Is Wine Ever Worth $100?

“Is a wine ever worth $100?”  “Why is there so much difference in price among wines?”  “What is the difference between a $10 bottle of wine and a $100 bottle of wine?”

Recently I was asked all three of these questions in a span of about 36 hours, and I realized that they were all variations on the same question:  Is there really a correlation between price and quality in wine?

The fact is that there IS a wide variation in the pricing of various wines –- even sometimes among wines made from the same type grape from the same region.  You can buy a Napa cabernet for $20, and you can buy a Napa cabernet for $300.  Why are they priced so differently?  Is the $300 cabernet really 15 times better than the $20 cab?

Both questions are easily answered (though maybe not definitively), but pricing requires a little more explanation.

The Price Question:

The price of a wine is determined by a number of facts.  These include:

1.    Types of grapes.  Some grapes are easier to grow than others.  For example, pinot noir is notoriously difficult to ripen properly.  The grape is thin-skinned, making it particularly susceptible to fungus and sunburn.  This means that good pinot noir grapes are more difficult to grow than other types of grapes, and more pinot noir grapes are lost in the field than other varietals.  Not surprisingly, wineries usually must pay more for pinot noir grapes.

2.    Yields.  Some types of grape vines naturally produce more grapes than others.  Some of the common table grapes, such as concords, are especially prolific.  For many fine wines, the production of the vines is reduced by thinning the crop during the growing season.  By reducing the yield, the vineyard manager forces the vine to put more effort and concentrate more flavor in the remaining grapes.  The result is fewer, but better, grapes.  Although the grower will produce fewer grapes to sell, the grower expects to get a lot more money for those grapes.

3.    Labor costs.  Grape growing and wine making can be very labor intensive.  Thinning the grapes, treating the vines/grapes against fungus, mildew and pests, thinning the leaf canopy (which allows the grapes to ripen more evenly) and picking grapes by hand (which allows rotten grapes to be tossed) all dramatically increase the cost of growing grapes.  But all these techniques result in better—hence, more expensive—grapes. 

4.    Technology costs.  Advances in wine-making technology have resulted in more control in the cellar and in many cases, better wines.  These technological advances include equipment that allows better temperature control during fermentation, tools that allow more accurate measurements of the progress of the wine-making process, and techniques that allow the winemaker to compensate for difficult growing conditions in a particular year.  All of these things can improve the quality of wine, but they come at a (sometimes significant) cost.

5.    Marketing costs.  Many a winery has learned the unpleasant truth – even if you make a great wine, that doesn’t mean you’ll be able to sell it.  There are a lot of very good wines in the marketplace, but standing out requires marketing, which costs money.  Printing information sheets, conducting free tastings at wine shops, buying ads in the newspaper, on-line or on television, hiring a marketing person – they all cost money, which raises the cost of the wine.

6.    Land cost.  Just like residential real estate in Manhattan in New York or Nob Hill in San Francisco will cost you a whole lot more than in Prineville, Oregon, vineyards in Napa and Bordeaux are significantly more expensive than vineyards in Lodi, California or Hermann, Missouri.  Thus, it’s not surprising that the grapes from a vineyard in Napa or Bordeaux will cost a winemaker much more than grapes from Lodi or Hermann.  The cost differential is partly one of quality (we are CERTAIN that Napa and Bordeaux can yield world-class wines, while we’re pretty sure that Lodi and Hermann can make pretty good wines) and partly one of “name” (everyone has heard of Napa and Bordeaux, while not everyone can locate Lodi or Hermann on a map).

7.    Supply and demand.  In many wines, this may be the most significant factor determining the price; price is determined by what a willing buyer will pay.  The price set by sellers is important, too, but often, winemakers are forced to lower prices on wines that haven’t sold in order to make room for new product.  There’s always another harvest to bring in and another vintage to bottle.  If you are still holding last year’s vintage, where are you going to put this year’s?  You’re going to lower the price to get it moving.  In the last five years or so, the wine market has been relatively soft for almost everything except wines from Napa (California), Bordeaux (France) and Burgundy (France).  Wineries from these three places have been able to maintain their high prices, in part because of the creation of a new class of Chinese tycoons.  These new wine drinkers haven’t yet learned about wine beyond the “big” names of Napa, Bordeaux and Burgundy.  So these regions haven’t had to discount their wines, while other regions have been forced to lower prices.  Although I understand this intellectually, I still have a hard time getting my mind around the fact that a big-name merlot from Bordeaux can fetch $350 a bottle, while a similar quality merlot from Washington State goes for about $50. 

The Quality Question:

Not everyone likes the same wine, but that doesn’t mean we can’t agree upon what makes a quality wine.  In my mind, a quality wine is one that is:  (1) true to the grape from which it is made; (2) true to the region from which it comes; and (3) well-balanced so that all the components co-exist harmoniously without any one overwhelming any other (my Dad, who is the “anti-wine snob,” refers to such wines as “smooth”). 

So is a $100 wine ten times better in quality than a $10 wine?  Sometimes.  As discussed above, some of the things that make a wine expensive can also make that wine much, much better (wine making techniques, vineyard practices, high-quality land, technology).  For example, I’ve had wines that are aged in oak barrels (which are VERY expensive).  And I’ve had wines aged in cement or plastic in which the maker just soaked oak chips.  I can tell you that the former makes a significantly better-tasting wine.

But some of the factors that drive up cost have no impact on quality.  For instance, marketing doesn’t make a wine better.  Popularity (i.e., demand) doesn’t make a wine better.  And, if misused, technology doesn’t make a wine better.  And even when all of the high-cost factors combine to make an expensive wine really good, that doesn’t mean that a $10 bottle is that much worse. 

Ultimately, the only way to know whether a wine is worth its price is to learn about it and determine whether the cost is worth it to you.  The best way to do this is to learn what you like in wines (by taking notes as you try them) and to try the biggest variety you can at wineries, wine tastings and in your own home.

Understanding the factors that go into making one wine a lot more expensive than another hasn’t made me more likely to prefer the expensive wine.  But it has helped me to understand that the difference in price isn’t necessarily just greed on the winery’s part.  It also has helped me to understand that the quality difference does—sometimes—make it worth spending $12-$15 on a bottle of wine rather than $5-$8.