Free DipWSET D2: Wine Business Flashcards    

DECK Number 7

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 7

[i] DipWSET D2 – Wine Business Flashcards

SET 7

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=”7″] NON FREE-MARKETS
(main market types)

[a] 1- MONOPOLY MARKETS

2- AMERICAN THREE-TIER SYSTEM

[q unit=”2″ topic=”7″] MONOPOLY MARKET
(definition)

[a] WINE IS DISTRIBUTED THROUGH GOVERNMENT RUN MONOPOLIES STORES
(and distributors for some)

[q unit=”2″ topic=”7″] 2 EXAMPLES OF MONOPOLY MARKETS

[a] 1- SCANDINAVIAN COUNTRIES

2- CANADA

[q unit=”2″ topic=”7″] MONOPOLY MARKET IN SWEDEN

[a] SYSTEMBOLAGET

– the only retail outlet selling wine

– some specialist independent
distributors can be licensed
under conditions

– Bars & Restaurants can buy from monopoly
or specialist independent distributors

[q unit=”2″ topic=”7″] GOAL OF THE MONOPOLY SYSTEM

[a] 1- LIMIT ALCOHOL CONSUMPTION

2- SHOPS & STAFF DO NOT PROMOTE PRODUCTS
or PRODUCERS

[q unit=”2″ topic=”7″] PRIVATISATION OF ALCOHOLIC BEVERAGES LEAD TO

[a] 1- GREATER COMPETITION

2- PRICE PRESSURE

3- GREATER ACCESSIBILITY

[q unit=”2″ topic=”7″] MONOPOLY MARKETS CONSEQUENCES FOR PRODUCERS

[a] 1- HARDER TO ENTER THE RETAIL SECTOR

2- CONSIDERABLE AMOUNT OF BUREAUCRACY

[q unit=”2″ topic=”7″] HOW TO GET A WINE STOCKED AT SYSTEMBOLAGET

[a] 1- REGISTER WITH AN IMPORTER
(approved supplier of Systembolaget)

2- FOUR TIMES per year, SYSTEMBOLAGET
ISSUES TENDER REQUESTS FOR VARIOUS 
TYPES OF WINES

3- APPROVED SUPPLIERS SUBMIT SAMPLES

4- BLIND TASTED BY A PANEL

5- ONCE SELECTED, THE WINE IS TASTED AGAIN
+ CHEMICAL ANALYSIS

[q unit=”2″ topic=”7″] CANADIAN MONOPOLY MARKET

[a] 1- STATE MONOPOLY IN ALL BUT ONE STATE:
ALBERTA

2- ALBERTA
– exception
– private market but supervised

[q unit=”2″ topic=”7″] USA PRE-PROHIBITION

[a] 1- Before 1919

2- Pre Prohibition = gambling, prostition, crime, drunkeness

3- Pre Prohibition Saloons = were tied houses

[q unit=”2″ topic=”7″] USA PROHIBITION

[a] 1- FROM 1919 to 1933

2- CONSUMPTION, DISTRIBUTION & PURCHASE OF ALCOHOL
= FORBIDDEN 

[q unit=”2″ topic=”7″] TIED HOUSE

[a] REQUIRED TO BUY ALL PRODUCTS (ALCOHOL) TO ONE
BREWER / DISTILLER
WHICH CREATED MONOPOLIES

[q unit=”2″ topic=”7″] REPEAL OF USA PROHIBITION

[a] 1- 1933

2- BIRTH OF THE 3-TIER SYSTEM

3- IMPLEMENTED ON A STATE BY STATE LEVEL

4- AVOID TO GO BACK TO PRE-PROHIBITION DAYS

[q unit=”2″ topic=”7″] GOAL OF THE 3-TIER SYSTEM

[a] 1- PREVENT DIRECT SALES FROM PRODUCERS / SUPPLIERS

2- AVOID PRODUCER MONOPOLIES

3- AVOID INCREASED PRICES

[q unit=”2″ topic=”7″] NAME THE 3 TIERS OF THE US SYSTEM

[a] 1- SUPPLIER
(producers / importers)

2- DISTRIBUTOR
(wholesalers / brokers)

3- RETAILER
(off premises
on premises)

[q unit=”2″ topic=”7″] USA 3 TIER SYSTEM
(main legal requirements)

[a] 1- LIMIT OR PROHIBIT CROSS-OWNERSHIP BETWEEN MOST RETAILERS
AND THE OTHER 2 TIERS

2- PRODUCERS CAN BE IMPORTER BUT NOT WHOLESALER

3- WHOLESALER CAN IMPORT BUT CANNOT PRODUCE

4- SOME STATES DO NOT ALLOW WINES PURCHASED
IN OTHER STATES TO CROSS BORDERS

5- SOME STATES ALLOW WINERIES TO SELL DIRECTLY TO CUSTOMERS
(under conditions)

[q unit=”2″ topic=”7″] CONSEQUENCES OF THE US 3-TIER SYSTEM
(on state level)

[a] 1- THE FEDERAL GOVERNMENT CEDED CONTROL OF
BEVERAGE ALCOHOL SALES TO INDIVIDUAL STATES

2- EACH STATE = DIFFERENT LAWS

3- INCREASED COMPLEXITY & BUREAUCRACY

4- “COMPLIANCE OFFICERS” NEEDED WITHIN BEVERAGE COMPANIES

5- NO STATES ARE DRY TODAY BUT THERE ARE SOME DRY COUNTIES

[q unit=”2″ topic=”7″] U.S. CONTROL STATES

[a] 1- THE STATE HOLD THE MONOPOLY OVER ONE OR MORE TIERS

2- THE ONLY LICENSED OFF-PERMISES RETAILER
= THE STATE

3- 17 CONTROL STATES IN THE USA

4- PENNSYLVANIA = STRICTEST CONTROL
= all spirits sold in state package shops

[q unit=”2″ topic=”7″] STATES IN WHICH STATE DOES NOT PARTICIPATE DIRECTLY
IN SALE OF ALCOHOL

[a] 1- OPEN STATES

2- FRANCHISE STATES

[q unit=”2″ topic=”7″] OPEN STATES

[a] 1- REGULATION OF THE 3-TIER SYSTEM IS MINIMAL

2- SUPPLIERS & DISTRIBUTORS ARE FREE TO ENTER INTO
AND EXIT OUT OF AGREEMENTS TO SELL
AND DISTRIBUTE BRANDS FREELY

[q unit=”2″ topic=”7″] FRANCHISE STATES

[a] 1- HAVE STRONG FRANCHISE LAWS THAT SEVERELY RESTRICT
THE FREEDOM OF SUPPLIERS
TO CHANGE DISTRIBUTOR AGREEMENTS

2- APPOINTMENT OF A DISTRIBUTOR TO A SUPPLIER (producer)
= ALMOST A LIFETIME APPOINTMENT

[q unit=”2″ topic=”7″] FRANCHISE LAWS
(rationale)

[a] EXIST TO PROTECT DISTRIBUTORS AGAINST SUDDEN
AND MASSIVE CHANGES TO THEIR BUSINESSES

[q unit=”2″ topic=”7″] CONSEQUENCES OF FRANCHISE LAWS ON SUPPLIERS
(Franchise States in the U.S.)

[a] EVEN IF LEGITIMATE REASON TO BE A DISSATISFIED WITH A DISTRIBUTOR PERFORMANCE
=
LITTLE RESCOURSE IF THE DISTRIBUTOR DOES NOT AGREE TO RELEASE THE SUPPLIER

[q unit=”2″ topic=”7″] CONNECTICUT LAWS ON ALCOHOL

[a] 1- VERY STRICT STATE

2- RESTRICT THE NUMBER OF OFF-PREMISES LICENCES IN EACH CITY

3- SMALL SHOPS BOUGHT BY LARGE ENTITIES TO OBTAIN LICENCES

4- PROHIBIT QUANTITY DISCOUNTS BY DISTRIBUTORS

5- ENFORCE MINIMUM BOTTLE PRICING FOR EACH BOTTLE SOLD IN THE STATE

[q unit=”2″ topic=”7″] CONSEQUENCES OF CONNECTICUT ALCOHOL LAWS

[a] 1- SMALL ALCOHOL / WINE SHOPS ARE PROSPEROUS

2- NO CONSOLIDATION AS IN OTHER STATES

[q unit=”2″ topic=”7″] CRITICS OF THE CONNECTICUT ALCOHOL LAWS

[a] 1- BORDER WARS

2- CHEAPER IN OTHER STATES

[q unit=”2″ topic=”7″] STRENGTHS OF THE 3-TIER SYSTEM
(4 main strengths)

[a] 1- SIGNIFICANT TAX REVENUE
(on each tier)

2- DISTRIBUTORS SPECIALIZE IN LOGISTICAL EFFICIENCY

3- DISTRIBUTORS TAKE ON MARKETING & SALES

4- BETTER EXPOSER FOR PRODUCERS
(compared to isolated approach)

[q unit=”2″ topic=”7″] WEAKNESSES OF THE 3-TIER SYSTEM

[a] 1- IN PAST 20 YEARS, NUMBER OF DISTRIBUTORS DECREASED BY 2/3

2- A LOT OF CONSOLIDATION

3- NUMBER OF U.S. WINERIES SEEKING TO ENTER THE MARKET
MULTIPLIED BY 5

4- BOTTLENECK EFFECT = DETRIMENTAL TO SMALLER PRODUCERS
(lost among massive portfolios)

[q unit=”2″ topic=”7″] CONSOLIDATION IN PRODUCER TIER

[a] LARGER WINERIES BUYING SMALLER ONES

[q unit=”2″ topic=”7″] EFFECT OF CONSOLIDATION IN THE PRODUCTION TIER

[a] 1- CONGLOMERATES OFFER ATTRACTIVE ARRAY OF PRODUCTS
FOR A LARGE DISTRIBUTOR

2- DISTRIBUTORS NEED TO DEAL WITH ONLY ONE CONGLOMERATE
TO GET ACCESS TO A RANGE OF DESIRABLE BRANDS

3- RETAILERS DEAL WITH 1 or 2 LARGE DISTRIBUTORS TO OFFER
LARGE RANGE OF PRODUCTS

[q unit=”2″ topic=”7″] CONSEQUENCES OF THE 3-TIER SYSTEM ON SMALL PRODUCERS

[a] 1- LOOK FOR SMALLER SPECIALIST DISTRIBUTORS

2- DISTRIBUTION CONTRACTS MAY BE HARD TO BREAK

[q unit=”2″ topic=”7″] SMALLER SPECIALIST DISTRIBUTORS

[a] 1- BETTER EQUIPPED TO SELL LOW-VOLUME BOUTIQUE BRANDS

2- LIMITED COVERAGE SCOPE ACROSS STATES

3- DISTRIBUTION CONTRACTS HARD TO BREAK

[q unit=”2″ topic=”7″] CONSEQUENCE ON PRODUCERS OF CONSOLIDATION
WITHIN THE U.S. 3-TIER SYSTEM

[a] DEVELOPMENT OF THE DIRECT-TO-CUSTOMER CATEGORY
(shipping to customers /
cellar door sales)

[q unit=”2″ topic=”7″] DIRECT-TO-CUSTOMERS ASSOCIATED COSTS

[a] 1- LABOUR

2- ADVERTISING

3- SHIPPING

4- ADMINISTRATIVE BURDEN

[q unit=”2″ topic=”7″] MARKETING
(definition)

[a] THE MANAGEMENT PROCESS IN CHARGE OF IDENTIFYING, ANTICIPATING,
AND SATISFYING CUSTOMER REQUIREMENTS PROFITABLY

[q unit=”2″ topic=”7″] 3 WAYS TO GENERATE PROFITS

[a] 1- THROUGH VOLUME OF SALES

2- THROUGH VALUE OF SALES

3- NOT ONLY THE WINE BUT ALSO THE WHOLE EXPERIENCE
– confirmation of social status
– ownership of something valuable
– return on investment

[q unit=”2″ topic=”7″] THE 4 STEPS OF MARKETING

[a] 1- IDENTIFY THE TARGET

2- UNDERSTAND THE NEEDS

3- SATISFY THEM

4- CREATE PROFITS

[q unit=”2″ topic=”7″] SUCCESSFUL MARKETING CAMPAIGN

[a] ACHIEVES ADEQUATE LEVEL OF PROFIT WITHIN A SPECIFIED TIMETABLE

[q unit=”2″ topic=”7″] MARKETING STRATEGY
(5 key steps)

[a] 1- IDENTIFY PRODUCT / BRAND TO BE MARKETED

2- IDENTIFY TARGET MARKET

3- SETTING OBJECTIVES

4- DEVISE MARKETING STRATEGY
(marketing mix)

5- IMPLEMENTING / MONITORING THE MARKETING STRATEGY

[q unit=”2″ topic=”7″] MARKETING MIX

[a] 5 Ps

PRICE
PRODUCT
PLACE
PROMOTION
PEOPLE

[q unit=”2″ topic=”7″] SWOT ANALYSIS

[a] STRENGTHS (internal + helpful)
WEAKNESSES (internal + unhelpful)
OPPORTUNITY (external + helpful)
THREATS (external + unhelpful)

1- IDENTIFY FACTORS THAT ARE RELEVANT TO ACHIEVE AN OBJECTIVE

2- IN ABSENCE OF A SPECIFIED OBJECTIVE PRIOR THE START OF THE ANALYSIS
= NO REFERENCE POINT
= cannot assess helpful / unhelpful

[q unit=”2″ topic=”7″] SETTING THE OBJECTIVE
(swot analysis)

[a] 1- OBJECTIVE SET PRIOR THE ANALYSIS

2- THE SWOT ANALYSIS HELPS TO SORT ACHIVABLE vs. UNACHIVABLE
OBJECTIVES

[q unit=”2″ topic=”7″] OBJECTIVE OF THE ANALYZED OBJECTIVE
(swot analysis)

[a] 1- INTUITION
2- DREAM / INSPIRATION
3- KNOWLEDGE OF THE MARKET
4- BUSINESS TOOLS

[q unit=”2″ topic=”7″] VALUE-CURVE ANALYSIS
(definition)

[a] 1- IT IS EXAMPLE OF A BUSINESS TOOL THAT CAN BE USED TO IDENTIFY AN OBJECTIVE

2- IT CONSISTS IN USING CONSUMER RESEARCH TO IDENTIFY CLUSTERS OF CONSUMER DEMAND THAT ARE UNDER-SUPPLIED or IGNORED

[q unit=”2″ topic=”7″] RESOURCE
(definition)

[a] IT IS A THING THAT THE ORGANISATION HAS ACCESS TO 
/ CAN EXPLOIT AS A TOOL

[q unit=”2″ topic=”7″] EXAMPLES OF RESOURCES IN WINE PRODUCTION

[a] 1- ESTABLISHED REPUTATION

2- RELIABLE / AFFORDABLE SUPPLY CHAIN

3- VINEYARD LOCATIONS

4- OPTIMIZED PRODUCTION FACILITIES

5- ACCESS TO RELIABLE / AFFORDABLE SUPPORT INDUSTRIES

6- STRONG FINANCIAL POSITION

7- INTERNAL EXPERTISE / EXPERIENCE

[q unit=”2″ topic=”7″] CAPABILITY

[a] SOMETHING THE ORGANISATION IS ABLE TO DO

[q unit=”2″ topic=”7″] EXAMPLES OF WINE CAPABILITIES

[a] 1- BUILD STRONG NEW BRANDS

2- GROW EXISTING BRANDS

3- SCALE PRODUCTION UP OR DOWN

4- CHANGE PRODUCTS RAPIDLY

5- R&D FOR NEW PRODUCTS

6- LOBBYING (local, regional, national)

[q unit=”2″ topic=”7″] OPPORTUNITIES & THREATS IN SWOT ANALYSIS
(3 key elements)

[a] 1- RELATED TO THE EXTERNAL BUSINESS ENVIRONMENT

2- CONSIDER ALSO TRENDS PRESENT & FUTURE
THAT MIGHT AFFECT THE BUSINESS ENVIRONMENT

3- USEFUL MNEMONIC = PESTEL

[q unit=”2″ topic=”7″] PESTEL ANALYSIS

[a] 1- POLITICAL
2- ECONOMIC
3- SOCIAL / SOCIETAL
4- TECHNOLOGICAL
5- ENVIRONMENTAL
6- LEGAL

[x] GOOD JOB!! [restart]

[/qdeck]

   

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