When shopping for wine, it becomes immediately evident that a person can spend anywhere between a few dollars to a few thousand dollars for a single 750 ml bottle. Most casual consumers can’t help but wonder what factors go into setting prices in wine and how there can be such vast differences in cost. The answer, like most things in life, is complex in nature. Over the next few articles, I will attempt to break down the major factors that contribute to the pricing of wine.
When examining wine production costs and consequent pricing, the first place that you have to look is in the vineyard. Wine grapes require specific climate ranges, soil composition, as well as water and sunlight levels for ideal growth. Just the location of the patch of ground where the vineyard is planted can make a difference. The purchase price of an acre of farmland within a prestigious AVA (agricultural growing area) in Napa Valley can be easily five times more than a similar acre in nearby Lake County. The acquisition cost of vineyard land and subsequent tax valuation is only half of the dirt equation. The second element is the prestige value conferred on that area. While consumers probably don’t give much thought to where the legumes for their peanut butter are produced, they do give more regard to high-status wine grape growing areas such as Napa or Burgundy. Also, the production of wine from grapes sourced from a single vineyard or small AVA will always be more expensive than the same type of wine made with grapes sourced from across broad growing areas like the Central Valley in California or even statewide.
The selection of specific grape varieties is another multi-faceted factor. Certain varieties will produce higher yields; some ripen more evenly, while others can be more susceptible to weather variations. Put simply: some grapes are more expensive to farm than others. The esteem element can enter into grape variety as well; Pinot Noir or Cabernet Sauvignon currently holds more cache than Grenache, Gamay or Petit Sirah.
Farming practices adds significantly to the growing costs. The decision to utilize mechanization in vine maintenance and harvesting or rely on manual labor is a major factor. Sometimes the aspect or slope of the terrain will determine the feasibility of machine-assisted vineyard management. In the case of large-scale growing operations the decision is typically based on economics. It is far less expensive to rely on mechanization to prune and pick, but the tradeoff is often a reduction in the quality of the end product. Vineyard management and harvesting by hand is more discriminating than running equipment up the vine rows. In the business there is an acronym: MOG (or material other than grapes); these are the unintended organic products (use your imagination) that end up in the harvest bins and to a lesser extent in the grape must. Improved technologies, such as optical sorting machines do increase the mechanical sensitivity of grape selection, but this equipment is quite expensive to purchase and maintain. The old fashion methods are quite often the best: hand harvesting, and subsequent hand selection dramatically reduces the instances of MOG while screening out unripe or unsuitable grapes to ensure only the best fruit is chosen. In certain prestigious vineyards in France every grape is inspected by workers as they pass along a conveyor belt; talk about a high production cost!
Growers must also balance the cost benefits of quantity vs. quality. Grapes at harvest are valued by weight, although if a farmer seeks to produce the maximum amount of fruit per acre the juice extracted from the grapes will be dilute and generally produce bland wine. Growers interested in producing the highest quality fruit practice expensive farming techniques such as ‘canopy management,’ which is when the farmer purposefully prunes the leaves during the growing season to ensure that the grape bunches receive just the right amount of sunshine and ‘green harvesting’: dropping a specific percentage of unripe fruit so that the remaining bunches will possess a more concentrated juice, this results in a reduced yield, but superior grapes. Additionally, vineyard management philosophies, such as organic or biodynamic farming can actually be far more expensive than methods using synthetic chemicals to promote growth or eradicate pests.
The many decisions made in the vineyard play a large part in whether the wine produced from its grapes is outstanding or just mediocre. The belief that vines and grapes must be treated with tender loving care comes with a cost. Next month I’ll discuss the various techniques and associated expenses that occur within the winery, during which I’ll reveal some of the shenanigans winemakers will use to cut corners producing ‘better wine through chemistry.’
Tom Oetinger holds an advanced certification in wine & spirits from the WSET in London, England. He is available to assist you with your wine events or answer your wine questions. Tom also offers a free email service, recommending high quality, good value wines available locally. Contact / subscribe at email@example.com.