Inexpensive vs Expensive Wines – Understanding the difference
If you were wondering why some wines are more expensive than others and you have that friend that always said “it’s just wine, it doesn’t matter” you are in the right place. We’re going to explain step by step the difference between inexpensive vs expensive wines. The following components impact the price of wine.
It all starts with the grapes, the main raw material. Two important factors are the land where the grapes are sourced from and their level of quality.
Land & New Vines
Different regions are priced differently. For example, it costs €1.5 million per hectare in Champagne, France.
When starting a new winery, a large initial investment is necessary to plant new vines. In the first years, the vine is young and cannot make grapes. Actually it may take up to three (3) years to produce grapes! The winery needs to wait until the vineyard is matured enough to produce quality grapes.
Quality & Slopes
Not all grapes are created equally in terms of quality. There are vines that grow on slopes and others that don’t.
The orientation of the slope will provide more exposure to sunlight and therefore help the vine accumulate more sugar and flavour. Grapes that come from parcels of land with slopes facing South will make better grapes than those facing North. The grapes from wineries without a slope might have lower quality.
Note that a steep slope means you cannot use machines to take care of the vines or harvest. Using manual labor means increased costs which will be noticed in the final price of the wine.
There are costly investments related to the winemaking process: technology, barrels, vats, destemming machines etc. These costs are indeed recovered after many years of producing wines.
Champagne is matured in the winery for years before being released. This results in costly investments each year.
Other wines are aged in new barrels. That means that after the first use the barrel cannot give the wine the same flavour. The cost of a barrel is around €700-€800 and the more barrels a winery needs the higher the costs.
Obviously, the wines that are cheaper are the the wines that are not matured, that are not aged at all, are ready to be consumed immediately after fermentation is done and the wine is clarified.
It might be a glass bottle, a plastic bag in a carton box or just bulk wine in big vessels. As we only focus on glass bottles, they also require closure mechanisms, and labels.
Different costs are associated with different shapes, thickness or size.
Closures for the bottle
After the wine is packaged, it needs to be closed. Most of the time corks, synthetic or screw caps are used. Cork might be more expensive (depending on length, density) but there are cases where cork can be cheaper that the infamous screw cap.
The screw cap should not be associated with bad or cheap wine. Premium wines from Australia or New Zealand use screw caps. Technology already allows screw caps to allow oxygen in the bottles in similar amounts as a cork stopper would.
Let’s be honest and admit that at least once you said “That’s such a pretty label!”. Sales do increase significantly when the right labels are used to target specific types of buyers, which leads to higher costs.
Taxes are different from country to country, and wine is almost always taxed when imported. Even within the European Union!
In the Netherlands, the excise duty is approx. €1 per litre. As a comparison, in the UK or Finland, get ready to pay approx. €4 per litre. Other countries, like Germany, have no excise duties.
On top of the excise duty there is Value Added Tax on the final product, which is 21% in the Netherlands.
Transportation & Distribution
Sometimes, the wine is shipped from the other side of the world and that is not cheap. The importer is adding their costs as well.
Moving further the supply chain, the distributor and the retailer both add 15%-30% to the price of the wine so the longer the chain the higher the price. Wine at a restaurant has a higher markup of at least 3 times the retail price of that bottle.
Lastly, as for any product, the wine price is affected by market forces. If there is high demand for a product and a limited availability, the price will go up. It’s that simple.
The price of wine is also very country specific. For some cultures wine is more important than for others and people are willing to pay more than others for the same product. What is a premium wine for you might be untouchable for some or not even cooking wine for others! That in terms of price, of course.
Our recommendation: Do not use bad wine for cooking! It will give an unpleasant flavour to your food. Always use a wine you like and would still drink!
It would be more useful to think of cheap vs expensive wines not in terms of price, but in terms of quality. To start with, consider a premium option the wine that showcases the grape, the region or the craftsmanship of the winemaker.
For that, you need to learn more about each grape and that is why Teach Me Wine is here. Head to our Shop page to get started or subscribe to our newsletter below to learn about wine in general free of charge!
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