Why does my wine cost that much?

It's a burning question for many wine drinkers; trying to understand the cost of a bottle of wine and the variations the world over. Here is the basics of what makes up the cost of your tipple.

One of the questions I get a lot is "What makes up the cost of that wine?". Why does a Bordeaux Premier Cru cost so much when I can get a Chilean Cab Sauv for a tiny fraction of the price? Cheap wines, expensive wines - for a lot of people the difference can't be tasted, but the effect on the wallet can.

I’ll try to explain what makes up the cost of wines, and then you can see for yourself how you feel about the value.

Essentially there are three important V’s that when added together make up the cost of wine production: Viticulture, Vinification & Vineyard.

Viticulture

 This is the time, effort and money that is put into the growing, and importantly, selecting of the grapes.

 If you’re a winemaker and you have pumped thousands of dollars into your vineyard, and then paid experienced pickers to select only the best grapes for your wine, this all adds to the cost and how much you need to charge per bottle.

 The idea, of course, is that carefully selected bunches will produce better quality wines than machine harvested grapes.

Vinification 

This is the time, effort and money that is put into actually making the wine. So here you are thinking about the quality of the oak barrels and the duration that they are stored for. Better oak and longer maturation all builds on the price. If you have a star winemaking team, they also need to be paid too. 

Vineyard

Where the vineyard is truly matters. Premium land commands a premium price, and certain appellations - especially in France, such as Champagne and areas of Bordeaux and Burgundy - can be very, very expensive. Therefore, wine price needs to reflect the income potential of that land.

So, broadly speaking, these are the factors that go into wine production. At this point you can ask yourself, if land and labour are cheaper in, say, Chile as opposed to Bordeaux, France - could I get a better quality wine for a lower price? Chile has some world class producers, so it's highly likely you can. 

But this isn’t the end of the story for how much consumers end up paying. 

You need to then think about marketing (you don't want to know how much of that Veuve Clicquot price is purely for building promotional budgets), distribution, and storage - and of course all of the people and companies who demand a varying mark up for providing these services. Then there will always be Mr Tax Man.

However precisely where you are enjoying your wine makes perhaps the largest contribution of all: Rent.

If you are in a hip, city-central bar, like in Singapore, London, New York or Hong Kong, for example, then the likelihood is that the bar has very high overheads on the property and needs to charge a significant mark up in order to make any money.

Many – especially in Singapore – blame taxes for the high cost of their wine. In reality, they should be cursing landlords and property prices instead if they are out in a bar. If they are at home, they would need to remember how far that lovely wine has travelled to get to them, and the special storage (think of the protection needed at all times from the nasty heat!) it needs to stay in tip-top condition and how this will affect the cost too.

So the best way to buy wines for the best value is definitely to click and purchase online and avoid filling a landlord's pockets.

Cheers!

N.B this doesn't speak much to investment grade wines, which operate in a whole other sphere in terms of pricing - more on that another day.