I’m often asked,
“Is a more expensive wine good value for money?”
“What exactly determines the cost of a wine?”
These are straightforward questions, but how best to simply explain them and to give guidance as to which criteria to consider when buying. Maybe I could fall back on the old adage “that you get what you pay for”, but does this hold true for wine?
Let’s start with the basic costs like the bottle, label, cork or other closure and transport. Add on UK excise duty and 20% Vat on these, and we are up to around £4.00 per bottle before taking account of the cost of the wine and the Vat on the wine. There also has to be a margin for the producer and for the retailer. This is the origin of the commonly expressed view that you have to pay more than, at least, £6 or £7 a bottle to actually be paying more for the actual wine than the packaging, shipping and taxes.
Basic costs are understandable, but what makes the difference to the cost of the actual wine. After all, it’s all about the, hopefully wonderful, liquid in the bottle. The wine cost is worth looking at in some detail as it helps us make informed decisions and get best value. There are huge differences in cost, can they be justified?
As a guide, our Rosé wine prices vary from around £7 to around £80 per bottle with a lot of well-made Provencal Rosés selling for between £10 and £20. As a company policy we have a lower margin on higher cost wines so as to ensure maximum value and not to inhibit their sale.
With wine, one analogy might relate to cars. Most cars at any price will get you there, but more expensive cars will do so in style and luxury as well as creating a good impression on arrival. In comparison, our low cost wines perhaps compare to a small car for convenience around town – practical and satisfactory in lots of situations. Our medium priced range would compare to good quality marques known for performance and comfort whilst our most costly wines would be the equivalent of the absolute top of the range. The Ferrari’s or Aston Martin’s of wines!
With cars, it’s easy to understand that better engineering, materials and interiors cost more to design and manufacture. What about wine though, what makes the difference? Whereas car pricing is probably quite easy to understand, wine may not be so obvious.
Firstly, the vineyard location determines the cost of land and labour with ideal sites with perfect topography, climate and conditions often fetching a substantial premium over less ideal ones. The owners have to achieve a return on their investment so this has to be factored into costs. Fortunately, ideal conditions can often result in better fruit for the winemaker so this is not unreasonable as top quality grapes grown in ideal conditions very often make for a better wine.
Transport is not as big a consideration as you might at first think in terms of costs. You’d imagine that vineyards closer to the UK might benefit from lesser transport costs. Oddly enough this is not a big factor as further away producers can often ship wine in bulk either already bottled or in large containers to bottling plants in Europe without a huge premium on cost. Bulk shipping requires a large scale of production and tends mainly to be used for mass produced wines, not usually at the expensive end.
I’d always recommend bottling at the vineyard as this allows the winemaker to oversee the conditions and carefully monitor the bottling and gives better control of the finished product. Distance can be a disadvantage for smaller producers though, who are unable to ship large quantities, and can add to the cost of their wine should they decide to send it here. These, often quite individual and good wines, can therefore be a lot more expensive than ones from the bulk suppliers for this reason.
The winery and the manner in which the wine is made are important factors contributing to the cost of wine along with the scale of production. A well designed modern winery often provides the winemaker finer control over all the important factors, but the best tanks, refrigeration, pumps, barrels and ideally, onsite bottling facilities can be very expensive indeed. That’s not to say that an old fashioned winery cannot make good wine, but the process is, like anything else, often made easier by investment. It even allows existing boundaries to be challenged and quality improved still further.
Science has provided answers to many of the problems faced by winemakers, but usually at a cost. The prevention of oxidisation using inert atmospheres or other techniques and the use of precision refrigeration at all stages must surely rank as some of the greatest Rosé wine related innovations of the last 40 years. The wine is far better for it, more stable, and capable of travelling without loss of quality to mention just a few of the benefits. This is one of the reasons Rosé has become so popular! Naturally, all of this costs money and the more that is spent, within reason, coupled with an expert winemaker, the better the end result.
When every single possible step is taken that can optimise a harvest, wine production, storage and bottling, this accounts for the higher price of the very top end wines. Often it leads to scarcity of product which can also escalate price. Organic certification and other increasingly popular, but demanding practices also generally increase costs.
You can, of course make do without some of the expense by leaving out some processes or choosing not to mature the wine for quite as long and this to a large extent accounts for all the differing price points. As an example some wines, made to be drunk locally, not intended to be kept for any length of time, or meant for shipping, can still be surprisingly good. These are often the ones you can buy by taking your own container to a winery and having it filled from a tank and can be great value. Another route to inexpensive, but good wine is where a wine merchant or large shop outlet manages to buy an end of line or job lot at a wholesale bargain price and passes on the saving to attract customers who will hopefully buy other items too.
Just when you think the pricing of wine is becoming clear there is one complication worth mentioning. Sometimes instead of taking a reasonable margin, unscrupulous suppliers will charge far more for a wine than it is worth. Buyers are understandably very disappointed when it seems no better than much cheaper choices. This is a really bad practice which artificially breaks the link between price and quality and does a lot of harm to the industry. A bit like an unethical used car dealer! There is an answer to it though and that is to only buy from a reputable trusted supplier. Also, avoid firms offering massive discounts, as the pre-discount price indicates that a very high margin was applied which serves to dilute the relationship between price and quality. Likewise, if an offer seems too good to be true, then tempting as it may be, it probably doesn’t reflect good value.
At Rose-wine.com our pricing is all related to our bought in cost. Our margin reduces for the more expensive wines so they remain attractively priced. We have good relations with our suppliers and visit many of the European vineyards to meet with them and see the processes being applied. Besides being a great reassurance of quality, this confirms that their pricing to us reflects the investment they have made and the production processes used. From time to time we obtain a “bargain”, but only where no corners have been cut. When we “discount” (usually to move stock in preparation for new stock coming in), it is not a large amount as otherwise our normal pricing would be excessive.
I hope this short article will have helped remove some of the mysteries surrounding wine pricing. And, yes! A more expensive wine should be good value for money – provided it is carefully chosen and sourced from a good supplier!
As always, I’ll be pleased to have your views!