Understanding the Cost of Wine

Understanding the Cost of Wine

There are many factors that affect the amount any of us will pay for a bottle of wine. Apart from the differences in how much each of us can afford to spend on a luxury item such as wine, it is likely that we'll pay more for a bottle to celebrate a special occasion, than for our everyday wine.

Each of the following components contributes to the broad spectrum of wines costing anywhere from £3 to over £500 per bottle.

Vineyard

The best grapes grow in the best vineyards. These aren't necessarily the ones with the most fertile soil, but the ones with the best soil for growing wine grapes. These soils pass on elements of mineral flavour to the grapes and thus to the wine. They will also have the right climate for growing wine grapes, which can alter dramatically within even a small area. The amount of sun and cooling breezes can vary from acre to acre in areas with hilly terrain.

All these differences will play a part in the individual grape flavours. The better the vineyard, the more expensive the land.

Vines

In addition to the vineyard, there is the vine itself. Older vines produce fewer, but higher quality grapes. This means that the wine produced from these grapes will be more expensive as they yield fewer bottles.

Grapes

The quality of the grape will also make a great deal of difference to the price of the wine. Grapes of only 'average' quality may be picked from very young vines growing in regions too warm or too cold for that particular variety. They may have been picked too soon to avoid a predicted thunderstorm, or maybe even picked after the storm and had their rich fruit diluted by an infusion of water. A skilled winemaker can turn 'average' grapes into enjoyable, pleasant wines, priced for everyday drinking, but they can never be made into a great wine.

Then there are good grapes, well grown in good regions under favourable conditions. These might be blended with lesser grapes to produce a decent wine at a particular price and quantity. Or they may be used alone to make a higher quality wine.

Great grapes, carefully tended to maturity in quality vineyards, command the highest price and produce the most expensive wines. The labels on these bottles will probably proudly display the name of the vineyard.

Grape Juice

The cheapest way to obtain grape juice is to press the grapes along with the leaves and stems and squeeze them until no more liquid remains. This extracts a great deal of juice, but it also draws harsh tannins from the grapes.

The most expensive method is to lightly crush, or allow the grapes to crush themselves under their own weight. The resulting 'free-run juice' is highly prized and accordingly expensive. Often grapes whose best juice has been drained off are then more thoroughly crushed. That juice is used for lesser wines.

Barrels

The most expensive grape juice is often put into the best French oak barrels. A new oak barrel can add a few pounds to the cost of producing each bottle of wine from that barrel. Cheaper options are older barrels or steel-vat fermentation. Such decisions by the winemaker are made with one eye on quality, and the other on cost.

Aging

Many top wines are crafted to be aged for many years to bring out its best qualities. Storing a wine for so long is very costly for the winemaker, and so will obviously affect the price.

The Bottom Line

With supermarkets increasing their stake in the wine market, their relentless pursuit of price-cutting has made wines cheaper in relative terms than they ever have been. Most supermarkets stock wines in the price range of £3.00 to £12.00, but a look at the costs that make up each bottle may be quite surprising:

Item Cost
Bottle, Cork, Capsule & Label £0.40
Shipping £0.20
HM Customs & Excise Duty £1.16
Wine Merchant's Margin £0.55
Sub Total
£2.31
VAT @ 17.5%
£0.40
Total
£2.71

This means that every bottle costs over £2.70 before any wine is put in it, which means that when you buy a bottle for £2.99, you are actually only paying for less than 30 pence worth of wine! However, these days few of us expect to pay less than £3.00 for a bottle, and the only £2.99 wines left on the shelves are either discounted stock, or 'loss-leaders' used as promotional gimmicks.