Most of the time, you’re paying too much money for wine, says Rowan Gormley, CEO of Internet wine retailerNakedWines.
He explained the economics of this unfortunate upcharge to Business Insider.
The price difference on the production side between a fantastic bottle of wine and an average one is a measly $US2 or $US3, he said.
The best wines are made with grapes that are left on the vine longer, cut with comparatively expensive wild yeast, and take longer to age. All those things lead to a more expensive bottle.
But spread over hundreds of bottles from a harvest, a grower only needs to pass on a few extra dollars to the consumer for a superior drink.
The way wine is sold adds to the cost.
Wine goes from the grower to a wholesaler to a distributor and then to a retailer. Each one increases the price along the way, making wine very expensive by the time it gets to the customer. Vineyards also put a lot of money into marketing and building a reputation for their brand, which has to be recouped in the final sale.
Buying a bottle at a store or a restaurant passes similar price hikes to the consumer, while buying wine by the glass increases the price even more. Wines by the glass are easier for servers to sell, and restaurants generally charge the wholesale price of one bottle for one glass of wine. Alcohol sales provide an easy way for a restaurant to add to its profit margin.
Gormley’s rule of thumb for buying wine: “If you recognise the place your wine’s from, like Napa, you’re paying double what another wine from the same type of grape would cost.”
Wine drinkers can alleviate the problem by knowing what they like based on grapes and age, instead of name brands like Lafite Rothschild Bordeaux, which Gormley said have rigged the market to create a scarcity of wine from endorsed plots of soil.
He added that going outside of the established market and buying directly from the grower will help oenophiles get a deal. Don’t be afraid to purchase young wines from hyper-local vintners and try new grapes, he said. A grape that hasn’t been recognised as the best may still suit your taste, but come with a smaller price tag.
NakedWines commissions wine using crowdfunded money from its users. Pairing buyers and growers directly limits the need for spending on marketing and advertising. Other sites operate with similar wisdom. They include Plonk Wine Merchants, Half Wit Wines and Accidental Wine Company.
“Wine is still new in America,” Gormley said. “When people are less confident with it, they want what they know, and they have this feeling that it’s cool to spend $US100 on a bottle of wine, when what’s cool is to have a good wine experience for an un-inflated price.”
He estimates a good bottle of wine can be made for $US15, which would mean no bottle of wine should cost more than $US30 to sell.
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