WSET Level 4 D2 Question with complete solution 2023

WSET Level 4 D2 Question with complete solution 2023Describe what happens when relative supply and demand change - When supply exceeds demand: price falls, consumer have greater choice of cheaper alternatives. Producers lower price to remain competitive. Fall in prices lead to increased demand in the long run - When demand exceeds supply: price increase, consumers willing to pay higher for some wines; others simply switch to another wine or a different alcoholic drink The general factors affecting demand for wine - Social - Economic - Legislative - Political List major social factors affecting demand for wine - Change in consumption habits - Change in consumer preferences - Change in reputation - Change in spending patterns Describe how global wine consumption habits have changed since 2001 - Rapid growth in the first part of 2000 - Fall after 2008 financial crisis as many consumers reduce spending on non-essential products - Slight decline in recent years and due to remain stable to 2021 - Strong growth in sparkling wine sales Top five countries for total wine consumption in 2017 - USA - France - Italy - Germany - China Explain the increasing wine consumption in USA in the last 20-30 yr - Increasing globalization of the food and drinks industry - Consumers more able and willing to embrace new tastes - Increases and improvement in wine production in the domestic market Explain the increasing wine consumption in China - Growing middle class showing wealth and status - move away from local drinks - Aspire to drink imported wine - Bilateral trade agreement with Australia, Chile etc Give possible reasons for falling wine consumption in traditional wine-drinking countries - Younger people drinking less wine: old fashioned; less time in bars, more on social media - Health concerns: mostly due to government campaigns, e.g., Loi Evin in France - Changes in lifestyle: less time for longer meals, less lunchtime drinking - Reduced availability of cheap wine: reduce over-production, some consumers switch to cheaper alcoholic drinks List a few major changes in consumer preferences in recent years - Rose and Prosecco become popular - Increased demand for lower-alcohol wines - Medium-sweet German wines and fortified wines going out of fashion What factors could influence a wine's reputation? - Good reviews from leading publications and critics - Online influencers and KOLs - Presence in popular culture, e.g., films television series, music lyrics or celebrity lifestyle news - Peer opinions 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