″] AVERAGE TIMING DELAY FROM PLANTING VINES TO PRODUCING WINE

[a] VINES NEED AT LEAST 3 YEARS TO PRODUCE QUALITY FRUITS 

[q unit=”2″ topic=”2″] WAYS TO FUND CAPITAL COSTS

[a] 1- LOANS

2- INVESTORS

3- PUBLIC SUBSIDIES

4- TAX INCENTIVES 

[q unit=”2″ topic=”2″] COSTS ASSOCIATED WITH ESTABLISHING A VINEYARD

[a] 1- BUYING & PLANTING VINES

2- STAKES & WIRES

3- DRAINAGE & PIPE WORKS (if needed)

4- PROTECTION AGAINST WEATHER HAZARDS
(wind breaks, frost protection…)

5- PROTECTION AGAINST ANIMAL PESTS
(high fences, electric fences, netting…)

6- BUYING MACHINERY & EQUIPMENTS
(tractors, machines…)

7- IN DRY AREAS = IRRIGATION SYSTEMS

[q unit=”2″ topic=”2″] DOWNSIDE OF LOAN FINANCING

[a] INTERESTS + CAPITAL REPAYMENTS 

[q unit=”2″ topic=”2″] DOWNSIDE OF FINANCING THROUGH INVESTORS

[a] 1- CONCEDE PART OF PROFITS

2- MAY IMPOSE HIGH RETURN ON INVESTMENT

3- PROVIDE THEM WITH VOTING RIGHTS = LOSS OF CONTROL

[q unit=”2″ topic=”2″] VINEYARD MANAGEMENT COSTS
(definition)

[a] COSTS OF RUNNING THE VINEYARD 

[q unit=”2″ topic=”2″] 7 CATEGORIES OF VINEYARD MANAGEMENT COSTS
(main categories)

[a] 1- LABOUR

2- MACHINERY & FUEL

3- SUPPLIES

4- VINEYARD TREATMENTS

5- WATER

6- ELECTRICITY

7- INSURANCE & DEPRECIATION 

[q unit=”2″ topic=”2″] LABOUR COSTS ASSOCIATED ON VINEYARD MANAGEMENT
(4 key takes)

[a] 1-VARIES ACCORDING TOPOGRAPHY, SIZE & OTHER FACTORS

2- ORGANIC & BIODYNAMIC VINEYARDS ARE MORE LABOUR INTENSIVE

3- VINEYARDS FOR PREMIUM & SUPER PREMIUM WINES ARE MORE LABOUR INTENSIVE

4- HIGHLY MECHANIZED VINEYARDS ARE LESS LABOUR INTENSIVE

[q unit=”2″ topic=”2″] EXAMPLES OF TOPOGRAPHY INFLUENCING LABOUR COSTS

[a] VINEYARDS ON STEEP SLOPES
(ex: Mosel…)

[q unit=”2″ topic=”2″] THE LABOUR COSTS vs. CAPITAL COSTS TRADE OFF

[a] 1- WHERE LABOUR COSTS ARE LOW = LESS INCENTIVE TO INVEST IN CAPITAL INTENSIVE EQUIPMENTS
(ex: Chile)

2- WHERE LABOUR COSTS ARE HIGH = INVESTMENT IN MACHINERY BETTER OPTION
(ex: Coonawarra) 

[q unit=”2″ topic=”2″] SEASONALITY OF LABOUR COSTS

[a] 1- AT HARVESTING = HIRE TEAM OF PICKERS FOR HAND-HARVESTING

2- REST OF THE YEAR = SMALLER STAFF OF MORE EXPENSIVE WORKERS
+ MANAGER 

[q unit=”2″ topic=”2″] OTHER COSTS ASSOCIATED WITH LABOUR

[a] COSTS OF HIRING, TRAINING & RETAINING STAFF 

[q unit=”2″ topic=”2″] 3 EXAMPLES OF COSTS REGARDING VINEYARD SUPPLIES

[a] 1- MATERIALS FOR REPAIR TO TRELLISING

2- PRUNING SHEARS

3- GLOVES TO WORKERS

[q unit=”2″ topic=”2″] 3 ELEMENTS OF VINEYARD TREATMENTS

[a] 1- AGRO-CHEMICAL COSTS
(herbicides, fungicides, insecticides…)

2- PREVENTING FUNGAL DISEASES
(cost of own weather station
or access to government-run weather station)

3- ORGANIC & BIODYNAMIC GROWERS STILL NEED
TRADITIONAL TREATMENTS
(ex: sulfur, Bordeaux mixture…)
 

[q unit=”2″ topic=”2″] 3 EXAMPLES OF ELECTRICITY COSTS
ASSOCIATED WITH VINEYARD OPERATING COSTS

[a] 1- FOR IRRIGATION SYSTEMS

2- FOR BIRD SCARERS

3- FOR FROST PROTECTION 

[q unit=”2″ topic=”2″] 2 EXAMPLES OF VINEYARD INSURANCES

[a] 1- AGAINST FLOOD

2- AGAINST FIRE

[q unit=”2″ topic=”2″] DEPRECIATION
(Definition)

[a] THE REDUCTION IN THE VALUE OF AN ASSET OVER TIME, BASED ON ITS USEFUL LIFE 

[q unit=”2″ topic=”2″] WINEMAKING COSTS
(cost structure)

[a] 1- WINERY ESTABLISHMENT
(capital costs)

2- WINEMAKING OPERATING COSTS 

[q unit=”2″ topic=”2″] WINEMAKING OPERATING COSTS
(Definition)

[a] COSTS INVOLVED IN RUNNING THE WINERY 

[q unit=”2″ topic=”2″] 3 CATEGORIES OF WINERY ESTABLISHMENT COSTS

[a] 1- BUYING or RENTING THE LAND
TO BUILD THE WINERY

2- COSTS OF BUILDING THE WINERY

3- COSTS OF EQUIPMENTS
(presses, pumps, maturing vessels, bottling line…)

[q unit=”2″ topic=”2″] 3 WAYS OF FUNDING WINERY ESTABLISHMENT COSTS
(capital costs)

[a] 1- THROUGH LOANS/MORTGAGE

2- THROUGH OWNER OWN CAPITAL

3- THROUGH INVESTORS 

[q unit=”2″ topic=”2″] 4 MAIN ACTIVITIES INVOLVED IN WINEMAKING OPERATING COSTS
(active verbs)

[a] 1- MANAGING THE WINERY

2- PRODUCING THE WINE

3- MATURING THE WINE

4- BOTTLING & PACKAGING
THE FINAL PRODUCT 

[q unit=”2″ topic=”2″] 9 CATEGORIES OF WINEMAKING OPERATING COSTS
(costs structure)

[a] 1- GRAPE GROWING or FRUIT BUYING

2- LABOUR

3- MACHINERY & EQUIPMENTS
(running costs)

4- WINERY MATERIALS

5- WATER
(e.g. cleaning)

6- ELECTRICITY

7- MATURATION

8- PACKAGING

9- DEPRECIATION

 

[q unit=”2″ topic=”2″] 3 MAIN COSTS ASSOCIATED WITH MATURING WINE

[a] 1- AGING VESSELS COSTS

2- STORAGE SPACE COSTS + OVERHEADS (electricity…)

3- LOSS OF CASH FLOW
(money tied up in maturing stocks) 

[q unit=”2″ topic=”2″] OTHER COSTS IMPACTING WINE PRODUCERS’ PROFITABILITY
(5 main categories)

[a] 1- TRANSPORTATION

2- TAXES & DUTIES

3- SALES

4- MARKETING

5- INDIRECT COSTS

[q unit=”2″ topic=”2″] ROUTE TO MARKET
(Definition)

[a] HOW A BOTTLE OF WINE GETS FROM THE PRODUCER TO THE CUSTOMER

[q unit=”2″ topic=”2″] SUPPLY CHAIN
(Definition)

[a] THE NETWORK OF ORGANIZATIONS AND ACTIVITIES INVOLVED
FROM THE CREATION OF A PRODUCT
TO ITS DISTRIBUTION AND SALE TO THE FINAL CUSTOMER 

[q unit=”2″ topic=”2″] IN WINE INDUSTRY, 1st STAGE OF SUPPLY CHAIN

[a] GRAPE GROWING

[q unit=”2″ topic=”2″] CAPITAL COSTS
(Definition)

[a] MONEY SPENT BY A BUSINESS IN ACQUIRING, IMPROVING OR MAINTAINING LONG-TERM ASSETS SUCH AS LANDS, BUILDINGS & EQUIPMENTS

[q unit=”2″ topic=”2″] COSTS OF GROWING GRAPES
(structure)

[a] CAPITAL COSTS + OPERATING COSTS 

[q unit=”2″ topic=”2″] USE OF AIR FREIGHT FOR WINE BOTTLES
(Circumstances)

[a] 1- SPECIAL CIRCUMSTANCES
– Bottles for competitions
– Bottles for fairs

2- HIGH VOLUME WINES FOR WHICH IT IS IMPORTANT TO HAVE CONTROL OVER THE FINAL PRODUCT

3- IMPORTANT DEADLINES
(Beaujolais Nouveau in Japan) 

[q unit=”2″ topic=”2″] SEA TRANSPORTATION

[a] 1- CALLED “DEEP SEA”

2- CHEAPEST METHOD (Cost/distance)

3- CONTAINERISATION IS ESSENTIAL

4- DOWNSIDE = SLOW

[q unit=”2″ topic=”2″] CAPACITY OF THE DIFFERENT TYPES OF SHIPPING CONTAINERS

[a] 1- SHIPPING CONTAINERS = 9000 to 10000 Liters of bottled wines

2- FLEXITANK = 24000 Liters of bulk wine

3- ISOTANK = 26000 Liters of bulk wine 

[q unit=”2″ topic=”2″] DISADVANTAGES OF BULK TRANSPORTATION

[a] 1- IF INFERIOR TO 15000 Liters = no cost advantages

2- ONLY POSSIBLE FOR LARGE VOLUME OF THE SAME WINE

3- NO CONTROL OVER BOTTLING PROCESS

4- NO CONTROL OF QUALITY OF FINAL PRODUCT

[q unit=”2″ topic=”2″] IMPORTATION COSTS

[a] 1- CUSTOM DUTIES & TAXES

2- LABELLING LAWS 

[q unit=”2″ topic=”2″] MAIN DIFFERENCES IN LABELLING LAWS

[a] 1- E.U. abv = nearest whole or half

2- USA = 1.5% VARIANCE ALLOWED

3- USA + MUST DISPLAY HEALTH WARNING 

[q unit=”2″ topic=”2″] ESTATE PRODUCER
(Definition)

[a] PRODUCER WINE FROM HIS OWN VINEYARD(S) OWNED OR LEASED

[q unit=”2″ topic=”2″] GROWERS
(Definition)

[a] 1- CHOOSE NOT TO PRODUCE OWN WINE

2- FOCUS ONLY ON GROWING GRAPES 

[q unit=”2″ topic=”2″] GROWER PRODUCER
(Definition)

[a] PRODUCE WINE FROM THEIR GRAPES AND SELL IT TO MERCHANTS
WHO MATURE AND SELL IT 

[q unit=”2″ topic=”2″] MERCHANTS
(Definition)

[a] BUY IMATURE WINES & GRAPES TO MAKE WINE, MATURE IT
& SELL IT UNDER MERCHANTS’ NAME 

[q unit=”2″ topic=”2″] ADVANTAGES OF USING DISTRIBUTORS

[a] 1- DEAL WITH LOCAL REQUIREMENTS

2- MARKET KNOWLEDGE

3- ESTABLISHED CLIENT LIST

4- DEALS EFFECTIVELY WITH LOGISTICS

5- PROVIDE INSURANCES

6- DISTRIBUTOR CARRY THE RISK OF LOSS/DAMAGES TO WINE 

[q unit=”2″ topic=”2″] DISADVANTAGES OF USING DISTRIBUTORS

[a] 1- CHARGE FEES (called Margin)

2- HORECA DISTRIBUTORS CHARGE HIGHER MARGIN

3- DISTRIBUTOR SALES & MARKETING MAY NOT BE IN LINE
WITH PRODUCER STRATEGY

4- DISTRIBUTOR MAY DROP LOW PERFORMING WINES

[x] GOOD JOB!!

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