Wine Prices, Whats the Deal?

By October 17, 2017Uncategorized

Part 1

Does that $300 bottle really taste better than that $75 bottle? To be truthful, I have no idea. A question like that is only answered by the individual tasting the wine, but WHY is that bottle $300? Now that is a a question that can be answered…sort of

To describe why a wine price is so high is to simply talk basic economics. First you have the cost of production, the cost of getting to market, then there is the demand, and of course the supply. There are definitely many other factors that can sneak into the mix, like the personal ideas or motivations of the proprietor, but to keep it simple lets talk about the 4 main reasons behind determining prices.

Firstly there is the simple and obvious cost of production. This can be influenced in many ways throughout the process of making each wine. Depending on whether or not the winery is new, old, or somewhere in between can affect the production cost a great deal. If the winery is brand new, the proprietors will be carrying a large start up cost like any new business, although the wine business certainly ain’t cheap. Purchasing property in an established wine region is anything but affordable, and the cost of building a winemaking facility only gets more taxing on the pocket book, oh right, then there are the taxes, damn the government! It can be argued that startup costs should not factor in the price of your wine but to be honest, it almost always does, so I thought I would mention it. Then you have the vineyard practices. Do you farm organically? Do you control your yield and if so how much fruit do you drop throughout the year? These are a few factors that can become quite expensive in the vineyard. As a quick example: some vineyards may harvest a crop of over 5 tons of grapes per acre while others may choose to crop closer to 2 tons per acre, and this will undoubtedly result in a more expensive wine as the winery cropping at 2 tons is surely spending more time and money controlling their volumes while ensuring only the best quality grapes get into their wines. Once you get passed that and to harvest time, you then have the option of mechanical harvest which can save some time and money, or hand harvesting which takes longer and is much more labour intensive and usually higher cost. Now that the grapes are harvested you are dealing with a plethora of ways that the cost can vary once in the winery. To keep the list short, the best way to describe winery costs is to think about the time each wine spends being made and its wait time before being released for purchase. One of the main factors that can drive a wines production cost up is barrel ageing. Not only do barrels cost a lot of money, some of which can reach the thousands for a single barrel that holds about 300 bottles of wine, it also means that the wine will have to rest inside that barrel for an extended period of time [sometimes upwards of 2 years and in some cases well beyond that]. So if you are making a wine aged in 100% new oak for 2 years (Can anyone say Oak Bomb! Okay, maybe not, but probably?!) you are not only spending thousands and thousands of dollars on the barrels to age this wine, you are also waiting an additional 2 years before you can see any return on all of your hard work and investment. Think of some of your favourite and most expensive red wines you enjoy from say Napa, or Bordeaux, both regions that are notorious for using new oak on their wines. Beyond this there are certainly many more cost factors that must be considered, but this should give you something to think about when wondering what went into making that $300 bottle of wine and keep in mind that expensive does not always mean better. More likely it means that a lot more time and money went in to making it, which HOPEFULLY means better.

Check out Part Two next week when I get into supply and demand. There is no shortage of controversy when it comes to the reasons people buy wine and how much of it some of the most prestigious wineries make!

By: TJ Harstine

Certified Sommelier

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