Why are some wines more expensive than others?
Have you ever thought why there are such large differences between the prices of wines? The extremely expensive wines of the world that cost many hundreds of euros make up a tiny percentage of the market. The prices of these wines are determined by supply and demand and speculation. For the vast majority of wine producers their business one in which margins are small and competition intense.
The cost of a bottle of wine depends on where it comes from, how it is made, the materials used and most importantly, availability and deman. For example, there is a world of difference from picking grapes and selecting the berries by hand than by harvesting with machines. Also, the cost of growing 1kg of grapes in Rioja Alavesa or Bordeaux is much higher than in La Mancha.
The demand for a particular grape variety will also effect the final price. With each vintage many factors have to be taken into consideration, most notably weather and size and quality of the harvest. This can result in sudden increases in prices from one year to the next, which can be frustrating for consumers.
So let us take a bottle of wine that costs you €7,50 in a shop or online here in Spain. In a restaurant this same wine will cost €15 to €20.
Once you take out the IVA, retailers margin and distribution charges, the winery will receive around €3 for each bottle.
On average the producer will make a margin of around 30%, which leaves just €2.10 for the cost of the bottle of wine.
To harvest the grapes, make and store the wine amounts to around 40% of the cost
Dry materials (bottle/cork/capsule/label/box) – 40%
Marketing the wine costs approx 20%.
In comparison with other businesses this is a small margin and goes to show that most of my colleagues in the wine business are more motivated by their passion for wine that for making a fortune from it.
The wine industry is global industry of local wines. So when exporting or importing other costs have to be taken into consideration such as transport and alcohol taxes.
Spending more on wine is not a guarantee that you will enjoy the wine more. it is important to experiment and discover new varieties, styles and countries in doing so you will find the wines that are best for you.