The price of wine

 

How many times in front of a bottle - especially when you are a beginner – we asked the reason because it costs so much?

After all, a bottle it’s only seventy-five centiliters of wine.

Why should we pay tens of euros (if not more) for this small amount?

In this post I will try to provide some guidelines in this regard, with the hope of making you understand the reasons for this apparent contradiction.

Before to try to explain the various items that contribute to the price of a bottle of wine, a general rule, which applies to any consumer good:

"The market does the price, and it’s the value in which supply and demand converge"

It means that  the maximum price at which I will sell my property - in this case my bottles of wine - beyond my intentions and its absolute value will be the highest at which I will be able to sell it, or rather the corresponding one of which I will find people willing to buy it.

If, absurdly, the cost price of my wine were higher than the value recognized by the market, it would be uneconomical to produce it, so I would have to stop doing it (and possibly find another job).

Having made this necessary premise, let's see which items contribute to the price of wine, dividing them into two macro-categories, that is:

- MATERIALS (those that contribute to making the cost price of the wine itself, in many respects a direct indicator of its absolute quality)

- INTANGIBLE (those that contribute to a further increase in the price without increasing its absolute quality)

To the first category, belong:

- THE QUANTITIES PRODUCED. Considering that there are a series of substantially fixed expenses in the management of a winery and the various stages of the life of the vineyard - as well as the harvest – if the quantities of wine produced by the company will be small, the cost related to this item and associated with single bottle will be higher. For this reason, companies with important numbers are able to produce good quality labels at very low prices, which is practically unthinkable for small producers.

- THE GRAPE. There are grapes that, due to their "morphological" characteristics and geographical locations, involve much greater work in the vineyard - and consequent costs - for achieving high quality grapes.

- YIELD PER HECTARE. This factor - which tends to be associated with the quality of the wine that can be obtained - however has an important impact on the cost of the single bottle, obviously in terms of inverse proportionality. A lower yield per hectare is equivalent to aN higher quality of the final product but also to a lower production for the same vineyard, and therefore to a higher cost per single bottle. A lower (or higher) yield per hectare is often the result of "forced" choices, therefore attributable to the grape variety, the geographical location of the vineyard or to what is imposed by the production disciplinary, but in many other cases it is the result of precise objective by the producer.

- THE VINIFICATION TECHNIQUES. A more quality-oriented production will usually involve more complex, technologically advanced and expensive winemaking techniques, which will therefore have a more significant impact on the cost of a single bottle

- THE DURATION AND METHOD OF AGEING. Clearly, in case of long refinement time, the winery will be "forced" to increase the spaces and containers needed to carry out this process, with a consequent increase in costs. This incidence will then be even greater in the case of aging in wood, especially when it is done using new barrels (generally barriques), which must therefore be replaced from year to year.

- PACKAGING. The cost for the glass, for the label and for the cork used to close the wine (an aspect absolutely not marginal for the quality of the wine itself, especially in terms of its aging skills) constitute an additional material cost, which in the case of quality productions - for example that use heavier glass, higher quality paper and fine single-piece cork - can determine an increase that can be quantified in several euros per single bottle.

At this point, you may be wondering that it would be nice - as well as interesting - to have a quantification of the costs listed above.

The answer is obviously not easy, also because it’s the result of a series of factors in some cases impossible to know and therefore to be traced back to a number.

In any case, on the basis of my experience and the idea that I have made talking over the years with many people inside this world (including producers), the total amount of material costs fluctuates very realistically in a range between 2 and 20 € / bottle.

Therefore, considering a whole series of other management costs and the logical gain that the producer (or company) should derive from them - and therefore doubling the value considered above, the cost of a single bottle of wine should therefore not be less than 4 € but at the same time not exceed 40 €.

At this point, two questions spontaneously arise.

The first: How is it possible to find wines that cost less than € 2 / bottle on the supermarket shelf? In that case, I avoid pronouncing myself, and leave the answer to you.

The second (probably more interesting): Why are there so many bottles that are sold at much higher prices, and which in many cases reach thousands of euros?

In this case, the answer is obvious, and is linked to the so-called intangible factors, which, while not helping to raise the absolute quality of the wine, however, end up determining an increase - in many cases even exponential - in its selling price.

These factors are:

- EXCLUSIVITY (SPECIES IN THE CASE OF OLD VINTAGES)

- THE PRESTIGE OF THE WINERY

- THE PRESTIGE OF THE TERROIR

- THE JUDGMENT OF THE WINE CRITICS

I know, these are all aspects that do not contribute to guaranteeing that the wine in question is necessarily better than another one with a lower price, and that above all end up bringing the cost of certain labels out of the reach of almost all wine-lovers, but there is nothing we can do about it.

In many ways, this is an aspect that makes wine something different from any other food, the one that elevates it from a simple material good to a determining element of our culture, coming - in some cases - to be an artistic expression.