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Which Factors Impact the Price of Wine?
Many factors, some a little surprising, impact the price of wine. The obvious factors include a wine’s scarcity, the labor costs to produce the grapes and wine, and the cost of the vineyards themselves. Some less obvious factors that can impact the price of wine include consumer perception about the cost of a quality wine, the cost of oak barrels in which the wine is aged, and the cost of label design and packaging.
A wine producer must decide on an appropriate price point for each variety of wine. This price point not only takes into consideration the profit of the distributor, retailer and the winery itself, but also what the consumer will pay. A study by the Stanford Graduate School of Business and The California Institute of Technology found that consumers who were presented two tastings from the same bottle of wine, but told they were different bottles of wine with disparate prices, perceived the more expensive wine to taste better.
An important factor that impacts the price of wine is where the grapes are grown. Grapes for less expensive bottles of wine can be grown in many areas, but the highest quality of grapes can only be grown in a few places; thus, making those grapes scarce. Other studies have shown that a wine’s appellation, or affiliation with where the grapes were grown, has a considerable impact on the price of wine.
For example, a study by University of California Agricultural Issues Center found that a Napa Valley wine averaged a significantly higher price than a wine labeled simply California. High priced wines are almost always produced in small batches, as well, which can yield a higher selling price.
As the wine ages, wineries are in essence investing in their product, but not yet yielding income, so the amount of aging necessary can also impact the price. The wine ages in oak barrels, which can vary greatly in price, from $350 US Dollars (USD) to $750 USD. As one might expect, the packaging, the thickness of the glass bottles, the type of cork used or the cost of the labels, can also impact the price of wine.
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![Since the weather can affect a vineyard's productivity, it influences the price of wine.]()
By: felindaSince the weather can affect a vineyard's productivity, it influences the price of wine. -
![A glass of red wine.]()
By: M.studioA glass of red wine. -
![Some — but not all — wine is aged in barrels.]()
By: Brad PictSome — but not all — wine is aged in barrels. -
![Bottles of champagne are marked up significantly at a restaurant.]()
By: frisotopBottles of champagne are marked up significantly at a restaurant. -
![Many factors -- including the cost of oak barrels, consumer demand and the cost of growing grapes -- can affect the price of wine.]()
By: stokketeMany factors -- including the cost of oak barrels, consumer demand and the cost of growing grapes -- can affect the price of wine.
Discussion Comments
I think a lot of things (cellar wine included) are just priced based on how much people are willing to pay for it. Some people are willing to spend an exorbitant amount of money for one bottle of wine, while others aren't.
So, there are wines available at every price range. I don't believe that a $100 bottle of wine is necessarily ten times better than a $10 bottle of wine. However, some people must, or no one would spend that much on a bottle of wine.
Also, it made a lot of sense what the article said about the price being based on how much it cost to produce the wine. Just because it cost more to produce one bottle of wine than another doesn't necessarily mean the expensive bottle is better.
@strawCake - I normally buy moderately priced wine, but once I treated myself to an expensive bottle of wine. It was delicious, but I think part of that had to do with how long it had been aged.
From what I understand, the longer wine ages, the better it tastes. I think this may be the only factor on price that was mentioned that actually affects the quality of the wine.
Still, after reading this article I'm now wondering if I tricked myself into thinking the expensive wine tasted so wonderful.
I must admit, I like wine. However, my tastes don't generally run towards the more expensive wines, mostly out of necessity. I just can't afford to regularly spend $50-$100 on a bottle of wine. I usually get wines in the $10-$15 range at my local liquor store (I've never thought to purchase wine online before).
Guess what? I've been very happy with my selections most of the time. I'm very glad to know that there isn't a lot of objective difference between expensive and "cheap" wine. As the article said, even something like the cost of the label can affect the price!
Regardless of the factors affecting the price, you can find some great deals if you buy online wines. Especially if you are willing to buy a few bottles at a time.
There are a number of online wine retailers and they take a lot of the confusion out of buying wines. They tell you every thing you need to know and can make informed recommendations. The only downside is that you can't taste or smell the wine which counts for a lot.
I know that about ten years ago the grape harvest here in Missouri was especially bad. I guess the yields were way down due to problems with rain and temperature. I remember some friends talking about how one of the Missouri wines they like had shot up a few dollars in price.
I guess it's just a simple supply and demand thing. If there are not enough grapes to meet the demand the supply will have to be more expensive. This is probably a basic principle of the wine economy.
It is true that the price of wine has impact on the taste. In some recent findings, people drinking wine they were told was more expensive, enjoyed the wine more.
How peculiar. I guess we expect more from expensive wines, so it becomes a self fulfilling prophecy.
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