The basis of every price of every bottle of wine is the same. After all, every wine maker has to deal with production costs, raw materials of grapes, barrels and bottles, necessary electricity and other utilities, labor and transportation. And, of course, administrative, sales and marketing costs. The basics may be the same, but these costs can vary enormously per wine maker, region or country. For example, labor prices have a major impact on the price of wine and vary widely around the world. In California, for example, labor is about ten times more expensive than in Argentina.
Mother Nature also makes a contribution by changing the conditions in each harvest year: temperature, humidity, sunshine hours, pests, vine diseases, natural disasters and so on. So some crop years have better yields, than other years. This is what we call vintage variation. The differences can even take dramatic forms. Hence giving Mother Nature great influence on the supply of wine (in taste and volume) and therefore on the demand for wine. A particularly good vintage can raise the prices of wine due to increased demand. At the same time, a small vintage may raise prices due to a decrease in supply. Also, in challenging vintage years, labor costs may be (significantly) higher.
Generally, we can say that the better the quality of a wine, the more expensive it will be. But what then determines quality? Just as nuances differ from wine to wine, human nature (and therefore our personal preferences) differ from person to person. When drinking and enjoying wine, what matters most is whether the wine tastes good. Whether a person likes the wine is determined by his or her personal preference. The price of the wine does not have to influence this. After all, many people can enjoy a cheap wine just as much as an expensive one. But that doesn't mean they are the same quality!
The quality of a wine is determined by several factors:
- Balance: Are the structural elements tannin, alcohol, acid and sugar in proportion? A wine with poor balance is too acidic or too sweet and may have a burning alcohol sensation.
- Complexity: How many flavors are in the wine? How does the wine smell? Does the taste match the smell? Is there a difference in taste when the wine first hits your tongue and after you swallow it? The more there is to say about a wine, the more complex it is.
- Individuality: does the wine come from a unique geographical region or place, or from a unique vintage? Does it taste just like any other wine, or is it distinctive?
- Intensity: Does the aroma of the wine fill the entire room as soon as you open it? Are your senses overwhelmed when you taste the wine? Then it is a wine with (a lot of) intensity. The volume knob is set to full.
- Taste length: How long does the aftertaste of the wine linger in your mouth? A longer aftertaste is a mark of quality.
- Typicality: The wine must have something in common with other wines from the same region. A Cabernet from Napa may taste as good as it does, if it is thin and pale, it lacks the typical characteristics.
Other pricing factors
There are many variables involved in growing grapes and making wine, all of which affect the final quality and taste of the wine as well as the cost of the production process. There are too many to list here, but it is clear that the total of these production costs (and therefore the price of the wine) depends on the choices made in the vineyard and cellar.
- Viticulture and Winemaking: Some wineries choose organic cultivation and/or manual harvesting, among other things, and therefore have very labor-intensive production processes. Other wineries choose inexpensive pesticides and mechanical harvesting. In addition, wineries may choose to ferment in huge (cheaper) stainless steel tanks or smaller, (more expensive) handmade oak barrels. This, too, affects the labor intensity and cost of vinification.
- Yield: Some vineyards have significantly lower yields than others, due to natural conditions or winery choices. Lower yields generally produced flavorful wines, but also smaller stocks and thus higher prices.
- Brand Policy: Some brands are famous and well marketed. These wines generally have higher prices than their competitors. A well-known marketing phenomenon: the stronger the brand, the higher the price.
- Fashion: If a wine is consumed in a particular, popular movie, it will quickly rise in popularity. If a famous person associates with a brand, the same thing happens. This is part of the brand policy, but also very much subject to the fashion sense of the moment. Lady Gaga associates herself with Dom Perignon at the time when she is an absolute (fashion) icon. So fashion goes beyond clothes....
- Equipment and supplies: When a winemaker invests in new buildings, barrels, fermentation tanks, expensive bottles or corks, the cost of production increases, which is passed on to the consumer.
- Age and potential for further aging: Some wines improve with age. As the bottles age, they become rarer and more collectible, making them more expensive. Also, because of their tannins and acid levels, some wines have the potential for further aging. These wines are more expensive because they are a good addition to the cellar of a serious wine collector.
- Reviews: customer ratings and reviews from experts and critics can influence the price of a particular wine either positively or negatively.
- Designation: certain geographical areas or 'designations' have a strong (brand) image with a lot of cachet and appeal. People are generally willing to pay more for these wines. Examples are the regions of Barolo, Margaux and Châteauneuf-du-Pape .
The influence of third parties
Finally, there are third parties who have an influence on the final price. Third parties that every winemaker has to deal with, while having limited or no influence on them.
- Distribution channel: If the wine is not sold directly to the consumer, in addition to the vineyard, the distributors, wholesalers and retailers must make a profit on each bottle sold.
- Government: Wines in different regions and countries are subject to different taxes and tariffs. This can affect the final price of a bottle. For example, wines from Europe are subject to additional import taxes (as opposed to domestic wines), which adds to the price of a European bottle.
There's no accounting for taste
In short, the price of a bottle of wine is determined by a complex variety of factors. The quality of the wine, the choices the winemaker makes during the production process, Mother Nature, the distributors and even the government. Personal taste can vary both in style and price. Remember, it's up to you which wine you buy. When a bottle of wine is worth the price and when it is not. The hunt for the perfect bottle of at a great price can be almost as much fun as the wine itself.
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