Monday, January 4, 2010

Making Dollars and Sense of Wine


Just what is the difference between a $10 bottle and a $100 bottle of wine?  The obvious and common answer is "quality", but there is just so much more to it than that.  Thing is, there's so much that goes into producing a bottle of fermented grape juice, most of which most people don't even think of when they're drinking the stuff.


1. Land: The grapes have to grow somewhere and most premier vineyard sites aren't cheap!  Cabernet grown in Bordeaux, France is going to cost far more than Cabernet grown in the boondocks of Washington state because vineyard land is far more prestigious and costly in Bordeaux.  Also when it comes to land, winemakers can chose to use grapes from a single isolated region or a blend of grapes from a larger area (ex.Napa vs. California). When wines are made from a blend of a larger region, they are typically cheaper due to the fact that some of the grapes are coming from cheaper growing areas.


2. Labor: Just like we learned in our Econ 101 classes, labor is a big cost contributor.  Someone needs to plant, care for, and pick the grapes.  And then someone else needs to turn those grapes into wine and get them into bottles.  Some cheaper wines are produced in more automated fashions that use harvesting machines, gyropalates, and robotic bottling/labeling lines.


3. Aging: Typically, the longer a wine is aged (whether it be in barrel, tank or bottle) at the winery, the more it is going to cost.  Merlot that has seen 18 months in oak, is going to cost more than a Merlot that was 'oak chipped' for a few weeks.  Oak barrels are costly and so is the space in the winery that they take up.  Wines that are "cellar aged" in the bottle before release will cost more because the winery has reserved a lot of space in their cellar to let those bottles just sit and take up valuable real estate. 


4. Supplies: Just like your car had all sorts of add-on options when you bought it, bottles can be tricked out or stripped down.  It still boggles my mind how many different types of glass, corks/closures, labels, boxes/crates and wax/foil options there are. You can engrave/emboss your bottle, get longer and more expensive corks with your logo "firebranded" on it, use heavier glass, package them in wood crates, or even hand-dip (+1 labor) the neck of your bottle in wax to make it extra fancy.  The sky's the limit and so is the cost you can incur.

5. Marketing: Some wineries are now part of mega-corporations like LVMH that believe wine should be advertised in every form of media possible and should be treated as a mass-marketed (and produced) product.  No small boutique winery is going to want (or be able to afford) to buy up TV time or huge magazine ads.  They look at their wine as an artistic expression, not a profit-driving commodity.  All those catchy Korbel commercials aren't cheap and you can be sure that advertising cost was figured into the cost of your that bottle of Brut you're eyeing.


6. Prestige/Scores: Veuve Cliquot, Opus One, Petrus, Silver Oak...are they really worth it?  Some say they are the best wines on the Earth and others think it is mostly hype (I vote for hype).  A lot of time and effort (+1 Marketing) and money go into building up a reputation - these brands have done just that and they make sure to charge you for it. You can also bet that once a wine gets a high score from Parker, Spectator, or Tanzer it won't be a "value" for long.

7. Certifications: Biodynamic and Organic certifications don't come cheap to a vineyard/winery.  The fees to get certified and the effort and supplies needed to do it come at a premium. So just like an organic carrot might set you back more than its mainstream counterpart, organic/biodynamic wines are going to cost you more, too - but some say the extra cost is worth it, both in produce and in wine.



Now, what you need to do is determine what factors are most important to you and buy your wine based on that. Do you think it is worth the extra few $$ to get a wine that is handmade or are you fine with mass-produced wines?  Are you an organic food/wine devotee?  Do you like wines that have pretty labels or fancy bottles that would make great mantle-pieces?  Do you view wine as a status symbol and only want to be seen drinking the fanciest of wines?  Once you figure out where your wine dollars are best spent, you will begin to get more out of your wine.

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