Report on Wine Production: Cost Factors and Marketing Strategies

This report delves into the multifaceted world of wine production, examining the key factors that influence the final price point of wine. It begins with an executive summary and table of contents, followed by an introduction that highlights the winemaking process and the challenges faced in the competitive market. The discussion section explores the input costs of winemaking, including viticulture practices like soil preparation, trellising, and pest control; winemaking practices such as harvest dates and fermentation techniques; and the growing and buying of grapes. The report also covers the marketing forces at play, including pricing strategies and market segmentation. A case study of the Strenua wine company, an Australian winery, is presented to illustrate these concepts in a real-world context. The report concludes by emphasizing the importance of innovation and modernization for success in the winemaking industry. References are included at the end.

Running head: WINE PRODUCTION
Wine Production
Name of the Student
Name of the University
Author note

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EXECUTIVE SUMMARY
The purpose of this report is to explore the range of contributing factors in determining the
price point of wine. A depth discussion about the input cost in winemaking such as the
viticulture practice, growing and buying grapes, winemaking practices and the marketing
force in winemaking involving pricing and market segment has been discussed in this report.
In addition, the case study of the winery and the winemaker has been included in the report.
The report concludes with the fact innovation and modernization is the key factor in
achieving success in winemaking.

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Table of Contents
INTRODUCTION......................................................................................................................3
DISCUSSION............................................................................................................................3
THE INPUT COST OF WINE MAKING.............................................................................4
The Practice of Viticulture.................................................................................................4
The Practices of Winemaking............................................................................................6
The Growing and Buying of Grapes..................................................................................7
THE MARKETING FORCE OF WINE MAKING..............................................................7
Pricing................................................................................................................................8
Market Segment.................................................................................................................8
CASE STUDY.......................................................................................................................9
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................11

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INTRODUCTION
Winemaking is the process of manufacturing wine. It commences from choosing the
grapes or other product and culminates in packing the refined and finalized wine in bottles.
Grape is utilized as the sole ingredient in making wine in most of the cases, but sometimes
other products like honey and other fruits are also used as wine ingredients. A person who is
proficient in making wine is known professionally as a winemaker and sometimes as a
vintner. The field of study consisting wine and wine production is termed as oenology
(Boulton et al., 2013).
This report outlines the fact that in order to pull through from the acute competition
about wine making, it is essential to explore the contributing factors in regulating the price
point of wine.
An in depth discussion about the various input cost factors of wine production, the
essential components of marketing force in wine production and lastly a case study of the
winery and the winemaker has been discussed in this report to highlight the wine production
competition scenario.
DISCUSSION
The market scenario of wine manufacturing and production has witnessed massive
changes in the last few years and is expected to transform further in the coming years.
Globalization can be considered as an important factor in bringing massive changes in the
wine production market. The influence from globalization on wine production can be

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evidently studied from the topographical, consumer utilization behavior and operational
outlooks (Overton, Murray & Banks, 2012).
THE BACKGROUND OF THE FORMATION OF STRENUA WINE COMPANY
The independent winemaking company of Strenua is based in Chum Creek, Yama
valley in the country of Australia. The two friends- Dale Wheeler and Rheon Dodd started the
company. The owners were both fresh college graduates and utilized their university
knowledge in managing the company. The first assignment of Strenua wine when they were
placed in the market, sold out rapidly. The quality and flavor of the Strenua produce was very
much appreciated by the public. The owners strictly practice organic farming and natural
based fertilizers in the vineyard, which makes them environmentally sustainable and helps to
enrich the biodiversity. It can be said that Strenua wine is a bright example of a successful
wine producer. Overall, Strenua wine has received an overwhelming response and is
continuing to be a hit with the public. In fact, Australian wine industry is considered one of
the best in the world (Chong, 2014).
THE INPUT COST OF WINE MAKING OF STRENUA
The fierce competition in worldwide wine production and the increasing failure in
gaining a wide consumer reach have led to a drastic fall in the profitability ratio. Winemakers
in all the continents are believed to have fallen victims to this situation. As a result, in order
to curb this disparaging effect of the losses, Strenua has called for the implementation of
strategic changes in the cost management. This is because the calculation of the
manufacturing cost of a single bottle of wine is considered to be a key portion in a wine
making business. Strenua winemakers also use the manufacturing cost of a single bottle of
wine as a benchmark in inspecting the cost effectiveness of the other production stages.
Therefore, the determination of the right input cost is very important in a wine production

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business. The input cost in Strenua wine production business depends on various factors such
as the practice of viticulture, the infrastructure of wine, disease and pest control methods, the
process of growing and purchasing grapes and the practices of making wine (Corsi & Strøm,
2013).
The Practice of Viticulture in Strenua
The practice of viticulture in Strenua comprises preparing the soil, cultivating or
tilling the soil, planting a different mix of vines, trellising the vines and finally having the
suitable machinery and products to fight pests and other wine related diseases. Primarily after
a suitable Strenua vineyard has been chosen, the material of the soil and the pertaining
climate conditions are researched so that the right method of cultivation for the soil is chosen.
There are many cultivation methods available, which can be applied in winemaking. The
selection of the most fitting cultivation method is necessary for maximizing the vine yields of
Strenua (Robinson & Harding, 2015). Along with the cultivation of the soil, there are other
important factors of Strenua, which are equally important. They are having abundant amounts
of air and moisture, which must be in the correct percentage to the available solid material
and ample nutrition, must be provided to the plants so that they do not suffer from
malnutrition. The superior production and cultivation of the finalized wine of Strenua
depends much upon the initial process of soil preparation. An occurrence of negligence in the
initial stage would hamper the bottled product of wine at the final stage. Each soil has certain
specific qualities, which makes some cultivation methods more suitable than the others do.
Generally, in Strenua the selection of the cultivation method depends upon the make-up of
the soil, the conditions of the weather, the location of the chosen vineyard and the type of the
wine which is to be cultivated. Wine makers who desire to amplify their vine harvests usually
plant in places where there is copious water supply. In Strenua, the quality of the wine is
supposed to depend upon the stabilizing between the leaf particles. The leaves produce better

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when they are exposed to good nutrition and air. The amount of grapes chosen to cultivate a
crop also decides the wine quality, because if there are less productive leaves to sustain a
huge harvest, then automatically, the quality of the wine diminishes. Strenua winemakers
make use of the method of trellising in their wine production phases. In horticulture, trellising
is the process of providing a structure or a design of latticework to sustain the climbing
plants. This is the reason why trellising is used in wine production because vines are
considered to be climbing plants. Usually, plants, which apparently show the characteristic of
growing stronger, are trellised. Some vines require trellising and others do not. The
requirement of trellising usually depends upon the strength of the vines, the climactic
conditions, the type and the capacity of the soil. Snowier areas where there is high prevalence
of frost injury, trellising is extremely required. On the contrast, in areas where there is less
precipitation, vines do not show the tendency to grow much. As a result, trellising is not
required in the drier areas (Smart, 2014). The efficiency and profitability of the Strenua
vineyard depends upon the robustness and vigor of the vines. Therefore, it is extremely
important to oversee and inspect the operating pest and disease control methods of a
vineyard. Organic pest control methods are now popularly used in Strenua vineyards. Organic
pest control methods supports, enriches the biodiversity, and makes the vines to develop
strong endurance against harmful weeds. Chemicals are used rarely and must be duly
approved before their application. Other disinfectants are also used to maintain the required
safety and health standards of the vines. It can be said that the disease and pest control
methods are indispensable to the successful functioning of the Strenua vineyard (Vine,
Harkness & Linton, 2012).
The Practices of Winemaking in Strenua
The expertise of a proficient winemaker can influence the taste of the wine.
Nevertheless, there are many geographical differences in grapes and other wine producing

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ingredients, some useful techniques if applied in the cellar can bring a magical flavor in the
wine. Hence, in Strenua innovative wine making practices hold great relevance in the wine
production business. Some of the major winemaking practices in Strenua include: - Harvest
date, Maceration Time, Fermentation Temperature, Punchdowns vs Pumpovers, Oak vs Steel
Tank, Corks vs Screwcaps and others. The flavor of Strenua wine differs as in two types-
Single flavor and complex flavor (Goodstein et al., 2014). The recipe of making single flavor
wine is not very intricate and is quite simple. Though manufacturing of single flavor wine is
much uncomplicated, they tend to be savory. Complex flavor wines require more time and
care. The Strenua winemakers, in order to refine the taste of the complex flavor wines, use
Split fermentation, the mixture of different kinds of oaks and the most interesting of all, the
procedure of blending distinct materials (Hall, 2013).
The Growing and Buying of Strenua Grapes
Growing and buying of wines effectively is very crucial for the Strenua vineyard to
prosper. Strenua winemakers prefer to grow their own grapes in their backyard instead of
buying from the grape suppliers. Growing healthy grapes in Strenua requires many detailed
works such as spending ample time and effort on training, weeding, netting and pruning the
leaves (Bokulich et al., 2014). In addition to that, proper combating techniques against the
pests, harmful diseases and the insects are also substantial. In some cases, due to the isolation
of the location of the grape producing areas in Strenua, extra care has to be taken to manage
any threat from wild animals and havocs caused by nature (Christ & Burritt, 2013).
Sometimes, Strenua winemakers favor to purchase superior quality grapes from reputed
suppliers. Nowadays, grapes can be transported from the suppliers to the buyers in many
ways. All over the world, varieties of grapes can be bought from the suppliers, ranging from
the South American grapes to the polished Italian originated grapes. Strenua winemakers
have free choice in buying grapes in accordance to their choices, needs and preferences.

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Another important fact, which must be noted while getting involved in buying grapes, is to
have a durable transportation facility. Strenua has a good transportation set up which ensures
that when the grapes reach to the winemakers, they are at their best condition (Wakeland,
Colette & Venal, 2012).
THE MARKETING FORCE OF WINE MAKING IN STRENUA
Marketing is an important segment in the business of wine production. Every business
requires an effective marketing program to increase the profitability by enlarging the sales
ratio. Strenua winemaking sector is no exception. Strenua winemakers in order to create a
profitable marketing approach utilize many important factors such as strategic pricing and
segmentation of the market (Overton & Murray, 2013).
Pricing policy of Strenua
Pricing is an important factor in winemaking business. Generally, the selling price of
the Strenua wine is correlated with the quantity of production. The fixed costs of the utilized
grapes cannot be lessened. These costs are also not dependable on the product quantities. The
techniques, which are applied in the production of Strenua wines also sets a benchmark for
the setting of the prices. Complicated techniques demand setting huge prices while the simple
technique wines do not suffer from over expenditure. Packaging is an important art, which
cannot be ignored in the Strenua winemaking business. Packaging also influences the setting
of prices of Strenua wines. Elaborate packaging, such as a fashionable design of the bottle
with an attractive label increases the overall manufacturing cost of the product and thereby
increases the finalized price. Henceforth, pricing of a Strenua wine bottle inadvertently
depends upon many important production factors (Piqueras-Fiszman, & Spence, 2012).

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Market Segment practiced in Strenua
 Market segmentation is the process of segmenting the buyers based on
characteristics, purchasing power, preferences and purchasing styles. Market
segmentation helps the Strenua wine business to study and understand the
buyers and their demands and then take necessary steps to fulfill their
demands. Identification of the target market is extremely important for the
Strenua winemakers because these will further help them to enlarge their sales
quantity and bring in more profits (Cho, Bonn, & Brymer, 2017). According to
popular perception, Strenua winemakers generally categorize the buyers into
the following segments, which are –
 The perplexed buyer. They are overwhelmed by the availability of diversified
ranges of wines.
 The status seeker. They prefer to buy wine to display their status symbol.
 The keen wine buyer. They purchase wine for the purpose of entertainment.
 The faithful wine buyer. They are the so-called connoisseurs of wine.
 The cost driven buyer. They tend to look for discount vouchers and the best
deals in wines.
 The novice buyer. They are new and the probably the youngest buyers in the
market.
CONCLUSION
In the light of the above discussion, it can be said wine making is a very lucrative
business and continues to be so in the coming years. Organic farming and natural fertilizers
are the new rage in winemaking. Winemakers all over the world including Strenua are
implementing these techniques in order to maintain and sustain the biodiversity at the

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ecological level. In addition, proper pricing and marketing policies has to be followed by the
winemakers to cut through the current competition prevailing in the wine market which
Strenua had already done so. Intense competition leads to drastic losses in the profit ratio of
the winemaking businesses. Thereby, it is evident that innovation and modernization is the
key to success in winemaking.

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REFERENCES
Ashenfelter, O., & Storchmann, K. (2014). Wine and climate change (No. 164854).
Bokulich, N. A., Thorngate, J. H., Richardson, P. M., & Mills, D. A. (2014). Microbial
biogeography of wine grapes is conditioned by cultivar, vintage, and
climate. Proceedings of the National Academy of Sciences, 111(1), E139-E148.
Boulton, R. B., Singleton, V. L., Bisson, L. F., & Kunkee, R. E. (2013). Principles and
practices of winemaking. Springer Science & Business Media.
Cho, M., Bonn, M. A., & Brymer, R. A. (2017). A constraint-based approach to wine tourism
market segmentation. Journal of Hospitality & Tourism Research, 41(4), 415-444.
Chong, S. (2014). Business process management for SMEs: an exploratory study of
implementation factors for the Australian wine industry. Journal of Information
Systems and Small Business, 1(1-2), 41-58.
Christ, K. L., & Burritt, R. L. (2013). Critical environmental concerns in wine production: an
integrative review. Journal of Cleaner Production, 53, 232-242.
Corsi, A., & Strøm, S. (2013). The price premium for organic wines: estimating a hedonic
farm-gate price equation. Journal of Wine Economics, 8(1), 29-48.
Goodstein, E. S., Bohlscheid, J. C., Evans, M., & Ross, C. F. (2014). Perception of flavor
finish in model white wine: A time-intensity study. Food Quality and Preference, 36,
50-60.
Hall, C. M. (2013). Wine, food, and tourism marketing. Routledge.