1|Page
WSET LEVEL 4 D2 EXAM ACTUAL PREP
QUESTIONS AND WELL REVISED ANSWERS -
LATEST AND COMPLETE UPDATE WITH
VERIFIED SOLUTIONS – ASSURED PASS
What are price-sensitive markets? Give examples - ANSWER >>>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? - ANSWER
>>>- 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' - ANSWER >>>- 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 - ANSWER >>>-
Strength of economy
- Fluctuations in currency exchange
- Changes to the market
Give examples in which the strength of economy affect wine demand - ANSWER
>>>- 2008 financial crisis: champagne demand falls, Prosecco grew; trade wine for
beer, cider etc
- Chinese economy growing: emerging middle class chasing aspirational
wines
,2|Page
In what kind of market does currency fluctuation have the most significant impact
on the demand for wine? - ANSWER >>>Price-sensitive market
When a wine-exporting country's currency gains value compared to that of the
importing country, what can a producer do? - ANSWER >>>- 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? - ANSWER >>>- 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? - ANSWER
>>>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? - ANSWER >>>- 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 - ANSWER
>>>- Laws prohibiting or limiting alcohol sale
- Government policies to reduce alcohol consumption
Taxation
International trade
- Wine laws
,3|Page
Give examples of laws that limit alcohol sale - ANSWER >>>- 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 - ANSWER
>>>- 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? - ANSWER >>>- Reduce consumption
- Major venue generator for many governments
List types of taxes applied to alcoholic drinks - ANSWER >>>- 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 - ANSWER >>>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? - ANSWER >>>Custom duties / trade
tariffs
, 4|Page
What non-member states have entered into trade agreements with EU? -
ANSWER >>>South Africa and Chile
What is embargo - ANSWER >>>An extreme form of protection in which a
country bans imports from or exports to a particular country
Describe what happens when relative supply and demand change - ANSWER
>>>-
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 - ANSWER >>>- Social
- Economic
- Legislative
- Political
List major social factors affecting demand for wine - ANSWER >>>- Change in
consumption habits
- Change in consumer preferences
- Change in reputation
- Change in spending patterns
WSET LEVEL 4 D2 EXAM ACTUAL PREP
QUESTIONS AND WELL REVISED ANSWERS -
LATEST AND COMPLETE UPDATE WITH
VERIFIED SOLUTIONS – ASSURED PASS
What are price-sensitive markets? Give examples - ANSWER >>>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? - ANSWER
>>>- 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' - ANSWER >>>- 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 - ANSWER >>>-
Strength of economy
- Fluctuations in currency exchange
- Changes to the market
Give examples in which the strength of economy affect wine demand - ANSWER
>>>- 2008 financial crisis: champagne demand falls, Prosecco grew; trade wine for
beer, cider etc
- Chinese economy growing: emerging middle class chasing aspirational
wines
,2|Page
In what kind of market does currency fluctuation have the most significant impact
on the demand for wine? - ANSWER >>>Price-sensitive market
When a wine-exporting country's currency gains value compared to that of the
importing country, what can a producer do? - ANSWER >>>- 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? - ANSWER >>>- 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? - ANSWER
>>>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? - ANSWER >>>- 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 - ANSWER
>>>- Laws prohibiting or limiting alcohol sale
- Government policies to reduce alcohol consumption
Taxation
International trade
- Wine laws
,3|Page
Give examples of laws that limit alcohol sale - ANSWER >>>- 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 - ANSWER
>>>- 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? - ANSWER >>>- Reduce consumption
- Major venue generator for many governments
List types of taxes applied to alcoholic drinks - ANSWER >>>- 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 - ANSWER >>>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? - ANSWER >>>Custom duties / trade
tariffs
, 4|Page
What non-member states have entered into trade agreements with EU? -
ANSWER >>>South Africa and Chile
What is embargo - ANSWER >>>An extreme form of protection in which a
country bans imports from or exports to a particular country
Describe what happens when relative supply and demand change - ANSWER
>>>-
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 - ANSWER >>>- Social
- Economic
- Legislative
- Political
List major social factors affecting demand for wine - ANSWER >>>- Change in
consumption habits
- Change in consumer preferences
- Change in reputation
- Change in spending patterns
