Why is wine so expensive?
According to Xander Oxman, co-founder of subscription wine service Club W, it doesn’t have much to do with the way it’s produced.
He explains that, contrary to what many consumers may believe, the cost of a bottle of wine isn’t based on the cost of grapes and winemaking.
Even on a typical $US20 bottle, Oxman explains, the cost of turning grapes into wine is only about $US5. “The remaining $US15 is markup charged by wholesalers and retailers along with the cost of sales, marketing, and logistics through an inefficient and antiquated three-tier distribution system,” he says.
What about the really pricey stuff?
“There is a threshold below which it becomes very difficult to deliver a high quality and genuinely interesting (which is to say not overly manipulated) bottle of wine,” Oxman says. “The cost of packaging along with the other baseline production expenses means that most wines under $US10 fail to meet this threshold.”
As the cost of the wine goes up, he continues, “the retail price becomes increasingly decoupled from the cost of production, and is simply a function of scarcity in a supply and demand market. A coveted cult wine that sells for $US300 doesn’t cost all that much more to make than a well-made $US30 bottle.”
So if wines under $US10 can’t always manage to be “genuinely interesting,” and $US300 wines are priced according to scarcity, where’s the best value? What price range produces palatable wines that aren’t overly expensive? “The sweet spot on the price-quality continuum is between $US10-$20 retail,” answers Oxman. “$20-$30 should yield something truly special, and above $US30, recognise that you’re mostly paying for rarity or brand name.”
Club W’s bottles go for $US13 each, which probably isn’t a coincidence.