Why are some wines more expensive than others?

Why are some wines more expensive than others?

In other blog posts, we've explored how complicated wine can be as a product. From the different varietals and blends, countries and regions, vintages (which year it was made), wine can be difficult to learn about, simply because there’s so much to learn. There’s also infinite information out there about wine - often conflicting info, at that. One of the most useful things to know, though, is a wine’s cost - and its value.

Breaking down that thought… aside from prestige or marketing, what is it that actually makes some wines more expensive than others? And how can you tell if it’s worthwhile getting something cheap and cheerful, spending a little extra, or splurging on any given bottle in the shop?!

The three major traits of expensive wine are oak, time and terroir - pronounced tear-wah - meaning territory, but there are other factors to consider, as well.

Oak

The most desired wines are aged in oak. The reason that winemakers put their wine in oak barrels is that it lends different notes to the wine, whilst exposing it to oxygen at the same time. When wine is exposed to oxygen, the tannins lose intensity and the overall taste of the wine is made much smoother. French oak barrels are more desired than American oak barrels because they cost almost double.

Time

Although it’s a common thought that when it comes to red wine, the older the better, there is some truth to the fact that aging wines improves its flavour. Time changes the taste of the fruit flavours in a wine as well as reduces the acidity and tannins. Holding wines for years takes up space and costs money, as well, again driving up the price of an older bottle versus a younger one.

Terroir (territory)

To make great grapes, wineries focus on reducing yields - that is, making their vines produce fewer grapes - so that the result is a more intensely flavoured  wine. The location of the vineyard also matters:  it’s been discovered that strangely, the best vineyards tend to be in areas where the vines struggle to produce grapes. Because we’re talking about producing less wine in total from a vineyard in any given year, the wines that are produced and released to market tend to be premium in cost. Supply and demand 101.

Production costs

Have you ever considered how much it costs to make a bottle of wine? There are the raw materials (grapes, barrels, bottles), plus utilities and labour. Factoring in administrative, sales and marketing costs, distribution costs so the middlemen distributors, wholesalers and retailers make a cut on every bottle sold - it starts to add up, and quickly. Buying a bottle of wine in a restaurant? Chances are, you’re paying the biggest markups of all.

It’s also worth considering supply and demand: the variable habits of Mother Nature means some vintages can vary dramatically in their yields (even given the terroir considerations, above!), so challenging years where fewer grapes are grown, even fewer wines are produced, which increases prices as well.

Because… reasons

Sometimes, we just have to accept that expensive wines are expensive because they can be. This phenomenon known as ‘perceived value’ - where how much a consumer is willing to pay is reflected in the price of a product or service. Think about high-end, luxury clothing and footwear: they can be excellently made of course, but it’s entirely subjective as to if an individual would be willing to pay the price difference for a slightly less luxurious, but perfectly functional, version.

When it comes to wine, there is a lot of elitism and prestige in the industry, and the production costs just don’t explain the entire story. Wines which are priced at hundreds of dollars and sell out every year can often be on-sold for far more at secondary market wine auctions - simply because they’re rare, so some people want them.

But that doesn’t mean you won’t like them!

So, are expensive wines worth it? Well, we think the case is probably more often yes than no - but it’s very important to remember that value is entirely subjective. If you’re a person who really enjoys and appreciates expensive wines, go right ahead with the top drops, because you’ll find some of them absolutely incredible! For others, though, you might find that any bottle over $20 doesn’t give you more than $20 worth of enjoyment, so it’s pointless splurging. That is, if you’re the one footing the bill :)

Cheers!




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