WSET LEVEL 4 UPDATED EXAM SCRIPT QUESTIONS AND
ANSWERS MARKED A+
✔✔What are price-sensitive markets? Give examples - ✔✔Markets where consumers
are unwilling to pay more than the lowest price possible for the style of wine they want
to buy. E.g., Germany, UK
✔✔What can producers do to retain customers in price-sensitive markets? - ✔✔-
Competition is fierce - reduce price or simply choose not to sell
- Reluctant to pass on increases in production costs to consumers
- Try to build up 'brand loyalty'
✔✔Explain 'premiumization' - ✔✔- Consumers are increasingly willing to pay more for
individual bottles of wine, often because they are buying less wine by volume
- Happens in USA even in UK
✔✔List major economic factors that influence demand for wine - ✔✔- Strength of
economy
- Fluctuations in currency exchange
- Changes to the market
✔✔Give examples in which the strength of economy affect wine demand - ✔✔- 2008
financial crisis: champagne demand falls, Prosecco grew; trade wine for beer, cider etc
- Chinese economy growing: emerging middle class chasing aspirational wines
✔✔In what kind of market does currency fluctuation have the most significant impact on
the demand for wine? - ✔✔Price-sensitive market
✔✔When a wine-exporting country's currency gains value compared to that of the
importing country, what can a producer do? - ✔✔- Increase wine price and losing sales
- Keep the price and lose profit
✔✔When a wine-exporting country's currency loses value compared to that of the
importing country, what can a producer do? - ✔✔- Lower price and boost sales
- Keep price stable and improve profits for future investment
✔✔What is one downside of weak currency on the part of the producer? - ✔✔Costs
more to import equipment and supplies such as barrels, corks and yeast, which may
offset additional profits
✔✔How does changes to the market affect demand for wine? - ✔✔- New
companies/products enter, others disappear
- Opportunities for competition
- However, if supply is limited, price increase is possible
,✔✔List major legislative and political factors that affect demand for wine - ✔✔- Laws
prohibiting or limiting alcohol sale
- Government policies to reduce alcohol consumption
- Taxation
- International trade
- Wine laws
✔✔Give examples of laws that limit alcohol sale - ✔✔- Monopoly
- USA three-tier system
- Min drinking age
- Limit hours in the day for alcohol sale
✔✔Give examples of government policies to reduce alcohol consumption - ✔✔- France:
Loi Evin in 1991, restrict alcohol advertising
- Scottish: min unit price: GBP(75cl bottle with 12% considered to have 9 units)
- Blood alcohol concentration (BAC)
✔✔What are two impacts of taxation on wine? - ✔✔- Reduce consumption
- Major venue generator for many governments
✔✔List types of taxes applied to alcoholic drinks - ✔✔- Sales tax (VAT in EU)
- Specific excise duties on alcohol, payable at the point of manufacture
- Minimum pricing mechanism
✔✔List one example in which reduced tax has boosted wine sales - ✔✔In 2008, Hong
Kong abolished excise duty on wine with the aim of becoming wine trading hub of East
Asia
✔✔What is tax on imported goods called? - ✔✔Custom duties / trade tariffs
✔✔What non-member states have entered into trade agreements with EU? - ✔✔South
Africa and Chile
✔✔What is embargo - ✔✔An extreme form of protection in which a country bans
imports from or exports to a particular country
✔✔Give examples of wine laws - ✔✔Geographical Indications (GIs): Protected
Denominations of Origin (PDOs) and Protected Geographical Indications (PGIs)
✔✔How do GIs affect wine demand? - ✔✔- Reputation
- Increase recognition and demand for wines from that region
- Allow price increase
,✔✔How can wine laws negatively affect wine production? - ✔✔- Many limitations such
as grape varieties, methods of production, maturation periods etc
- Slow to react to changes in consumer preferences
✔✔What factors in production could influence wine supply? - ✔✔- Area under vine
- Human factors
- Natural factors
✔✔Which country has seen the biggest growth under vine recently? - ✔✔China: now
second largest area under vine, seventh largest producer
✔✔What factors have resulted in the loss of vineyard land? - ✔✔- Vine pull schemes
- EU restrictions on planting new vineyards
- Conversion of vineyard land to other uses
- Abandonment of rural areas
✔✔What is 'wine lake'? - ✔✔By the mid 1980s, EU wine production was much greater
than demand, creating a surplus that came to be known as the 'wine lake'
✔✔Where have vine pull schemes mainly occurred? - ✔✔- Southern France, Italy and
Spain
- Australia, New Zealand, Argentina
✔✔Give examples where conversion of vineyard land to other uses have occurred -
✔✔- Wine grapes are relatively low value
- Elgin, South Africa: replaced with apples
- Santa Clara Valley or Silicon Valley for business
- Property development, often for tourists, as in Madeira
✔✔Explain why Spain has increase wine production despite the area under vine
decreasing - ✔✔- Average yield has traditionally been low compared with France / Italy,
due to very dry climate and the use of traditional low-density planting systems
- Relaxation of laws banning irrigation, which means that areas not previously able to
support vines are now viable
- Increased use of modern high density planting
✔✔List major wine production techniques that have helped wine production efficiency -
✔✔- Modern techniques for grape production, such as better site selection, clonal
selection, improved canopy management, pest and disease control
- Modern winemaking technology
✔✔What caused the significant reduction of wine production in Europe in 2017? -
✔✔Combination of spring frosts, hailstorms and severe heat waves
, ✔✔What wine regions are affected by long-term climate mate change? - ✔✔- Serious
droughts in South Africa and California
- More reliable sugar accumulation in certain regions in Europe
- New world regions too hot for certain varieties
✔✔How do GIs limit wine production? - ✔✔Define where grapes of wine with specific
geographical names can be grown, thus limiting the amount of wine that a can be
produced
- European PDO dictate what grapes, max yield and winemaking and maturation
techniques
✔✔What are the major aims of GI? - ✔✔- Define wine style produced in a particular
region
- Bring supply and demand more into line and reduce the risk of downward price
pressure
However, with rising demand, there is often pressure to extend the permitted production
area
✔✔How does the PGI system offer greater freedom to producers? - ✔✔- Based on the
vin de pays system
- Still require 85% grapes from a particular geographical area
- Wider range of varietiesNo rules on viticulture and winemaking
✔✔What could producers do when there is an oversupply of wine? - ✔✔- Sell excess at
much lower cost
- Try to find new markets and outlets - takes time, only for someone with market or
distributor
- Sell wine under different label and offer to supermarket, deep discounter, bar or
restaurant as private label wine
✔✔How does the oversupply of wine cause damage to brand image? - ✔✔- If a
producer is forced to sell at lower than usual price
- If retailer orders too much wine and has to lower the price to sell
✔✔What are the problems associated with undersupply of wine? - ✔✔- Disappointing
clients and constrained relationships. Potential penalty or cancellation of contract
- Increased price, but most issue wines to main distributors on allocation
- Cheaper alternatives from other grape varieties or countries, especially in price-
sensitive markets
✔✔Why do very large companies have advantage when there is an undersupply of
wine? - ✔✔- They have wines at different price points, styles and origin
- They have alternative from within their portfolio
ANSWERS MARKED A+
✔✔What are price-sensitive markets? Give examples - ✔✔Markets where consumers
are unwilling to pay more than the lowest price possible for the style of wine they want
to buy. E.g., Germany, UK
✔✔What can producers do to retain customers in price-sensitive markets? - ✔✔-
Competition is fierce - reduce price or simply choose not to sell
- Reluctant to pass on increases in production costs to consumers
- Try to build up 'brand loyalty'
✔✔Explain 'premiumization' - ✔✔- Consumers are increasingly willing to pay more for
individual bottles of wine, often because they are buying less wine by volume
- Happens in USA even in UK
✔✔List major economic factors that influence demand for wine - ✔✔- Strength of
economy
- Fluctuations in currency exchange
- Changes to the market
✔✔Give examples in which the strength of economy affect wine demand - ✔✔- 2008
financial crisis: champagne demand falls, Prosecco grew; trade wine for beer, cider etc
- Chinese economy growing: emerging middle class chasing aspirational wines
✔✔In what kind of market does currency fluctuation have the most significant impact on
the demand for wine? - ✔✔Price-sensitive market
✔✔When a wine-exporting country's currency gains value compared to that of the
importing country, what can a producer do? - ✔✔- Increase wine price and losing sales
- Keep the price and lose profit
✔✔When a wine-exporting country's currency loses value compared to that of the
importing country, what can a producer do? - ✔✔- Lower price and boost sales
- Keep price stable and improve profits for future investment
✔✔What is one downside of weak currency on the part of the producer? - ✔✔Costs
more to import equipment and supplies such as barrels, corks and yeast, which may
offset additional profits
✔✔How does changes to the market affect demand for wine? - ✔✔- New
companies/products enter, others disappear
- Opportunities for competition
- However, if supply is limited, price increase is possible
,✔✔List major legislative and political factors that affect demand for wine - ✔✔- Laws
prohibiting or limiting alcohol sale
- Government policies to reduce alcohol consumption
- Taxation
- International trade
- Wine laws
✔✔Give examples of laws that limit alcohol sale - ✔✔- Monopoly
- USA three-tier system
- Min drinking age
- Limit hours in the day for alcohol sale
✔✔Give examples of government policies to reduce alcohol consumption - ✔✔- France:
Loi Evin in 1991, restrict alcohol advertising
- Scottish: min unit price: GBP(75cl bottle with 12% considered to have 9 units)
- Blood alcohol concentration (BAC)
✔✔What are two impacts of taxation on wine? - ✔✔- Reduce consumption
- Major venue generator for many governments
✔✔List types of taxes applied to alcoholic drinks - ✔✔- Sales tax (VAT in EU)
- Specific excise duties on alcohol, payable at the point of manufacture
- Minimum pricing mechanism
✔✔List one example in which reduced tax has boosted wine sales - ✔✔In 2008, Hong
Kong abolished excise duty on wine with the aim of becoming wine trading hub of East
Asia
✔✔What is tax on imported goods called? - ✔✔Custom duties / trade tariffs
✔✔What non-member states have entered into trade agreements with EU? - ✔✔South
Africa and Chile
✔✔What is embargo - ✔✔An extreme form of protection in which a country bans
imports from or exports to a particular country
✔✔Give examples of wine laws - ✔✔Geographical Indications (GIs): Protected
Denominations of Origin (PDOs) and Protected Geographical Indications (PGIs)
✔✔How do GIs affect wine demand? - ✔✔- Reputation
- Increase recognition and demand for wines from that region
- Allow price increase
,✔✔How can wine laws negatively affect wine production? - ✔✔- Many limitations such
as grape varieties, methods of production, maturation periods etc
- Slow to react to changes in consumer preferences
✔✔What factors in production could influence wine supply? - ✔✔- Area under vine
- Human factors
- Natural factors
✔✔Which country has seen the biggest growth under vine recently? - ✔✔China: now
second largest area under vine, seventh largest producer
✔✔What factors have resulted in the loss of vineyard land? - ✔✔- Vine pull schemes
- EU restrictions on planting new vineyards
- Conversion of vineyard land to other uses
- Abandonment of rural areas
✔✔What is 'wine lake'? - ✔✔By the mid 1980s, EU wine production was much greater
than demand, creating a surplus that came to be known as the 'wine lake'
✔✔Where have vine pull schemes mainly occurred? - ✔✔- Southern France, Italy and
Spain
- Australia, New Zealand, Argentina
✔✔Give examples where conversion of vineyard land to other uses have occurred -
✔✔- Wine grapes are relatively low value
- Elgin, South Africa: replaced with apples
- Santa Clara Valley or Silicon Valley for business
- Property development, often for tourists, as in Madeira
✔✔Explain why Spain has increase wine production despite the area under vine
decreasing - ✔✔- Average yield has traditionally been low compared with France / Italy,
due to very dry climate and the use of traditional low-density planting systems
- Relaxation of laws banning irrigation, which means that areas not previously able to
support vines are now viable
- Increased use of modern high density planting
✔✔List major wine production techniques that have helped wine production efficiency -
✔✔- Modern techniques for grape production, such as better site selection, clonal
selection, improved canopy management, pest and disease control
- Modern winemaking technology
✔✔What caused the significant reduction of wine production in Europe in 2017? -
✔✔Combination of spring frosts, hailstorms and severe heat waves
, ✔✔What wine regions are affected by long-term climate mate change? - ✔✔- Serious
droughts in South Africa and California
- More reliable sugar accumulation in certain regions in Europe
- New world regions too hot for certain varieties
✔✔How do GIs limit wine production? - ✔✔Define where grapes of wine with specific
geographical names can be grown, thus limiting the amount of wine that a can be
produced
- European PDO dictate what grapes, max yield and winemaking and maturation
techniques
✔✔What are the major aims of GI? - ✔✔- Define wine style produced in a particular
region
- Bring supply and demand more into line and reduce the risk of downward price
pressure
However, with rising demand, there is often pressure to extend the permitted production
area
✔✔How does the PGI system offer greater freedom to producers? - ✔✔- Based on the
vin de pays system
- Still require 85% grapes from a particular geographical area
- Wider range of varietiesNo rules on viticulture and winemaking
✔✔What could producers do when there is an oversupply of wine? - ✔✔- Sell excess at
much lower cost
- Try to find new markets and outlets - takes time, only for someone with market or
distributor
- Sell wine under different label and offer to supermarket, deep discounter, bar or
restaurant as private label wine
✔✔How does the oversupply of wine cause damage to brand image? - ✔✔- If a
producer is forced to sell at lower than usual price
- If retailer orders too much wine and has to lower the price to sell
✔✔What are the problems associated with undersupply of wine? - ✔✔- Disappointing
clients and constrained relationships. Potential penalty or cancellation of contract
- Increased price, but most issue wines to main distributors on allocation
- Cheaper alternatives from other grape varieties or countries, especially in price-
sensitive markets
✔✔Why do very large companies have advantage when there is an undersupply of
wine? - ✔✔- They have wines at different price points, styles and origin
- They have alternative from within their portfolio
