Which Factors Decide the Price of Wine?

by Karoline Arberg

Why are some wines sold at just £ 2 while others have a price tag similar to the cost of a whole house? The easy answer would be that expensive wines are of higher quality, right? But this is not always the rule; you can buy very good wines at reasonably low prices too. Similarly, you’ll also find very expensive wines that may not be worth what they cost. So, who or what decides the price of wine?

The final price of a bottle of wine is influenced by different variables that we will try to explain below:

The Vineyard

The cost of maintaining a vineyard is high. Very high. It takes a large initial investment to buy it but on top of that, you must add high maintenance costs for the winery. Among other things, you will need machinery, tools and products that are necessary to keep the vineyard operating.

Vineyards typically also employ many people so salaries must be added to the cost. Farmers, agronomists and winemakers are just some of the people who participate in the initial phase of production. That directly affects the price of the wine.

Production Quantity

The harvest also carries fixed costs to the winery such as labour, machinery, etc. These costs, however, are not directly proportional to the quantity of fruit collected or the bottles produced from the fruit.

In years with a poor harvest, the costs must be recovered by increasing the price of the final product. On the other hand, the price will not need to be increased in years with a good harvest. The abundance of harvested grapes means the number of produced bottles will be greater and fewer costs must be recovered.

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Winemaking and Aging Techniques

Winemaking is the process by which grapes are transformed into wine. The process is more or less always the same, but the techniques of each winery often differ. Each technique is carried out with a specific objective, e.g. producing more wine or improving the quality. Creating a quality wine usually involves wine artisans, specialised winemakers, and sometimes even chemical engineers to prepare analyses. There is no doubt that it would be more economical to go through an automated and more industrial process. Supervising each of the manufacturing phases with specialised personnel is obviously more expensive.

The ageing of the wine, the maturation time, also comes with endless expenses. The longer the wine must age the higher the cost for the winery. A wine with a long maturation period costs more to produce and you cannot sell it immediately. You need expensive materials such as barrels and you cannot recover this investment quickly. You also need space to store the many barrels and your investment will be held for years until the wine is bottled.

Vineyard and Winery

Each vineyard has its own specific characteristics and objectively some characteristics are better than others. There are historical wine regions that produce wines of excellent quality every single year. This could be due to the composition of the soil, a unique microclimate, or perhaps a very rare native vine. In these areas wine is produced following ancient techniques and traditions which winemakers pass on through the generations.

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The geographical areas of the vineyards are indicated by acronyms such as DOC, DOCG, IGT and IGP. The areas are protected by strict regulations to guarantee the quality of their products. The regulations are specifically designed to regulate the production process and the quantities of wine that can be produced. These restrictions seek to defend the quality of the product and the territory. However, they also contribute to increasing the production costs and therefore the price of the wine itself.

The winery itself is another important factor to keep in mind. A winery that has endured over generations, has built a reputation and is loved by the greatest wine critics deserves to be rewarded.

The Bottle

The bottle, the cork and the label also constitute a cost. Winemakers know that the quality of the bottle influences the quality of the wine significantly. It is not worth the risk of ruining years and years of careful work just to save on the bottle.

At the final stages of selling the wine, the marketing carries its own costs. A beautiful label, perhaps decorated by an artist or signed by a celebrity, certainly makes you sell more. However, this also requires an investment. And finally, we must not forget costs added by intermediaries such as wholesalers, distributors, representatives, traders, etc.

 

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