This question is asked of me all the time. As with any other consumer product you purchase such as a pair of pants or shoes, a wash machine or automobile, it is the materials that go into making it, the labor cost, import costs, and any special features.
Wine begins on a farm in the vineyard fields. The cost of land in Chile is not as expensive as the cost of land in Napa or Champagne. The same is true for the labor cost. The labor demands of vineyards in Burgundy, Northern Rhone, Champagne, Sauternes, and parts of Germany are very high. These vineyards cannot be machine pruned, picked or harvested due to steep terraced slopes, soil composition, or type of grape or style of wine. Rather these grapes are hand-picked, hand sorted and carefully selected. If the weather is very warm, they may even have to pick the grapes at night so the wine does not begin to ferment before reaching the cellar.
Yields per vine—quantity vs. quality, is a big factor in the cost of a bottle of wine. Less grapes on the vine means a concentration of sugars and flavors yet less bottles and cases per harvest (1,000 cases). More grapes on the vine equals less sugars and less flavor, but a larger quantity of bottles and cases per harvest (10,000 cases). Think of an Italian hand-made shoe versus a mass produced factory made shoe.
Winemaking equipment such as presses, fermentation and storage vessels are very expensive. The more use made of them at vintage time, the wider the costs can be spread. Some vintners share equipment by joining co-operatives. Smaller production means less use of equipment which means the cost is amortized over fewer bottles.
Barrels used for oak aging vary in cost depending on type of oak or it they are new or second-hand. American oak barrel is $200 while a French oak barrel is $600.
Ageing of a wine requires expensive storage facilities and ties up capital. An Italian Barolo by law has to be aged 2 years in oak and another year in the bottle before it is released for sale.
After the grapes are grown and the wine is made the additional post-cellar costs include the packaging, bottle, closure (cork), label, carton, and the winery profits. Then the wine goes into distribution which tacks on transportation costs, import tax, sales tax, marketing, wholesaler and retailer storage costs and mark-ups/margins and the overhead cost of a retailer (volume stores vs. small boutique stores).
Last but not least the ultimate price that a wine sells for is the price that the market will support. If there is high demand for a wine that produces small quantities (200 cases) the price will naturally be high. If everyone wants it, the market price will rise higher.
Discover for yourself if a $10 wine versus a $50 wine is a better wine or at least provides greater pleasurable experience (value for money). You may buy a Prius at $22,000 and get good gas mileage and reliability, but a Lexus convertible at $70,000 would probably give you more pleasure, if you could afford it. When you purchase the wines ask the wine shop owner to wrap them in a brown bag (you can even have him/her pop the cork and recork it) so you can bring them home and taste them blind. Rate each wine on a scale from 1-10 and remove the brown bag to see if you enjoyed the less expensive or the more expensive wine. Here are few good red wines to taste at different price points.
Vina Los Vascos Cabernet Sauvignon, Colchagua Valley, Chile 2007 - $10
vs.
Chateau Gloria Saint Julien, Bordeaux, France, 2005--$50
Veramonte Pinot Noir Reserva, Casablanca, Chile, 2007 - $14
vs.
Domaine Forey Vosne Romanee, Burgundy, France, 2006 - $50
Stephen Vincent Merlot, California, 2006 - $10
vs.
Shafer Merlot, Napa, California, 2006 - $50
Note: If you live in Fairfield County, CT you can find or order these wines from these local wine stores: Peter’s Spirit Shop, Weston, CT; Ancona’s, Ridgefield, CT; Elmer’s Wines, Norwalk, CT
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