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What Goes Into the Cost of Wine?

Wine, by the Numbers

One of the most informative seminars at the Food & Wine Classic was taught by sommelier (and James Beard Award winner) Belinda Chang. She's made her name as the wine director at The Modern restaurant in New York City. The 2011 Outstanding Wine Service Award winner — whose seminar was titled "Bling vs. Bargain? Guess the Wine Price" — tackled the question of whether price makes a difference when it comes to wine.

Attendees tasted two glasses of sparkling, Chardonnay, and Bordeaux blends, respectively, and were asked to guess which was higher-priced. While we assessed each wine's value, Chang also shared details on what goes into the price of wine. Better understand why a wine costs what it does after the jump.

A number of factors determine the price of wine, like supply and demand, particularly in scenarios like that of the coveted Grand Cru Bordeaux. But there are also other standard costs, including labor, real estate, grapes, barrels, fuel, machinery, bottles, labels, corks, marketing, and winemaker and staffing expenses. Take a look at the price breakdown for a $100 bottle of Napa Valley Cabernet:

Cost to Produce a $100 Napa Cabernet
Description Cost
Grapes (to buy) $7.00
Labor (harvesting grapes) $6.67
Winery costs (maintenance, etc.) $6.82
Barrels (to buy) $2.67
Glass bottles (to buy) $1.50
Other (labels, corks, etc.) $3.59
Total cost to produce $28.25

While I was surprised to find out how high some of the costs were (how can a bottle cost $1.50 when Two-Buck Chuck is $2? Think about that!), it was also a wake-up call to learn that many wines are marked up anywhere between 300 and 600 percent retail — or more, especially if you're ordering a highly sought-after bottle. Here's what some wines look like, on average:

Wine Costs in Brief
Wine Description   Cost to Produce     Retail Price   Markup
Generic 2006 Bordeaux $2 $12 600 percent
2000 Dom Pérignon $33 $150 455 percent
2005 Chateau Pétrus
(Bordeaux first-growth equivalent)
$45 $4,000 8,889 percent

Do these figures shock you?

Image Source: Getty
Join The Conversation
Jen-from-VineCrowd Jen-from-VineCrowd 6 years
We at VineCrowd are a little obsessed with indie and artisanal wine and have spent a lot of time musing this particular question, because we are often asked: Why purchase artisanal wine when there is a 2 cent wine sale at MongoBev? When you get down to it, there are actually great reasons to buy artisanal wine that the excellent analysis above skirts around. The fact is that there is a different cost structure for corporate brand wines and indie wines. Here are some of the things that your money might be paying for when you buy a bottle from a large, corporate winery (hence the 600% mad mark-ups noted above): • Expensive ads in wine magazines • Lawyers to approve expensive ads in wine magazines • Corporate “team building” retreats • Profit margin for other less expensive brands that use the same equipment and staff In contrast, when you buy a bottle of artisanal wine for the same price, your money might be going to things like: • Family owned and operated vineyards • Premium, new barrels for aging • Multiple hand harvests (for peak ripeness) • College fund for winery owner’s kids to one day take over the business As you can see, in this scenario your $50 for an artisanal bottle goes straight into the quality of the wine. This means that whatever the cost of the bottle, the value of the wine inside is almost always higher when you go indie. Just sayin'.
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