The cost of a wine vs. the value of a wine

On the wholesale side of the business, the pricing of wine by the gigantic wineries and companies is a strange, mysterious art form. These big companies know this best, which explains why a mass production wine is $13.99 at one store and $7.99 at another (or $5.99 in New Jersey).  Sliding scales, quantity buys (in states where it is allowed), incentives (how ’bout a new TV for the home?), and other such pricing tricks, all performed with a slight of hand to put David Copperfield to shame (otherwise known as “Wine Math” … a future topic on the blog), cause this to happen.

But the missing question is this: What is the cost of a wine versus the value of a wine?

Never forget that the selling of wine to the consumer comes down to this: the bottles arrive at a restaurant or wine shop through one door, and somehow, magically, they become more valuable and go out the other door.  That transition time is essential, and a clear question to ask is: What makes a wine suddenly more valuable?

Let’s first talk about wines that BRING value

  • If a wine has rarity (lower production or lower distribution) combined with a hot name on the label or a hot grape, that rarity brings value. (You can currently buy Kosta Browne Pinot Noir at North Loop… go figure.)
  • If a wine has good press combined with a good price, that combination brings value. (Personal choice: McManis Cabernet Sauvignon)
  • If a wine has overall quality that is out of this world, and that quality helps a wine shop or restaurant enthusiastically sell it, then that wine has clear value … many would say this is the most important. (Vega Sicilia at Solo Vino.)
  • If a wine expands a category that you are already well known for (example: if you are becoming well known for your Spanish selections and all of the sudden a goofball oddity (but oh so delicious) wine like LiVeli Susumaniello is offered to you), then that wine brings value. (24 bottles of this arrived in Minnesota. And you can drink it by the glass until it runs out at Scusi. They tasted it, they liked it, they bought it. Simple.)
  • If a wine is brought into a store or onto a list because good customers requested it then you have an opportunity for a word of mouth feeding frenzy.

Now, WINES that do NOT bring value

  • If you are offered a wine on the premise that “it’s the most popular wine at the moment”, that in itself brings no value because it doesn’t mean you’ll like it.  Football is a popular sport. Katy Perry is a popular singer. A Honda is a popular car. So what. What are you looking for? Popularity is a sales pitch, and occasionally a reason to try a wine (the best use of in-store tastings), but in itself it does not bring value. Popularity can be forced, purchased, and invented in the alcohol beverage world … caveat empor!
  • If a wine is pitched on price first and foremost, then you should be careful.  It’s easy to sell one bottle of cheap wine (anybody, and I mean ANYBODY, can do that).  It’s selling that second bottle that is the trick.
  • If a wine is of questionable provenance it brings zero value. There are a couple of stores in town that are famous for leaky bottles, old vintages, and a grumpy attitude when returning bad wine to them. The goal should be a higher batting average of great wines in your house or at your table, simple as that. Spending more to get more quality is often essential, especially with something as fragile as wine. Think of it like this: exact same wine at two different restaurants. One charges $5 a glass, serves it in a tumbler or jelly jar because they think it’s cute, and serves it ten degrees too warm. Down the street the same wine is $8 a glass, served in Riedel stemware, and at the correct temperature. That’s three bucks damn well spent.

Lastly, how does a bottle BECOME more valuable between the delivery and the sale?

  • It’s pretty simple, really.  A wine shop or restaurant has to give the customer something beyond just fermented grape juice in a bottle.  Obviously, fodder for a future post.

One Response to The cost of a wine vs. the value of a wine

  1. Jan Davidson April 22, 2012 at 3:07 pm #

    Great cost vs value comments, especially the $5 vs $8 glass example. Living in California’s Santa Rita Hills appellation I have done some “Wine Math” of my own that you might enjoy… Ever wonder how many grapes are in a glass of wine? Wine-Math.com, or watch the 90 second stop action teaser @ bit.ly/winemath. Cheers!

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