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Quality versus brand


#1

What do yo think is the top cost of a bottle that can be “justified” purely on quality i.e. when does hype/fashion/branding take over ? Is it £15, £30, £50 etc when as much “quality” as possible has gone into the winemaking process and after that other factors come into play ?


#2

@GedL I think it is more a question of supply and demand, especially at the elite level. A quick look at the recent mildew/hail affected vintages in Bordeaux and Burgundy will show you that.


#3

Whilst there are of course exceptions I generally think you can expect a reasonably proportional increase in quality up to around the £50 mark. Above that I definitely think you get an ever decreasing return on the extra outlay. So whilst a £500 wine is almost certainly going to be much better than a £50 one, I doubt if it will be ten times better.

It’s one of the reason I very rarely buy about £50 (the other is that I really really can’t afford wines over £50 and can only afford ones around that mark on special occasions!).


#4

There is a bit of a grey area where viticultural and winemaking interventions take place mainly or partly for marketing reasons. More extreme examples are overly-tidy vineyards with well-tended roses at the row ends, and grand barrel rooms where each barrel has a neatly painted stripe of red wine in its middle.

That said, someone in the busines (can’t remember who) estimated the maximum cost for making a wine to be around £25 per bottle. Add tax, shipping and margins, and I suppose you can at least double that for retail…?

Presumably that does not include insanely high land prices (e.g. for top Burgundy GCs), as those are driven by high demand that is due to insanely high demand-driven wine prices.

Also there are styles of wine that are more expensive than most. Top Sauternes is a good example, with its expensive harvesting


#5

That’s a really difficult question to answer because, as you say, there are so many other factors that come into play.

Take Champagne for example. The actual wines won’t be expensive to make and most could be retailed for around a tenner and everybody could make a small profit. But what about land prices? If there was only a very small profit but land was worth three quarters of a million pounds a hectare, they’d sell up and then the new owners would want to recoup their investment quickly so prices would shoot up. That’s even before we get into marketing and all the other stuff that goes on.

If we’re talking purely what can be justified, without taking these factors into consideration, I’d say £50 max but if you’re a fan of Burgundy or top Bordeaux you’ll have to look elsewhere if you want the good stuff because it’ll be well and truly out of reach.

It doesn’t really matter to me though. I can probably count on one hand the number of times I’ve purchased a wine over £40 and I’ve never really felt I’m missing out. Musar is a treat for me and I’ve no interest or funds available to spend a lot more for a slightly better wine (if I’m lucky).


#6

I don’t know if it’s the same as you saw, but a while ago an American ITB calculated how much it cost to make wine if you were to buy the best new barrel, pay top wages &etc and he came up with a max figure per bottle.

I can’t remember details.

But do you include capital costs, land, etc. If one were to start a winery from scratch and you had to buy the land, plant the vineyards build the winery then the costs of the first vintage would be astronomical.

In the end, I think wine sells at what the market will pay. For top priced wine one is paying for rarity, fame, investibility, track record


#7

I can’t remember details either, but any serious estimate should indeed include include initial investments - spread over a few decades I should think.


#8

I did a search to see if I could find the article I mentioned.

I found three more recent articles that will give @GedL the information.

First from 2001 by HRH (Jancis Robinson) who says that the top Bordeaux costs around £3 (2001 prices) to make.

But read down and eminent Chateaux owners including Allan Sichel chip in.
https://www.jancisrobinson.com/articles/how-much-does-it-cost-to-make-great-wine

Then there’s a commercial winemaker, Steve Burch, in California who costs making wine from grapes bought from a Napa Valley grower and renting space in a winery who costs the wine at $16.69 a bottle.
https://www.quora.com/How-much-does-it-cost-to-produce-a-bottle-of-fine-wine

Then there’s Bo Barrett, whose family owns Chateau Montelena in Napa Valley, who concludes that “In a restaurant, the person who brings the wine to the table, uncorks it, and pours it can make more in tips than we do at the winery.”

(later edit - wrong link pasted originally, use link in @cerberus post below)


#9

Here is another from the same producer Bo Barrett…


and of course there are no start up costs included which disproportionately affect growers/wineries in areas like Burgundy, in fact as someone recently said the cost of land in Burgundy is so high only extremely rich investors or corporations can start up.

It’s an interesting area but almost impossible to calculate other than on an individual basis, I see Gallo have invested $1 billion in their premium wine range, but with them comes economy of scale, you could come up with a totally different set of figures for an outfit like that.


#10

Actually that’s the article! I didn’t check, seems like my copy of the URL didn’t work and I pasted in the previous link.

I won’t edit my post with the correct link as that’d make your post confusing, so I’ll point to yours


#11

To be fair that first article is by Jancis Robinson in 2001 (so 18 years ago) and refers to a table in The World Atlas of Wine that has now been considerably updated (by her). In my 7th edition of that book the costs per bottle are €9.8 for a classed growth, €2.35 for a Medoc Chateau and €0.57 for a Bordeaux AOC. BUT - and this is a real big BUT - the associated text goes on to say:

“Most Bordeaux properties are run on bank borrowings, typically a value of around €1.8 million per hectare for a top classed growth, which would be amortised over 15 years, with a fixed interest of about 4.5%. This would add at least €100,000 per hectare each year to costs, and therefore around €20 per bottle to the classed growth figure [so that is now around €30 per bottle] And, of course, the costs in the table leave the wine unbottled, unmarketed and untransported.”

So the figure of £3 is quite a long way off the real cost of production when it is all added up.


#12

So that text is probably the source of my “around £25”


#13

I can’t remember if it was at Cos D’Estornel or Ch Latour but when I asked them about production costs the reply came back that just the bottle, cork, label and box came to more than €5 (and that was about 10 years ago)