What goes into the price of a bottle of wine? The short answer is, a lot! However, does that mean a more expensive bottle is always a better wine? The short answer is, it depends. Let’s break down how wine pricing is determined.
Terroir
Terroir is usually defined as the place where the grapes are grown, and not all terroirs are created equal. Ideal vineyard sites are very specific to the grape variety planted and the part of the world they are located (cool vs. warm climates). However, they usually have enough warmth to fully ripen whatever varieties are planted, but also enough cooling influence to retain freshness and finesse. They are often on slopes, have ideal soils to meet but not exceed nutrient and water needs, offer protection from hazards, receive ideal sun exposure…the list goes on and on. Often, such ideal sites that produce high quality grapes are rare and have extremely limited available space. Think about how small Napa Valley and Burgundy are – there is no more space to plant new vineyards in those locations. That type of scarcity comes with huge price tags that are passed on to consumers in the cost of a bottle. Alternatively, wide tracts of flat land that are plentiful, easy to farm and mechanize, and warm enough for consistent ripening, tend to be used for high volume grape growing for inexpensive wines.
Grape Growing
Conventional viticulture (irrigation, fertilization, herbicides, pesticides, etc.) is a lot easier and cheaper (in the short term) than trying to work with Mother Nature through organic, biodynamic and sustainable farming. Using chemical treatments usually results in higher yields of grapes to make more wine more cheaply, which translates to a lower cost (and typically lower quality) wine. Eliminating or reducing such treatments is difficult and risky, sometimes resulting in crop loss that reduces the number of bottles that can be made. However, managing a vineyard more naturally requires a lot of hands-on attention and care that often results in higher quality fruit and therefore better wines. On the flip side, those lower yields and higher labor requirements can raise the price of your wine.
Winemaking
The size of a winemaking operation can have a big impact on price. Huge commercial operations have the benefit of economies of scale gained through lots of automation and high through-put, making it cheaper to produce each bottle. While small, boutique operations will do many steps by hand or on smaller pieces of equipment, which requires more labor but also more attention to the quality of the finished product. How the wine is made also plays an enormous factor in price. For example, the use of oak barrels is a huge cost ($1500-$3000 per French oak barrel!), so high volume producers will dump oak chips or staves into the wine for quick flavoring. Some producers will use additives and adjustments to obtain the color, flavors, aromas and structure they want rather than trying to obtain those naturally through high quality fruit. Aging wine ties up cellar space and delays return-on-investment, making those wines more expensive to produce. The list of available winemaking options for producing premium versus high volume wine is extensive.
Packaging
Did you ever notice how some glass wine bottles feel like they weigh a ton and others are light as a feather? Glass bottles are expensive to produce and even more expensive to ship, especially if they are heavier, so those hefty bottles are usually reserved for more expensive wines. The use of alternative packaging options, such as boxes and cans, can help bring down the price of a wine, but consumer perception is still that those packaging options contain lower quality wines. Closures also have different price points – cork, cork alternatives, screwcaps, etc. – and can impact the final bottle price.
Sales, Marketing and Distribution
Once a wine is produced and bottled, the costs don’t end there. That wine still has to be marketed and sold. Things like critic scores, brand recognition and consumer demand will help push up the cost of a wine, while wines made with lesser-known grape varieties or from lesser-known regions or producers will depress the price of the wine, regardless of quality. Every country also has a slew of laws that control growing, production and distribution of a wine. There are usually a number of intermediaries that a wine passes through on its way to the consumer – distributors, importers/exporters, wholesalers, retailers – each who take their cut along the way, increasing the final bottle price, not to mention taxes, duties, tariffs, etc.
Price vs. Quality
At the end of the day, inexpensive, high-volume wines are pretty much always produced using cheaper methods, otherwise, they couldn’t be priced in that $10 per bottle range. When you get above $20-$25 per bottle, producers may have better quality winemaking and grapegrowing options available to them, but that doesn’t always mean they are high quality wines. There are expensive wine regions where an entry-level bottle will set you back $50 (e.g., Napa, Champagne). On the other hand, there are High Value wine regions where you will pay less for quality wines. These are places where consumer demand is lower because the region and its grape varieties are lesser known, and costs are more reasonable.
High Value Wine Regions
Some of my favorite High Value wine regions are:
- Spain (Rivera del Duero, Jumilla, Yecla, Alicante)
- Portugal (Duoro Valley, Dao)
- Italy (Sicily, Puglia)
- Argentina (Mendoza)
- South Africa (Stellenbosch)
- Chile (Maipo Valley, Colchagua Valley)
- Washington State (Columbia Valley)
- Uruguay
- France (Languedoc-Roussillon)
If you want to experience first-hand how quality and value translate into the glass, check out my wine tasting experience, Is the Juice Worth the Squeeze! I will blind pour 5 different wines from $10 to $200 per bottle and in a fun competition, you and you guests will assess the quality of each wine and try to determine their price.
