Understanding Why Wine Costs the Way It Does!

25/03/2019 Wine drinking is a classy affair. It is quite justifiable when the wine is worthy, the cost is not an issue.

Somethings go without saying, and are quite acceptable, because of the royal value attached to it and regal interest in that particular thing! That is why, for those wines we love to sip on, it goes without saying, that the finer you go in quality and the brand label, the more handsomely ‘you pay’! Wine drinking is a classy and expensive affair, after all, isn’t it?!

Also, for some wines who have aged gracefully over the years, acquiring them, has to have some good number of bucks to be given. Freshly made or aged over years, wine is rich, suave and dense automatically attracts those enthusiasts who are ready to pay higher, as they are definitely oenophiles.

oenophiles

The basic concept is that the wineries, after making the wines sell it to the distributor at a price called ex-cellar price, which includes the cost of vineyards, sales, marketing, loans, real estate, and building and administration prices. The distributor then, as per his portfolios, buys wine as per his needs, and when finally, the retailer is sold the wine, the retailers sell it at a much higher/reasonable price often considering his business model and zip code. This is the basic cycle which happens in the wine trade. But there is much to that, the subjective factors which fit quite logically in determining why wine costs the way it does! What factors push the cost to some extraordinary heights? This is where ‘Vinomics’ comes in! The Vinomics will justify why does the wine have to cost the way it does, considering the three basic things- Time, Oak and Terroir.

For many wine producers, developing a vineyard cum winery might have been a very old traditional family business, and they might be carrying it out with a lot of sacrifices made in the past, hard pills swallowed, as well as, putting in timely efforts so that the wine they make turns out to be gold. The fact is that for some wineries it’s a bottle of sacrifices and hard work which they produce and so, demanding a price for that, is, nothing but justifiable and quite worthy. Such wineries with a great amount of experience in winemaking, produce unimaginable quality wine which owes to be paid that much.

Quoting an example from Food and Wine website, Mark Oldman pointed out while he was showing off a Stag’s Leap ‘Cask 23’ Cabernet Sauvignon, the bottle commemorated the 40th anniversary of the Judgment of Paris. During that tasting in 1976, Stag’s Leap shocked the wine world and beat out a number of Bordeaux giving American wine some real credibility on the international stage for the first time. Hence, this is one of the major factors why some of the best wines demand hefty costs to be paid.

Another subjective point can be wineries being private entities. Such privately owned wineries need not produce quarterly reports or open books to reporters, so they, as per their producing standards and quality, determine a price at which the wine can be sold.

Now, diving into Vinomics, there are many other factors apart from subjective ones which determine the whole cost structure of the wines. One of the core constituents in determining the wine price is ‘Time’. There are some reserve wines which needs to be stored in oak barrels for longer times and the more they are stored in oak barrels, the richer the taste becomes, because of oxidation. Also, those oak barrels are themselves quite costly which adds up to the price of the wine. A wine stored in oak barrel tends to last longer, in turn costing a bit more and the oenophiles seem to understand it all!

This is yet another technique used in storing wine. Other factors which add on to the high price of wine are fermentation techniques and procedures.

The other factor playing a key role which contributes to the cost of wine is the cork.  As per the Prospect website, cork manufacturers put a lot of work into detection. Especially, trained noses are deployed to sample corks, at random, in a large batch and to put aside any that cause suspicion. Guaranteeing the health of each and every cork is possible, but it costs much more to pass each cork under the nose of highly trained and sensitive sniffers. When the corks are manufactured so meticulously, it is certain that corks will be sold at a good amount and the winemakers in order to compensate, will definitely incorporate those costs in the final bottle of wine.

Similarly, when the label of wine is considered, it is certain that printing of the label is going to be included in the total cost of wines, but the type of label material/paper also depends on that. One is the cast gloss paper which has an extra coating applied to it which makes it extra glossy, giving it a mirror-like finish and the other one is an uncoated paper which is quite common in wines. The extra glossy paper is going to cost more than the normal one.

Augmented reality is one concept, which nowadays, is very much used in printing the wine labels. Brands like 19 crimes have implemented it, where the characters on wine label come alive and narrate the wine story. So, when such technological inclusions are done on the wine label, it is likely to be compensated by pricing the wine high.

The terroir of the wine is of supreme importance. After all, it is the environment, the surroundings where the wine is going to be grown. The soil quality, climate, irrigation, grape quality, and other factors, in turn, determine how much ‘extra’ care viticulture will require. At times, due to weak soil quality, there might be times wherein extra pesticides or extra ploughing might have to be done. Also, mixing the soil well with everything it requires, and doing it on a timely basis, requires different resources. The importance of terroir lies because ultimately the grapes are the main source which will be converted to wines, so each and every factor required to perform sound viticulture is included in the wine cost.

Sommeliers

Sommeliers, wine experts, renowned bartenders are always going to have a say in how a particular wine cost. They are here for that! And after tasting that wine, they will definitely want to rate it, give an opinion about and be truthful in their recommendations of a certain wine, considering that wine recommendation will carry along their palate tastes to other wine lovers. So, when wine experts rate a certain wine or publicize it highly, then there are certain wines which eventually earn that prestige because it is highly recommended by the experts. So, the ‘talk of the town wine’ isn’t coming that easily, as it will then cost more. So, this is yet another factor of answering the question of why wines cost more.

Considering core Vinomics, the supply and demand of a certain wine, also quite well determine how much will it cost. Current wine preferences, tastes, and trends in the wine world add up to the demand of a certain wine and in turn the supply. Some brands receive increased demands because of quality and innovative publicity.

Moreover, there are some micro-wineries which can only cultivate specific grapes considering the terroir. So, chances are that they might be missing out on cultivating those grapes which could easily fetch them good returns. But due to the restricted terroir, they can only grow a specific grape. Hence, to earn their bread and butter with a little jam as well, they price the grapes/wines high, which results in costly yet worthy wines which are scarce, yet are being produced by efforts of the winemakers.

Summing it up, it all depends on these minute factors which qualitatively and quantitatively add up to construct the wine price. After all, it’s all worth it in the end, because nothing compares to the feeling which occurs after seeing those joyous sparkles and pleasure textures of the wine.

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