Want more?
Don't miss our Wine 101 feature on Understanding Wine Prices.Catch Up with Wine 101
Wine 101: What is Wine?Discover what it takes to make your favorite bottle of wine.
Wine 101: Decanting
To decant, or not to decant? Learn how to tell when your bottle needs to breathe.
Comments
Excellent graphic, Greg et al. Makes pricing clear as a picture!
Jul 01, 2010 at 4:20 PM
Dal Piaz
We're trying! Thanks for the kind words!
Jul 02, 2010 at 10:05 AM
batrotz
Don't forget the "what the market will bear" factor. Add into that what stores charge for shelf facings and the price starts to get up there.
Jul 02, 2010 at 12:00 PM
Winery
Where can I buy bottles for 5 Cents each? I own a winery and they cost me between 0.50 and $1!
Jul 02, 2010 at 1:09 PM
Vineyards
@Plymouth-Winery: you can find used bottles for that. The cheap ones but used. I assume they are available in the US as well. Of course they you need to treat them and at the end of the day there is not much saved over the new ones.
However, I have seen bottles also for a lot more than $1.25. Though the average there is right on.
I went to a packaging manufacturer at the Mendoza Wine Fair a month ago and asked for pricing for a nice box made for a high end bottle of wine. If you ordered 5,000 you got them cheap at US$5 a piece. :)
Excellent graph, Gregory.
Jul 03, 2010 at 5:25 AM
So why are some grapes more expensive than others? Is it the price of property, harvesting, quality, processing and paying for equipment?
Jul 03, 2010 at 12:21 PM
Vineyards
A lot has to do with the cost of the land. That is a huge factor. The other is simply labor cost. A vineyard is extemely labor intensive. Last year for example we had 40 people extra to prune our 110acres (42ha) vineyards. They all need to get paid. If you cut for quality production you have more labor involved than for high yield. You hire good help in France it is more expensive than in Argentina. A lot more...
The equipment is equally expensive throught the world, with some exceptions like here in Argentina where the government thinks it is great business practice to have a 70% import tax. So all of a sudden your tractor cost twice as much as in the rest of the world. That then is offset with the labor savings but then the government adds an export tax on wine.
Another factor is the varietal. Certain varetals produce less yield than others per hectare. Obviously that factors into your cost though for the high end wine production it does not make much difference since you are cutting 2nd growth anyhow to get lower yields on purpose.
Jul 03, 2010 at 12:38 PM
very nicely done, greg.
Jul 04, 2010 at 9:36 PM
I am a winemaker running a medium-size commercial winery in California. There are significant cost factors that you have left out, every one of which has to be figured into the price of each bottle: building, buying, or leasing winery space, buying and maintaining processing equipment (a decent size/quality press costs more than $100K, a crusher can be $50K, tanks average $10K, pumps, hoses, fittings, etc.), payroll for winery staff (which can easily exceed $1 million/year), utilities (our electric bills alone can sometimes approach $10K/month--how do you think we keep all that wine cool?), fees for lab analysis (or specialized equipment to do it in-house), infrastructure (air compressors, water heaters, refrigeration units, plumbing, wiring--all commercial grade), insurance, sales and marketing expenses, promotional travel, additives (yeast isn't free), cleaning products, waste water treatment....
I could go on, but I have work to do. And don't forget that a winery only gets half the retail price when wine is placed into the distribution channel.
Jul 09, 2010 at 6:18 PM
Another important issue you're forgetting: the markup from distributor to distributor to retail store/restaurant. Everyone who gets a hold of each bottle puts their markup on it before you drink it.
Jul 09, 2010 at 6:29 PM
k
Don't forget those of us who live in three-tier states, either....or the fact that many states see alcohol tax as a way to make up for dwindling revenue from other taxes...
Here in NC, we're forced to buy our products from distributors - so on top of the federal and state taxes (last year, it was decided that the tax per ounce on beer and wine should be the same as liquor - allegedly to help pay for ObamaCare....tax increased over 300% per ounce on beer and wine) - we're also paying a markup for each importer or distributor that touches the product before it gets to us...the retailers.
THEN, add the ever-increasing expenses associated with taking credit cards (thanks again to the current administration's legislation) - and the cost per bottle keeps going up before it even gets to the consumer.
The industry standard markup on a bottle of wine from distributor to retailer is 40%, but a good review from one of the major trade mags (parker, spectator, etc) - and suddenly you can see that wine shoot through the roof....Just one example - 2004 Hazyblur Invictus Shiraz was pre-released at about $40 a bottle. By the time it was actually released for distribution, the reviews had pushed the price per bottle to over $200!!!! Those who took the risk and committed to futures made a killing, while the rest had to pay!!!
Jul 09, 2010 at 7:26 PM
Dal Piaz
Thanks for the great comments folks. I think if you read the accompanying article, the link to it is just below the infographic, you'll find that I addressed most of these issues.
While I understand the cost involved in producing wine, at least up to a retail price, arbitrary as I state in the article, of $100.
This infographic can't cover many of the expenses involved in running a winery for several reasons, but among those are the rate of amortization of assets, and the basically unusable nature of many of them due to the ranges
Land cost can range from zero for paid off land, to lets say a million an acre, with interest.
The purpose of this inforgraphic is to give people a thumbnail idea of some of the fairly fixed costs that go into producing a bottle of wine.
Jul 09, 2010 at 7:46 PM
Andrews
That is cost of materials but it does not cover the cost of inventory, cost of labor (human cost), cost of production (machinery) or cost of storage (both barrel space & bottle space). These are all built into the cost of a bottle of wine.
Jul 09, 2010 at 7:54 PM
this is ridiculous: it's like saying BEEF: 5.09/kilo. It depends, radically, on the species, condition, and pampering of the animal in particular.
Jul 10, 2010 at 1:22 AM
Jagdhund
I agree that your cost segregation is not all inclusive, however it is a good review of the cost of materials. You didn't list my fav varietal, pinot noir, in your avrage price per ton of grapes. Can you? thanks in advance.
Jul 12, 2010 at 2:59 PM
1
As wine maker I believe this is total BS. Prices of wines depend on costs mentioned indeed, but you forget fixed costs of running a winery (wages, interest, transport etc etc) as well as the margins made in the overly expensive US distribution system. I wish it was that easy! Cheers, Jasper, Italia
Jul 15, 2010 at 9:31 AM
Dal Piaz
Ciao Jasper,
Thanks for the comment.
All of these issues were addressed in the accompanying article, and the comments above.
Jul 15, 2010 at 9:44 AM
ing101
Your "barrel cost" should also include the lowest "barrel" cost: coarse saw dust, pardon me, small oak chips. This will at least explain why you can get 'oak flavored' wine for pennies. And then there are those 2 x 4s and many, many other 'wood helpers' to give consumers "barrel illusions".
Jul 21, 2010 at 10:37 AM
ing101
Your "barrel cost" should also include the lowest "barrel" cost: coarse saw dust, pardon me, small oak chips. This will at least explain why you can get 'oak flavored' wine for pennies. And then there are those 2 x 4s and many, many other 'wood helpers' to give consumers a "barrel illusion".
Jul 21, 2010 at 4:20 PM
What a great article and infographic.
Thank you,
Marc
http://www.cellaradvisors.com/wine-...
Sep 21, 2011 at 1:45 PM
Nice article Greg, it gives some insight to the costs and setting the price of the wine. Next article could be about how much hard work is put down on one bottle of wine for example. Like "how many visits has each wine plant received under a year?
Thanks,
Leif
Jan 04, 2012 at 9:36 AM
Dal Piaz
Hi Leif,
It's a great idea and one we have been working on. As it turns out that's a huge project so there will be a sort of master infographic along with some smaller ones that illustrate certain points, like the differences between vine training methods, something I've been trying to get on virtual paper for awhile now.
Thanks for the encouragement!
Jan 04, 2012 at 10:24 AM
Add a Comment
Submit
Edit Confirm