Free DipWSET D2: Wine Business Flashcards
DECK Number 5
Instructions before starting:
I RECOMMEND YOU LEAVE THE CARDS IN THE INITIAL ORDER AND USE THE “SHUFFLE” OPTION ONLY WHEN YOU MASTER THE WHOLE DECK (= 0 MISTAKE)
Read the Term on the Card and give your answer Click on “Check the Answer” button to check your knowledge Click on “Got It!” if your answer was correct
Click on “Need more practice” to review the card at the end of the deck and try answering another time
Click on “Shuffle” button to change cards order
GOOD LUCK!!
[qdeck]
[h] DipWSET D2 SET 5
[i] DipWSET D2 – Wine Business Flashcards
SET 5
I RECOMMEND YOU LEAVE THE CARDS IN THE INITIAL ORDER AND USE THE “SHUFFLE” OPTION ONLY WHEN YOU MASTER THE WHOLE DECK (= 0 MISTAKE)
– Read the Term on the Card and give your answer
– Click on “Check the Answer” button to check your knowledge
– Click on “Got It!” if your answer was correct
– Click on “Need more practice” to review the card at the end of the deck and try answering another time
– Click on “Shuffle” button to change cards order
[start]
[q unit=”2″ topic=”5″] CONGLOMERATES (definition)
[a] OFTEN OWN MANY SMALLER BUSINESSES ACROSS THE SUPPLY CHAIN (production, distribution…)
[q unit=”2″ topic=”5″] LARGEST WINE CONGLOMERATE IN THE WORLD (Names + location)
[a] E & J GALLO (CALIFORNIA)
[q unit=”2″ topic=”5″] ADVANTAGES OF CONGLOMERATES
[a] 1- CAN SET UP REGIONAL OFFICES
2- GREATER CONTROL AT ALL STAGES OF THE SUPPLY CHAIN
3- MASTER MANY ROUTES TO MARKET
4- REDUCED NEEDS TO PAY INTERMEDIARIES
5- HAVE SIGNIFICANT NEGOCIATING POWER
(both with suppliers & retailers)
6- GREATER LOBBYING POWER
[q unit=”2″ topic=”5″] CURRENT TRENDS IN CONGLOMERATES
[a] MAJOR COMPANIES OUTSIDE THE WINE INDUSTRY
BUY PRESTIGIOUS WINE BRANDS
– LVMH (luxury)
– INSURANCE COMPANIES
[q unit=”2″ topic=”5″] E & J GALLO OVERVIEW
[a] 1- LARGEST WINE CONGLOMERATE IN THE WORLD
2- OWN MORE THAN 15 WINERIES IN CALIFORNIA
3- OWN GLASS COMPANY = GALLO GLASS (bottles…)
4- OWN EXCLUSIVE IMPORT RIGHTS OF MANY WELL-KNOWN WINES
5- STAFF ACROSS THE WORLD TO COVER REGIONAL MARKETS
– REPRESENTS OVER 40% OF PRODUCTION
OF CALIFORNIAN WINES
– REPRESENTS OVER 22% OF USA WINE
MARKETS BY VOLUME
[q unit=”2″ topic=”5″] CITE 3 DIFFERENT WINE CONGLOMERATES
[a] 1- E & J GALLO (California, USA) = LARGE SIZE
2- MICHELE CHIRALO (Piemonte, Italy) = MEDIUM SIZE
3- FELTON ROAD (Central Otago, New-Zeland) = SMALL SIZE
[q unit=”2″ topic=”5″] MICHELE CHIARLO
[a] MEDIUM SIZED WINE CONGLOMERATE PIEMONTE, ITALY
OWN BAROLO VINEYARDS BUY GRAPES FROM
LOCAL GROWERS LARGE VOLUME OF MID-PRICED WINES
(Moscato d’Asti, Barbera d’Asti)
[q unit=”2″ topic=”5″] FELTON ROAD
[a] SMALL SIZE CONGLOMERATE CENTRAL OTAGO, NEW ZELAND
OWN 4 VINEYARDS ONLY ORGANIC & BIODYNAMIC WINES
ONLY AMBIENT YEASTS AVOIDS FINING & FILTERING
[q unit=”2″ topic=”5″] WINE SALES SPLIT INTO 2 BROAD SECTORS
[a] 1- RETAIL
– OFF PREMISE (USA)
– OFF TRADE (UK)
2- HOSPITALITY
– ON PREMISES (USA)
– ON TRADE (UK)
[q unit=”2″ topic=”5″] HORECA
(meaning)
[a] HOtel + REstaurants + CAtering (& CAfé)
[q unit=”2″ topic=”5″] ADVANTAGES FOR PRODUCERS OF SELLING DIRECTLY TO RETAILERS
[a] 1- DO NOT HAVE TO PAY INTERMEDIARIES
2- MAXIMIZE THEIR PROFITS
3- CAN DECIDE WHICH RETAILERS STOCK THEIR WINES
& HOW WINES ARE MARKETED
4- RETAIN CONTROL OVER BRAND IMAGE
(but not possible with large buyers)
[q unit=”2″ topic=”5″] DISADVANTAGES FOR PRODUCERS OF SELLING DIRECTLY TO RETAILERS
[a] 1- INCREASED ADMINISTRATIVE BURDEN
(administrative tasks + export admin)
2- CARRY THE RISK OF LOSS, SPOILAGE & DAMAGED WINES
(reduced if use freight forwarders)
3- THE MORE DISTRIBUTORS DELT WITH
THE HIGHER THE ADMINISTRATIVE BURDEN
[q unit=”2″ topic=”5″] MAIN ADVANTAGE OF BULK TRANSPORTATION
FOR LARGE BUYERS & LARGE PRODUCERS
[a] MEET & RETAIN COMPETITIVE PRICE POINTS
[q unit=”2″ topic=”5″] DISTRIBUTOR
(definition)
[a] INTERMEDIARY THAT BUYS WINE FROM A RANGE OF PRODUCERS AND SELLS IT TO A RANGE OF RETAILERS
(including HORECA)
MAY OR MAY NOT HOLD STOCKS
MAY OR MAY NOT HAVE EXCLUSIVE RIGHTS TO IMPORT
OR DISTRIBUTE CERTAIN PRODUCTS
[q unit=”2″ topic=”5″] DISTRIBUTOR
(other usual names)
[a] = IMPORTER / AGENT / WHOLESALER
[q unit=”2″ topic=”5″] BENEFITS OF USING A DISTRIBUTOR
(for producers)
[a] 1- EASIER TO ENTER A NEW MARKET
– TAKE ADVANTAGE OF DISTRIBUTOR
MARKET KNOWLEDGE
(clients, buyers list, consumption habits…)
– DISTRIBUTOR HELP FOR
ADMINISTRATIVE BURDEN
& LEGAL REQUIREMENTS
– DISTRIBUTOR ABSORB RISK OF LOSS,
SPOILAGE, DAMAGED WINES
– DISTRIBUTOR OFFERS LOGISTICAL EFFICIENCY
– GREATER RESOURCES TO PROMOTE WINE
(portfolio tastings…)
– GREATER RESOURCES FOR MARKETING
HELP FOR LANGUAGE BARRIER
– LARGE BUYERS PREFER DEALING WITH DISTRIBUTORS
(cannot reach them otherwise)
– NOT POSSIBLE TO ENTER SOME MARKETS WITHOUT DISTRIBUTORS
(USA 3-Tier System)
[q unit=”2″ topic=”5″] DISADVANTAGES OF USING A DISTRIBUTOR
[a] 1- REDUCED PROFITS
2- MARKETING & SALES STRATEGY CHOSEN
BY THE DISTRIBUTOR MAY NOT BE IN LINE
WITH IN LINE WITH PRODUCER’S BRAND IMAGE
3- DISTRIBUTOR CANNOT GIVE UNDIVIDED
ATTTENTION TO ANY ONE PRODUCER
4- DISTRIBUTOR MAY DROP LOW PERFORMING
PRODUCERS FROM PORTFOLIO
5- PRODUCERS NEED TO SPEND TIME TO SELECT
THE RIGHT DISTRIBUTOR
6- PRODUCERS MAY SELECT SEVERAL
DIFFERENT DISTRIBUTORS FOR EACH
OF THEIR PRODUCTS
[q unit=”2″ topic=”5″] JOINT VENTURE
(definition)
[a] WHEN TWO DIFFERENT COMPANIES AGREE TO COMBINE RESOURCES TO PURSUE A COMMON GOAL BY CREATING THIRD COMPANY ASIDE IF THE INITIAL 2 COMPANIES
(the initial 2 founding companies remain in existence)
[q unit=”2″ topic=”5″] JOINT VENTURE
(conditions to be successful)
[a] 1- COMPANIES NEED TO BE OF COMPARABLE SIZE
(otherwise effect of a takeover)
2- EACH RESPONSIBILITIES & OBLIGATIONS NEED TO BE CLEARLY AGREED, DETAILED & DOCUMENTED
3- BETTER IF THE 2 COMPANIES ARE NOT DIRECTLY COMPETITORS
4- BETTER IF THE 2 COMPANIES DO NOT OVERLAP
[q unit=”2″ topic=”5″] 2 EXAMPLES OF JOINT VENTURES
[a] 1- METZENDORFF (UK distributor) + CHAMPAGNE BOLLINGER
= FLADGATE PARTNERSHIP PORT
2- BUCKINGHAM SCHENK (UK distributor) + HD JOYEUX FABRE
= VINALBA (ARGENTINIAN WINE BRAND)
[q unit=”2″ topic=”5″] MERGERS
[a] OCCURS WHEN TWO BUSINESSES JOIN TOGETHER COMPLETELY
INSIDE A NEW COMPANY WITH GREATER
RESOURCES & RESPONSIBILITIES
[q unit=”2″ topic=”5″] ACQUISITION
(synonymous)
[a] TAKEOVER
[q unit=”2″ topic=”5″] ACQUISITION
(definition)
[a] OCCURS WHEN ONE COMPANY BUYS ANOTHER ONE,
WHICH THEN BECOMES A SUBSIDIARY
OF THE PURCHASING COMPANY
[q unit=”2″ topic=”5″] 6 REASONS FOR A MERGER
(2 categories)
[a] 1- TO ACQUIRE CAPABILITIES
– skills
– brands
– resources
– market shares
– vineyard locations
2- TO SAVE A COMPANY FROM GOING BANKRUPT
[q unit=”2″ topic=”5″] 2 ADVANTAGES OF A MERGER
[a] 1- LOSS OF CONTROL
2- CAN OPEN NEW ROUTES TO MARKETS
[q unit=”2″ topic=”5″] DISADVANTAGE OF MERGER
[a] LOSS OF CONTROL
[q unit=”2″ topic=”5″] BROKER
(defintion)
[a] – INDEPENDENT INTERMEDIARY WHO
REPRESENTS NEITHER PARTY
AND DO NOT ENTER ANY DEAL.
– IT ACTS AS A FACILITATOR
WHO MAKES DEALS HAPPEN.
– IT ALSO CHARGES SMALLER FEES.
[q unit=”2″ topic=”5″] EXPLAIN THE DIFFERENCE BETWEEN A BROKER AND A DISTRIBUTOR
[a] A BROKER IS AN INDEPENDENT INTERMEDIARY
WHO REPRESENTS NEITHER PARTY
THE DISTRIBUTOR IS PAID BY A PRODUCER
TO SELL WINE ON HIS BEHALF
[q unit=”2″ topic=”5″] USING A BROKER
(benefit for producers)
[a] 1- HAS INTIMATE KNWOLEDGE OF A PARTICULAR,
OFTEN SPECIALIZED MARKET
2- KNOWS WHAT OTHER PRODUCERS (competitors)
HAVE FOR SALE AND AT WHICH PRICE THEY ARE WILLING TO SELL
3- KNOWS WHAT STYLE, VOLUME
& PRICES BUYERS ARE LOOKING FOR
4- BRING TOGETHER BUYERS & SELLERS
[q unit=”2″ topic=”5″] USING A BROKER
(benefit for the buyer)
[a] 1- KNOWS WHAT WINES AT FOR SALE (types, volumes & prices)
ON THE MARKET
2- KNOWS WHAT OTHER BUYERS ARE LOOKING FOR
3- BRING TOGETHER BUYERS & SELLERS
[q unit=”2″ topic=”5″] BROKERS ROLE IN BORDEAUX
[a] 1- HAVE LEGAL STATUS
2- PLAY AN IMPORTANT ROLE
3- INTERMEDIARIES BETWEEN CHATEAUX
& NEGOCIANTS
4- WHEN BULK-BUYING = IN CHARGE OF ENSURING
CORRECT VATS ARE DELIVERED TO BUYERS
5- IN FINE TRADE = FACILITATE DEALS
BETWEEN SEEKERS & SELLERS
[q unit=”2″ topic=”5″] 4 OPTIONS FOR SELLING DIRECTY TO CUSTOMERS
[a] 1- CELLAR DOORS SALES
2- EVENTS
3- WINE CLUBS
4- ONLINE
[q unit=”2″ topic=”5″] CELLAR DOOR SALES
(definition)
[a] SET-UP FACILITIES ON ESTATE OR AT THE WINERY
TO SELL WINES TO VISITORS
[q unit=”2″ topic=”5″] CELLAR DOOR SALES
(type of customers)
[a] 1- LOCALS
2- REGULAR TOURISTS
3- WINE TOURISTS
[q unit=”2″ topic=”5″] CELLAR DOOR SALES
(experiences provided)
[a] 1- SEE WHERE THE WINE IS MADE
2- TASTING BEFORE PURCHASING
3- STORY BEHIND THE LABEL
4- WINES NOT AVAILABLE ELSEWHERE
FOR SOME TOURISTS
5- ADDITIONAL ACTIVITIES (extra fees)
(tours, exclusive tastings, reserve wines, food & wine pairing)
[q unit=”2″ topic=”5″] CELLAR DOOR SALES
(benefits for producers)
[a] 1- EARN LARGER PROFITS
2- ENGAGE DIRECTLY WITH CUSTOMERS
3- TASTING = IMPORTANT FOR MARKETING
4- BUILD BRAND AWARENESS
5- BUILD LOYALTY
6- PROMOTE BRAND VALUES
7- INCREASED CHANCE OF RETURNING CUSTOMERS
(buy again in the future)
8- INDIRECT RECOMMENDATIONS TO ENTOURAGE
9- WAY TO TRIAL NEW PRODUCTS
-direct feedbacks
– no need for market research
[q unit=”2″ topic=”5″] WHY SOME PRODUCERS DECIDE NOT TO OFFER CELLAR DOOR SALES
[a] 1- LACK OF SUITABLE LOCATION
2- REQUIRE ADDITIONAL STAFF
3- FOCUS ON OTHER ROUTES TO MARKET
[q unit=”2″ topic=”5″] ALTERNATIVE TO STANDARD CELLAR DOOR SALES
[a] OPEN A “CELLAR DOOR” IN A NEARBY TOWN
(no need to visit the estate)
[q unit=”2″ topic=”5″] 2 MAIN TYPES OF DIRECT SALES EVENTS
[a] 1- TASTING FAIRS (salons)
2- WINE & FOOD FESTIVALS
[q unit=”2″ topic=”5″] ADVANTAGES OF EVENTS FOR PRODUCERS
(direct sales context)
[a] 1- ATTRACT LARGE NUMBER OF PEOPLE
2- ATTRACT WIDER RANGE OF PEOPLE
3- GET ACCESS TO PEOPLE THAT COULD NOT
BE REACHED OTHERWISE
[q unit=”2″ topic=”5″] DOWNSIDE OF EVENTS
(direct sales context)
[a] 1- PAY TO EXHIBIT
2- TRAVEL EXPENSES
3- NEED ADDITIONAL STAFF
4- LOGISTIC BURDEN
5- COMPETE FOR VISITORS’ ATTENTION
6- NEED CAREFUL MANAGEMENT
(accident with overdrinking)
[q unit=”2″ topic=”5″] SUCCESSFUL EVENTS IN CERTAIN WINE REGIONS CAN CREATE
[a] A DESTINATION EFFECT
[q unit=”2″ topic=”5″] WINE CLUBS
(definition)
[a] EXCLUSIVE CLUB WHO OFFER MEMBERS THE OPPORTUNITY TO PURCHASE WINE AT A REDUCED PRICE TO DELIVER TO THEIR HOMES
[q unit=”2″ topic=”5″] ADVANTAGES OF WINE CLUBS
[a] 1- ACCESS TO WINES NOT NORMALLY AVAILABLE
TO THE GENERAL PUBLIC
2- GET FREE TOURS
3- GET INVITATION TO EXCLUSIVE TASTINGS
4- PRODUCERS CAN STAY IN CONTACT WITH CUSTOMERS
(newsletter, website, blog)
5- POSSIBLE TO SUBSCRIBE TO PRODUCERS’ WINE CLUBS
AT CELLAR DOOR
[q unit=”2″ topic=”5″] CONSTRAINTS OF WINE CLUBS
[a] 1- RUNNING COSTS
(additional costs, send details…)
2- PROCESS ORDERS
3- SHIP THE WINES
4- PRODUCERS CARRY THE RISK OF LOSS,
SPOILAGE & DAMAGE
5- USA = ONEROUS ADMINISTRATIVE BURDEN
(3 Tier System)
[q unit=”2″ topic=”5″] WINE CLUBS FOR SOME PRESTIGIOUS PRODUCERS
(peculiarity)
[a] MAY BE THE ONLY WAY TO GET ACCESS TO THOSE WINES
(exclusive members’ clubs)
[q unit=”2″ topic=”5″] ADVANTAGE ONLINE SALES FOR PRODUCERS
(direct selling to customers
[a] LARGER PROFITS FOR PRODUCERS
[q unit=”2″ topic=”5″] DISADVANTAGE ONLINE SALES FOR PRODUCERS
(direct selling to customers)
[a] 1- COSTS ASSOCIATED WITH SETTING UP
& MAINTAINING RELIABLE UP-TO-DATE WEBSITE
2- ADDED COSTS ON DELIVERY
[q unit=”2″ topic=”5″] DIFFERENCE BETWEEN RETAILER AND THE RETAIL SECTOR
[a] 1- SELLING THROUGH A RETAILER MEANS
SELLING DIRECTLY TO THE END USER
(vs. distributor, importer…)
2- RETAIL SECTOR = IN CONTRAST
WITH THE HOSPITALITY SECTOR
[q unit=”2″ topic=”5″] RETAIL SECTOR IN THE UK
(% of total sales)
[a] 80% OF WINE SALES BY VOLUME
[x] GOOD JOB!! [restart]
[/qdeck]