Wine Prices Explained
Posted on 1st September 2017 by JN Wine
It’s natural for us as consumers to look for the highest quality of produce for the best possible price. In our increasingly globalised world it has become easier than ever for us to buy wine from all corners of the globe for little over £5 a bottle, as supermarkets and other retailers compete for our custom by driving down prices of big-name, global brands. However, with a little understanding of what exactly you’re paying for when you spend £5 on a ‘bargain’ bottle in your local supermarket or off licence, you’ll soon realise that it may be far from a ‘bargain’ at all.
There are a number of inherent factors at play that can make one bottle of wine worth more than another. These include but are not limited to:
- Size of production: Large production wines will generally cater to obvious tastes and will be stylistically similar year on year to fulfil large-scale demand. While this fulfils economic endeavour, it offers less in the way of stylistic variety, geographical provenance and, arguably, the character that smaller scale production wines better can. Think of multinational fast food restaurants using heavily processed ingredients vs small-scale, gourmet restaurants that incorporate local, artisanal produce.
- Harvesting method: Wines that use grapes harvested by hand will generally be more expensive than those that have been harvested by machine. The cost of employing lots of people to hand-harvest the crop attributes to this, up to $750 (~£580) per acre of grapevines as opposed to $100-$300 (~£75-£230) per acre for mechanical harvesting. However, it tends to be only the larger-scale production wineries that can afford the equipment that can carry out this mechanical harvesting meaning that small production wines will generally be more expensive to account for the cost of increased human labour.
- Geography: Where a wine was made is perhaps the most imperative factor in its resulting price. Appellation law dictates that wine derived from a specific, renowned region or even a single, highly-classified estate or vineyard will command a higher price due to its provenance and often long, esteemed tradition, whereas wine derived from a more general region carries less esteem, less stylistic restriction and thus less value. Wine from emerging or less-established growing regions will also command a lesser price generally than wine of similar quality from more established growing regions.
- Oak: The amount of time a wine has spent in oak as well as the type of oak used can not only affect flavour but influence the price of the wine. A wine that has spent extended time in new Bertranges French oak barrels will often command a higher price than one of similar variety that has spent a lesser time in American oak, for example.
- Time: Some wines lend themselves well to aging as acidity and tannins reduce and the wine becomes smoother and rounder with age; a transition from austerity to a more ‘evolved’ state of balance resulting in a significantly better taste (see our last post on ‘Drinking Windows’). The storing and aging of wine costs money however and this cost applies year on year with maturation which then affects the overall price. As well, old wines from renowned, outstanding vintages will command high prices as they become rarer and more sought after, again driving up the price.
Despite all these inherent variables that influence the final price of a bottle of wine, one thing that does not vary from bottle to bottle is the amount of duty paid on each. In the UK, duty is set to £2.16 (€3.18 in ROI) per bottle – that remains the same regardless of whether you are buying a £5 bottle of wine or a £20 bottle (or more)! Once other costs such as VAT, packaging, delivery and margin have been applied – this leaves very little money left to be spent on the wine in the bottle if you are aiming for the cheaper options. So little in fact, that on a £5 bottle the value of the wine itself will come to approximately 37p.
In a more expensive bottle there is a greater margin devoted to actual wine expenditure, meaning that in a £10 bottle the amount that can be afforded to the wine is approximately £2.76 – not double but in fact approximately 7 and a half times better quality than the £5 bottle. Contrast this further with a £20 bottle of wine, where approximately £7.09 per bottle is devoted to wine expenditure – over 19 times greater in quality than the £5 bottle rather than the expected 4.
Here at JN Wine we look to emerging or less-known wine regions and growers. This results in quality, handcrafted wines that are sourced directly and tasted by us. This also cuts out any “middle men” that also take a margin. Each bottle carries the James Nicholson seal of approval and we personally stand over our range. At JN we hope this will enrich your wine drinking experience without breaking the bank. Here are a few of our top picks that meet this criteria: