Why Does Wine Vary In Price?

The Guardian's Word of Mouth food blog posed the question today, so I penned a quick reply, which you can see below.

You could also talk about (as I did in the previous blog post) how influential wine critics' scores can inflate prices, in particular for finer wines from the likes of Bordeaux and Burgundy. However the forum is aimed more at your everyday wines, rather than First Growths! Any comments appreciated either here, on the original Guardian page, or both!

Any number of factors influence the price of wine. Grapes are an agricultural product much influenced by the vagaries of the weather, or in wine terms the vintage. Lower yields mean fewer grapes to go round; deeper-pocketed industrial-sized wineries can stomach that (or make do with lesser wine made from lesser quality fruit, or indeed doctor it with additives to make it sweeter, drier, more/less acidic etc), however smaller winemakers will have to put prices up in many cases to compensate for lower volumes. Where there is high demand for a certain wine, e.g. white Burgundy, and there are lower yields in a given vintage, then of course the supply and demand mechanism causes prices to rise.

Taking a more macro view of it, and thinking about the vast majority of cheap bulk wine you see in supermarkets, global forces influence the price simply in terms of supply and demand, though impact on price is more gradual over a period of years. So for many years we had a glut of wine production and in recent years of poorer vintages (particularly in Europe) we're experiencing a shortfall, hence some price rises for bulk wines.

Taxes and duties will, of course, also have an affect. In the UK these are relatively high, with 20% VAT and excise duty of £2 per bottle on a standard bottle of still wine. This means a bottle of wine at the average price of £5.11 has approximately 10 or so pence worth of liquid in it, the rest going to the Chancellor, or towards packaging, transport, storage and suchlike. Therefore the upsell of a slightly more expensive bottle of wine is very compelling, particularly in the £6-9 range.

That brings us on to other inputs, broadly under the heading of logistics. Wine is a particularly bulky and heavy thing to transport around the world, so the distance it has to travel as well as the method of transport can have a big impact. Likewise, cheaper bulk wine that is transported as a liquid in huge tanks then bottled at its destination is consequently cheaper for the consumer.

Then certain wines have to be stored for a number of years, adding more cost for the seller, which is passed on to the customer. The customer can of course do this themselves but they'll need suitable storage space such as a cellar or a decent wine fridge. So if you buy older vintages, their higher cost can be partly a result of the time and cost of storing them for you.

Meanwhile, we have the delightful discounting practice of supermarkets, which has recently received some much-needed coverage in the national media. Approximately eight out of every ten bottles of wine in the UK are sold by supermarkets, and approximately seven out of every ten of those are sold at an alleged 'discount'. However wise or not the British consumer is to this type of price promotion (and it is not of course limited to wine) we continue to fall for it. A bottle of wine costing £5.99 from Tesco miraculously and magnanimously discounted from £10 or so is not, was never, and never will be worth a tenner. So the artificial zig-zagging of wine prices in supermarkets (and the more consistent but still unhelpfully brainwashing discounting practice of big wine retailers like Majestic) must also be taken into account as it is not necessarily something so evident in beer retailing.

That being said, and this after all is at root about comparing wine to beer, there can also be large differences in the price of a "well-crafted pint of real ale" and a "mass-produced fizzy lager". Take something like Innis & Gunn's attractively packaged whisky-cask aged beers, for instance. You might find your Badger's real ale similarly priced to your Carlsberg in your supermarket beer aisle, but think back to how wine prices can vary in terms of various inputs: those catchy television ads don't come cheap, even if the mass-produced liquid does.
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