Why Wine is Expensive: and why price matters

Why wine is so expensive: the cost of red wine matter and may indicate quality, but not alwasy

Why Wine is Expensive

I didn’t come from a wine-drinking family. My mom only recently started to keep wine around–a bottle of Moscato from Aldi. She was as equally horrified at the taste of my Italian Falanginha as I was of the $3 price tag for her juice of choice. This isn’t a blow to Moscato-drinkers. But while high-priced wine isn’t necessarily better than a $20 bottle, bottles that cost under $5 retail are most certainly filled with bad grapes and preservatives (sorry, mom). Before you convince yourself that you’re getting a bargain, let’s dig into why wine is so expensive. 

Expensive Real Estate

Often the best land for making wine comes with an expensive price tag. People have figured out that Bordeaux, Burgundy, and Napa Valley are positioned perfectly to make world-class wine, so even before farmers plant grapes, they’re shelling out to invest in the land itself (read more about terroir). I don’t think that good wine only comes from expensive regions, but very cheap wine will come from high-yielding crops like California’s Central Valley. If the grape’s life is too easy, you can expect more vegetation and watered-down fruit from overproduction. 

The Sacrifice of Low Yields

Quality-minded producers will train the vines in such a way where they limit the amount of fruit produced. This causes the vines to put more energy into the remaining fruit, creating more complexity and structure. To make a $3/bottle, they have to mass-produce grapes. To make vines grow and produce as much as possible, it’s typical that the vineyard manager will use pesticides and chemical fertilizer. Farmers with lower yields aren’t always conscientious of additives, but it’s much more common. They have to manage their vines with minimal intervention, which takes a lot more time & care.

The Cost of Wine Labor

Quality vines take more care from start to finish. Humans have to go through and prune, cut and select the best grapes. Humans have to make fast decisions when bad weather hits. Humans choose the perfect time to pick and then often go through a team to hand-harvest for the perfect grapes. Machines are cheap, but they don’t have any discernment. The more personal care the grapes get, the more likely you’ll find great wine.

Oak & Aging

New oak is around $1200/barrel. For wineries that age each vintage of wine in new oak for two years, they have to pay for all those barrels and the added space to store the wine. Even holding back your product before release is an expensive endeavor, yet a common one for popular red wines like Cabernet Sauvignon and Pinot Noir. It’s worth the pain to add complexity, soften the tannin, and increase longevity. Oak doesn’t make all wine better, but cheap wine will undoubtedly miss this added finesse. 

Pricey Marketing & Packaging

I want to clarify off the bat that expensive bottles don’t mean better wine. But suppose a winery owner paid for great land, a costly grape like Cabernet Sauvignon, and the labor it takes to make delicious wine. In that case, they’re definitely going to indicate the premium quality with a heavier bottle and a beautiful label. Before you snuff at paying for the bottle itself, consider your own bias. Most people assume a lighter bottle to be cheaper.

The Added Cost of the Wine Distribution Chain

The average winery makes a relatively small margin on their wine. To get from a winery in Italy to your wine shop in California, the wine is picked up by an importer, shipped in temperature-controlled containers across the world, sent to a distributor’s warehouse, purchased by the wine shop owner, then picked up by you. Every “middleman” is going to take their cut. The average markup for a retailer is 2x the wholesale price, or 3x for restaurant wine lists.

Why the Cost of Wine Matters

When you buy a $3 bottle of wine, imagine how much budget remains for the wine itself after packaging and distribution. It was produced with cost-cutting methods like fertilizers to maximize yields, then likely pumped with sulfites and preservatives to cover up flawed winemaking. You can find decent wine for under $10, but $10-15/bottle is when there becomes a shift, and you start to pay more for the wine and less for the other stuff (i.e., higher quality).

…But Expensive Wine Isn’t Always Better

The $15 benchmark is a good place to start. To avoid getting fooled by marketing, there are a few hacks for drinking good wine:

  • Please rely on the wine buyer (they want to help). They did the research and (hopefully) stand behind the products.
  • Know what you like. You may not enjoy a $40 bottle simply because it’s not your taste. Learn a little vocab to describe your palate.
  • Look at the “Bottled at __” on the label. Some digital wine clubs buy wine in bulk from around the world, ship it to their winery in California, and produce everything there. They might charge $15, but if they bottle a French wine in Napa, expect garbage 99% of the time.