What Costs Go Into Making A Bottle Of Wine
Crafting a bottle of wine involves a blend of art and science. Each step contributes to the final price.
From vineyard location and grape harvesting costs to fermentation and aging, every detail plays a crucial role.
Let’s break down the expenses that shape the cost of your favorite bottle.
1. Land/Grapes
One of the most significant costs associated with grape production is the land on which the grapes are grown; given the importance of “sense of place,” or terroir, in the best wine, selecting land is also one of the most important decisions a producer can make.
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- It's important to note that it takes about 3 lbs. of grapes to make a standard 750 ml bottle of wine.
- Vineyard yields (the tonnage of grapes harvested) can vary significantly. Premium vineyards minimize yields to increase quality (say 2 tons per acre). Meanwhile, vineyards that serve bulk winemakers try to maximize yields (say 10 tons per acre).
- That means a bulk winery can produce 5,334 more bottles from one acre of land.
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Of course, not all land comes at the same price. While in the budget-and-bulk-wine-focused Central Valley, CA, you can find vineyard land for $20,000 per acre, in prime Napa Valley, vineyard land can easily fetch over $300,000 an acre.
Grapes with specific vineyard names tend to be more expensive. Wines labeled "California" tend to be less expensive. A wine with a "California" designation can use grapes from anywhere in the state.
2. Farming/Equipment
Given the initial land investment or the cost of contracting for prime land or grapes, these costs are often compounded because the best grapes are generally treated with more care before, during, and after harvest.
Choices such as organic/biodynamic farming, planting density, hand-harvesting, and using top-of-the-line equipment at the winery, to name a few, can all affect the cost of the final bottle.
3. Oak
Another often-overlooked cost is the price of oak. Oak is crucial in winemaking; aging in oak develops texture, stabilizes a wine, and adds aromatic complexity and character. Logically, new oak barrels assert themselves more onto a wine than barrels already used several times.
In general, higher-quality grapes will be more flavorful and well-structured and do well with the assertiveness of new oak. However, purchasing new oak barrels year after year is a huge cost for a winery.
Quality new oak can cost upwards of $500 per barrel, and top-quality French oak will run you as much as $4,000 per barrel. Say a mid-sized winery has 1,000 barrels and rotates out 30% for new oak each year; this means that beyond the initial investment for barrels each year, the winery needs to budget for 300 new barrels as well.
These costs directly translate into a higher cost per bottle for the best wine aged in new and/or high-quality oak.
Lower-cost red wines are often aged in steel containers. Winemakers will add pieces of oak to the wine as it ages. This will impart some oak qualities to the wine at a lower cost.
4. Other Winery Overhead
Other costs on the production side include employee salaries, packaging (bottle weight, cork quality, label design, etc.), and marketing.
Marketing is a significant expense for some wineries. They focus their efforts on creating eye-catching labels and in-store displays. Beware of wines that have overly slick presentations. The winery may be compensating for below-average wine with over-the-top marketing.
Conclusion
There are hard costs that affect the cost of wine production. Wineries are in the business of making a profit, so they need to sell the wine for more than their production costs. This shouldn't come as a surprise. On top of this, there is a strong demand for certain wines. This demand allows the wineries to increase prices. To help mitigate this, I shop at online wine stores where it is easy to compare prices and find bargain wines.
