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December 13, 2021

Editor’s note: The wine industry likes to use the term “inexpensive wine” instead of “cheap wine”. In this article, we’ll go with “cheap wine” because that’s the term more commonly searched. Keep in mind, “cheap” doesn’t necessarily connote “bad” and is a subjective term depending on the person. Like, what's 5k a bottle to Jeff Bezos?


Imagine you are staring at the wine aisle of your local grocery store. There you find your regular suspects...the Barefoot Moscatos, the Kendall Jackson Chardonnays, the Santa Margarita Pinot Grigios, and so on.

Grocery Isle

Then of course, you find the sea of unknown labels and brands. A wine with a cool label catches your eye, you read it’s made with a suitable grape variety and learn it only costs $17 - perfect for your budget! Directly to the right of that bottle, you notice another neat wine label. Take a closer look...it’s $100! “Wow,” you think, ”that is pricey.” Yep, $100 wine exists and people are willing to pay for it. Does the $100 price tag mean that the wine is objectively almost six times better than the less expensive $17 wine? Or is it just marketing mumbo-jumbo and the wines are equally tasty? 


This blog will give you insider info...the secret on what separates a cheap wine and an expensive wine. We’ll help you decide how to determine the best option for your taste buds AND your bank account.


Let’s get into it. 


1. Vineyards/Grapes

The vineyards and grapes that wineries use are an essential factor in the price of the wine. Grapes from famous regions like the Russian River Valley and Napa Valley are more expensive than grapes from regions like Sierra Foothills or Lodi. In famous wine regions, there is also an  added cost due to scarcity. There is no free space to plant vineyards. Not enough land= not enough wine= prices skyrocket. Expect to pay a premium for Napa wines for that exact reason. 

Establishing your own vineyard from scratch, aka the “Estate” model, is more expensive than buying grapes from established growers. Plus, once you have your vineyard established, the term “Estate” is popular amongst producers. Estate grapes aren’t automatically better than sourced grapes, but they tend to add more cost to the bottle, so be aware of that. Those fancy fountains aren’t cheap!

Finally, popular grapes like Cabernet Sauvignon and Pinot Noir are more expensive than less popular grapes like Merlot. That might mean that you are also paying a premium for a wine made from those grapes.

2. Fermenting/Ageing Vessel

French oak barrels

The vessel you choose to age/ferment your wine is an essential consideration for price. The primary factor here is oak. Winemakers have so many options for oak, but the major decisions they make are:

No Oak vs. Oak

As you may know,most white wines do not go through the barrel aging process. On the other hand,most reds do, so the price will reflect that. Using steel tanks (or even special plastic containers) for fermentation and aging is a less expensive and more efficient method. Not having to buy or maintain barrels reduces the price. However, there are definitely positive trade-offs to using oak such as rounding out the wine, adding flavors, and increasing wine complexity.

Old Oak Barrels vs. New Oak Barrels


Buying new barrels every year can get expensive. French wine barrels are around $1000 each, and some wineries buy thousands of themevery. single. year. New oak will impart vanilla, cinnamon, toasty flavors, but old oak will not impart much flavor and mostly rounds the wine’s harsher parts. The style you prefer is up to you, but it’s a fact that wines with more new oak barrels will cost you more.

French vs. American (and “other” oak)

French barrels cost x2 (on average) an American barrel. Of course, there are other options for barrels from other countries, but those are the main two. These two kinds of oak taste very different, for better or for worse.

Barrels vs. Oak Alternatives

Some mass-produced wineries add oak chips, staves, or even oak dust to simulate oak flavors. This method is far cheaper but can create a “cheaper” tasting/feeling wine. More affordable wines with oak flavors are more than likely to be using these “shortcuts”.

3. Ageing 

Ageing wine

Older is better, right? Not when it comes to your wallet. There are two types of aging: aging in the vessel (barrel/steel/ other) and aging in bottle (both done by the winery before release). Simply put, the more time the wine is aged in the winery’s cellar, the more expensive it is to the winery AND the consumer. Cheap wines rarely go through much bottle aging, but premium wines will almost always have an extended time in a barrel or a bottle. Time is money!

4. Marketing/Branding

 

Domaine De La Romanee Conti

   

In writing this, we noticed that a lot of people avoid talking about this component. That is because “branding” and “marketing” are no-no words in the industry. Everybody does it, but no one wants to talk about it. But it plays 

The main rule here, which might be a rule that makes all of the other things mentioned here almost irrelevant is: “A wine costs what the consumer is willing to pay for it.” 

Once all of the production costs are considered, does the company have the marketing/ branding hutzpah to sell the wine for $100-$200? Can they talk up their winemaker, their barrels, their aging, and their story so once you hear it, you just have to buy their $100 wine?  

A little inside story: I worked at an “ultra-premium winery” that will remain nameless. They had estate vineyards as well as new and used oak. It cost them $17 per bottle to make both their ultra-premium Cabernet Sauvignon and their ‘lower-tier’ Cab. In the end, they set the price that they figured the people visiting the winery would pay. They priced their ultra-premium Cab at $200 and their premium Cab at $75. They made a $58 profit on their lower tier, but a whopping $183 on their top wine.  Interesting, right?



Conclusion

Hopefully, you have learned something about the world of wine pricing and are more confident in your purchasing process/decision. To drive the point home, I will use an example of 2 wines that are similar but take two different paths to be different prices:

Cabernet Sauvignon > from Napa $15 per bottle > New French oak +$6 per bottle > 3 years aging + $3 per bottle > Well-known winery with excellent reputation x3= $72 per bottle to the consumer. 

Cabernet Sauvignon >  From Sierra Foothills $10 per bottle > Neutral Oak +$3 per bottle > 1 year of ageing $1 per bottle > Reasonable winery x1.3=$18 per bottle to the consumer.

Both wines have the potential to be delicious. However, they will undoubtedly be different in style due to aging and location. So, will you go with the “cheap wine” or the “expensive wine”?


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