What makes some wines so expensive?

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Dear Dr. Vinny,

What makes some wines so expensive?

—Stacia P., France

Dear Stacia,

The price of a bottle of wine reflects a few things. First up are the costs of production, or how much it costs to make a bottle. There are the raw materials of grapes, barrels and bottles, plus utilities and labor. You also have to factor in administrative, sales and marketing costs. If the wine isn’t sold directly to a consumer, then distributors, wholesalers and retailers all look to make a profit on every bottle sold, so there are markups along the way. Buying a bottle of wine in a restaurant? Those are often the biggest markups. There is also the variable of Mother Nature—some vintages can vary dramatically in their yields, affecting the whole supply/demand factor, and some challenging vintages bring higher labor costs.

Expensive wines are usually expensive for two reasons. First off, expensive wines typically cost more to make. The raw materials can vary quite a bit in cost—a high-yielding grape from an unknown vineyard fermented in a stainless steel tank won’t cost as much to make as a wine made from a low-yielding, marquee vineyard, fermented in brand-new oak barrels by a highly sought-after winemaking consultant.

Secondly, expensive wines are expensive because they can be. This is a phenomenon known as “perceived value,” in which how much a consumer is willing to pay affects the price of a good or service. This is particularly true when it comes to things that fall into the “luxury” category. The production costs simply aren’t the whole story when high-end perfumes or fashions are priced. Similarly, some wines may carry a $500 price tag or higher and sell out every year, even fetching two or three times that amount on the secondary market.

Of course, value is also subjective. You might get a lot of enjoyment from an expensive wine, or you might find that any bottle over $20 doesn’t give you more than $20 worth of enjoyment. I drink wines from many different price points, but I have to say, I really enjoy the most expensive ones when someone else is buying.

—Dr. Vinny

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