does wine cost what it does?
One of the questions I’m commonly asked goes as follows.
Why does one wine cost £3.99 while another costs £30, and another
still £130? A common variant on this theme is, is a £20 twice as
good as a £10 wine and four times as good as a £5 wine?
It’s slightly tricky to give a concise, tight answer to
these questions, but let me try. At the bottom end of the market, say
£6 and under, the cost of a bottle of wine largely reflects the cost
of production, plus duty and taxes, plus the usual margins for the
importer and retailer. Duty is just over a pound a bottle, and VAT is
17.5%. So for a wine retailing at £3, take off VAT and duty, the
producer gets £1.50 less the margin for the retailer and importer:
this doesn’t leave a lot. Maybe that’s why it’s so hard to find
decent wine at this price.
Moving upmarket a bit, towards £6, and production costs will
largely account for the rise in price. More care might have been taken
in selecting riper or lower yielding grapes, more trendy varieties
cost a bit more, and the wine may even have seen some oak contact in
the form of barrel staves or oak chips, or even older barrels.
|It’s worth mentioning that the region makes a difference.
Grape prices differ widely depending on how trendy the address
they’ve come from is. Basic, entry level Chardonnay grapes, for
example, will cost a lot more than entry-level Chardonnay grapes from
the Languedoc. This is largely why the cheapest Chablis on the market
costs more than £6, as opposed to Languedoc whites which begin at
Let’s move up to the midmarket wines: those costing, say £7–£12.
Here the price is determined by a number of factors. Production costs
are a factor, but the aspirations of the producer and the positioning
of the ‘brand’ in the market come in to play. Where the wine comes
from is a complicating factor, here: in Burgundy, £10 is really an
entry level wine, whereas for wines from new world countries such as
Chile, this price point is premium-level.
question of quality: what makes one wine 'better' than
A difficult question to answer
precisely. Loosely, though, you'd expect an expensive wine to
- More harmonious, with all
the components in balance
- More complex, with a range
of different interacting or layered flavours
- More persistent (this is
called 'length') with flavours that last for longer
- Perhaps with the potential
for future development, although this isn't always the
- More elegant and beguiling
- More concentrated
This price bracket is quite
a mixed bag, encompassing hand-made, individual wines from less trendy
areas on the one hand, and mass market industrial brands engineered to
taste more sophisticated by winemaking trickery on the other. And, of
course, this is the bargain basement end of the Champagne market.
Move up to the fine wine bracket, which I’ll arbitrarily
designate as £20 plus and the cost of wine is largely distanced from
production costs. Wine at this level enters the luxury goods market,
and pricing is largely an artificial construct determined by factors
such as scarcity and perceived quality. If you pay £100 for a bottle
of California Cabernet you are, by your conspicuous consumption,
largely funding an expensive lifestyle on behalf of the producer in a
market where it reflects badly on a wine to be priced too cheaply.
There is also the phenomenon of ‘trophy’ wines, which are highly
sought after collectables trading for high prices on the auction
But let’s return to the second of the questions we started
out with. Is a £6 wine twice as ‘good’ as a £3 wine? Bearing
mind the caveats that it’s impossible to quantify how ‘good’ a
wine is, and the fact that entry level wines from trendy locations
cost more than those from others, yes, you’ll probably get a great
deal more pleasure out of a £6 wine than a £3 wine. The extra £3 is
usually money well spent. Beyond this, the law of diminishing returns
kicks in. A £10 wine will likely afford you a significantly better
drinking experience than a £5 wine, but each increment in quality
beyond this will cost substantially more (of course, we are talking in
very vague terms here). Another complication: appreciating wine is
quite context dependent. If I presented a novice with a £5 Chilean
Merlot and a £50 St Emilion, there’s no guarantee they’d actually
prefer the St Emilion. That’s because appreciating fine wine does
require some context. With expensive wines, it is not always the case
that average consumers would be able to appreciate why they are so
revered by experts.
So those are my answers. They’re not as tidy or clear-cut
as I’d like them to be, but this reflects the complexity of wine.
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