Why Does A Bottle Of Wine Cost What It Costs?
One half of my family has roots in the Isle of Man. It’s a little island off the north west coast of England, and carries with it a slightly stereotypical trait of personality (apologies in advance to any Manx reading this, but you know it’s the case!). I struggle to spend money. Always have. Now some people like to call this the mark of a tight arse. I’m really not, or at least I don’t think I am. I just like value for money, who doesn’t? The problem here is if you haven’t a clue about what goes into the thing you’re buying it’s hard to come up with an idea of what it’s worth and if you’re paying over the odds or not.
There are two types of things you buy; things you need and things you don’t. It’s the things I want I have a problem with. I find it very easy to just convince myself I don’t need something, especially when it comes to things that I don’t understand the value of. I just kitted out the flat with my missus, and no word of a lie, it took me 3 months to get over the fact a couch costs more than £100.
Now unfortunately buying wine to begin with fell into the camp of non-essential spending. I’m over it now, but only because I feel like I have a better handle on what things are worth, why they’re priced the way they are, and if I think there’s value there. There was always a magical barrier in my head of £10. If it cost more than £10 then I’d switch off and look elsewhere. Looking back it was a bit silly, but understandable at the time.
I still retain that you can buy lots of great wines for less than a tenner…
Of course you can. Anyone watching the wine pairings on Saturday Morning Kitchen (on the BBC) will have seen that nearly every pick is under that level. The problem here is we’re not all as expert at filtering through to the not-so-great stuff to find the gems as the boys and girls on the telly. As with most consumer goods it’s possible to pay £5 for a bottle of wine and be ripped off, in the same way it’s possible to pay £20 and get a bargain.
So once again, to help with those first few trips down to the wine shop, it’s probably time to write a bit about why wines are priced at such different levels?
Well guess what? There are lots of reasons, and the best way to think about it is to think about the wine making process talked about in the last blog (Another Day at the Office). Some reasons are more straightforward than others, but you only need a few in mind to get you on your way.
The first I guess sounds really obvious.
Where does the wine come from?
There are areas of vineyard in the world that are worth more than others. We’ll maybe talk about climate factors some other time, but let’s just note that a vine is a plant, and like any plant it needs the right levels of nutrients, sun, etc for the perfect fruit. Some vineyards are better situated than others, giving great harvests year in year out. Obviously they cost more to the producer, and ultimately more to us as buyers. So if you see a named area on the bottle, such as Chablis, Chianti, Barossa, etc then you’re likely to be paying a slight premium for the potential of a better wine.
Next cost is the workforce it took to bring the grapes from the vineyard into the barrels…
If you are a producer in Germany chances are the wages you have to pay your workers are more than those of a Chilean producer. This can be as regional as the south and the north of Italy for example.
Also if you have a site on a very flat land with vines in nice neat rows (much more common in recently established vineyards), then spraying and picking and other activities like it can be done by special machines cutting labour costs. If you have an old plot half way up a mountain with sparsely planted vines then I’m afraid you’re stuck, it can only be looked after by hand.
The last main cost controlled in the vineyard is the yield…
By yield we mean how much fruit the vines produce each year. This is controlled by pruning throughout the year depending on the ultimate product the farmer wants to go for. It also depends on how many grapes have made it through the year due to weather conditions, birds, diseases, and so on. It’s not fool proof, but think of it roughly like the higher the yield, the more wine, but the less flavour on average per grape. Lot’s of bring brand wines go for as much fruit as possible to keep up quotas of volume and price across the world, but their overall product tends to be not quite as good as those smaller productions. As I said, it’s only a rough idea.
After harvesting we’re into the cellars for turning the grapes into wine…
Some cellars are highly mechanised and use their time and energy more efficiently than others. Some producers like to use oak barrels to mature the wine before release. These oak barrels are roughly £600 for a 225L size (300 bottles). Not only are they expensive to buy, they’re also big buggers that need expensive storage space. You also may want to age the wine for a decent length of time, and you’re not realising any return on your money for that bit longer.
So now the wine is ready for bottling…
Is the bottle, label, and packaging standard and readily available? How many wine bottles do you see in novelty shapes? You also have to get it to the consumer by sea, road, or air. Going back to our German producer, his transport costs to sell into the UK are a lot less than the Chilean producer.
So it’s bottled and ready for transport…
Now where’s it going to? The target country itself will impose taxes and levies (I think it’s knocking close to £2 per bottle in the UK, so next time you see your £3.99 bottle of wine in the supermarket, remember that’s cost only £1.99 to get it here). The distributor then takes over. How good are they at getting the product on the shelves and shifted? Also you have to wonder how much profit margin they expect to take out of each bottle?
Bit of a rush there I know, but at least that’s the main ideas introduced. We’ve gone from vine to shelf and seen a few different factors involved in the pricing. It’s still worth pointing out that a bottle of wine is only worth what we’re all prepared to pay for it. So all we can do is get out there, buy some, try some, and only go back to those that we think are worth it.
It’s all about value for money. Nothing to do with being a tight arse!