Wine 101 – September 28, 2015: How Are Wine Prices Determined?

This Week In Wine 101: Why Is Wine So Expensive & Does Price Equal Quality?

We recently went with some friends to a local wine tasting and were introduced to several Cabernet Sauvignons and Zinfandels from California, Chile, France and Italy. Our plan: taste some new wines, socialize a bit and purchase a few bottles to enjoy later with dinner. As we examined color, swirled, smelled, tasted and savored each wine we couldn’t help but notice the difference in prices between all the wines we sampled. Naturally, the following question was asked, “What makes one wine more expensive than another?”

 

The Truth About Wine Prices

The truth is, while shopping for wine we’ve all observed the wide range in wine prices and the differences with the many grape varietals, and asked ourselves, “Why?” or “What is the difference between a $5 bottle and $30 bottle of wine?” But more importantly, does price actually equal quality and will a $30 or $45 bottle of wine taste like the price?

 

How Location Affects Wine Prices

There are many factors that influence wine prices, the least of which is (not) the location an owner intends to grow and produce wine. Land prices in the United States have soared dramatically in the past few years. The taxes (alone) that must be paid on the land can dramatically affect the price tag on a bottle of wine. After taxes winemakers must consider the lands production or “yield.” The number of vines that’ll be grown per acre and the number of grapes per vine directly affects the price per bottle.

Next, you have topography of the land, which will determine the type of labor expenses the owner will incur while operational. Usually flat land requires less manpower and machinery is the more cost effective option to go with. However, if the land is on a slope, then manual labor might be required. Which results in yet another expense for the vineyard. An additional expense must be considered for the upkeep of an organic, sustainable or biodynamic vineyard, making for a more expensive endeavor as well.

 

Rules By Wine Region

Some countries like, France, Spain and Italy have very particular vinification methods that also play a part in their cost. The steps necessary to produce a particular type of wine that earns a specific classification can add to the price of the wine. For example, in Burgundy, France there are three classifications for white wines: Village wine, Premier Cru and Grand Cru. The quality in these classifications is said to range from good, great to fantastic and the prices often reflect this quality, rightfully so.

Whether or not a wine is fermented in French Oak, steel, wooden barrels or plastic can also equate to cheaper costs or increase the cost of wine. While steel and plastic fermentation containers can be cleaned and reused for years to come, oak barrels are frequently replaced, as often as yearly, which must be factored into the wines price. In addition, it is not uncommon for wineries to age their wine for a couple of years before they release it to the public. Having space and the appropriate conditions to properly age the wine will add to the cost.

Next, vineyards have to keep up with the supply and demand of their markets. Which in today’s market, especially in the United States and China, has grown rapidly as more consumers discover wine. And let’s face it, the more reputable (or marketed) a brand, the more clout it’ll have, which allows for price inflations. But this also means you’ll find a number of new world wines priced cheaply. Experiencing new wines from unknown vineyards can be a risk but that’s how we discover new gems, through trial and error.

 

Understanding Wine Prices & Production Costs

When you combine all of these factors you’ll have a better understanding of the costs that go into producing wine and determining wine prices. The only question left is, “Does the price of the wine equal quality and are you getting a return on your investment?” at the end of the day that depends on your taste, preferences and budget. We’ve enjoyed many wines under $10 and $20 that were absolutely divine. But we’ve also had the opportunity to enjoy some renowned wines north of $50 and found them to also be quite seductive in taste. However, tonight while at this particular wine tasting we sampled several expensive wines that we found absolutely unpalatable.

In short, wine prices do not always equate to great tasting wines. As you explore a variety of grapes you’ll find a wide range of prices and enjoyment levels. Remember these two things:

1. There are a number of factors including your mood and complementing foods and that contribute to your enjoyment or lack thereof for a particular wine, and

2. There is no wrong or right answer to what your taste buds savor or senses smell.

Whether or not the price equals quality depends on your taste. Don’t be afraid to try new wines you’re unfamiliar with and don’t judge a wine based solely on price. You won’t love every inexpensive or expensive wine you try but once you get to know your palate and are able to discern certain ingredients you like and dislike you’ll be able to find both affordable and more expensive wines that you’ll fall in love with. Cheers!

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