Is a bottle of wine worth $ 500 to you?

Website design By BotEap.comEveryone knows what makes some wines so expensive. Here are my two cents. What makes a bottle of wine cost between $ 500 and $ 1,000? Now understand, that’s a different question than: Is a bottle of wine worth $ 500 or even a lot more? The short answer to the first question is: perceived value, costs of the finished product, quantity produced and quality of the winemaking processes.

Website design By BotEap.comAs a point of reference, we are not talking about auction prices. For example, in the US, Sotheby’s sold 3 bottles of Chteau Lafite-Rothschild at auction which generated $ 232,692. William Koch paid $ 500,000 for 4 bottles of Bordeaux Vintage 1784 and 1787. It is reported that these 4 bottles were originally wine owned by Thomas Jefferson. The highest paid for a bottle of “drinkable” wine was sold, in the United States, again at auction, for $ 167,500 and that was for 7 bottles of Montrachet 1978. In May 2011, a 1945 Burgundy sold for $ 123,899.

Website design By BotEap.comThe most expensive bottle of wine I have tried was the Screaming Eagle Cab, which is a $ 750 bottle of this “cult wine.” A wine merchant I know in Napa sells much more expensive wines to some of his American customers. He recently sold a three-liter bottle of Grace Family Cab for $ 10,000. Another bottle he had was a 750 ml bottle that sold for $ 3,500. For real oneophiles, a 1992 Screaming Eagle Magnum may be a $ 25,000 bottle of wine.

Website design By BotEap.comBut enough of wine “war stories”, let’s examine how a bottle of wine can get expensive when starting out in the field.

Website design By BotEap.comFirst, you need to consider whether the wine comes from an established winery or from a new company. That means where the grapes come from. Suppose the winery owner is starting from scratch; new winery and a small own vineyard. For land suitable for planting, you will pay approximately $ 200,000 per acre in today’s market. So now you have your 11 acres or so and then you need a facility for equipment crushing, fermentation, barrel storage, etc. So, let’s call a respectable little showcase winery a $ 4 million investment. You are now ready to wait 7+ years before your dream of a $ 500 bottle of wine is ready for prime time. Prime time is defined as a period in which wine is rated and written to help you build a reputation. Time, land, and facilities are money.

Website design By BotEap.comThe better the grapes, the more they cost. The best example of this is the famous Beckstoffer To Kalon vineyard, near the Mondavi winery in Oakville. Of course, this is a unique situation, but these grapes are in great demand. Andy Beckstoffer can set the price for a ton of cabernet grapes based on the price per bottle that his customer will charge. The price per ton can be $ 10,000 or even $ 20,000. Yes, boys and girls, they get what they pay for.

Website design By BotEap.comOther factors that affect cost in the field depend on who you select as your vineyard manager (if you own your own vineyard) or who manages the vineyard where you will buy your grapes. There are ‘rock star’ vineyard managers like David Abrue and others who probably make more money than others. Then it enters the vineyard certification as certified organic or biodynamic / Demeter.

Website design By BotEap.comThere is also the situation where you want to limit the production of your vines. The theory here is that if you limit your production, then the quality of the fruit is better. So instead of 4 or more tons per acre, it drops to 1.5 to 2 tons per acre.

Website design By BotEap.comWhen it comes to picking grapes, the grapes for better wines are harvested by hand rather than involving the machine. Hand-picked grapes require more labor and time, therefore more costs. Also, for some of the higher priced wines, the grapes are collected in lower boxes so as not to crush the grapes at the bottom of the container before destemming. Coming from the field, the higher priced wine grapes are passed along a conveyor belt to the destemmer. This conveyor belt is run by people who select things that you do not want included in your wine, such as leaves, rotten or dried fruit or anything else that affects the quality. Then, the grapes are introduced into a destemmer, taking care not to abuse the grapes. Another process that adds quality to the wine in addition to costs; The grapes are placed on a sorting table where once again workers check the grapes for stems that were not obtained by the destemmer and leaves or anything else that may have been lost, further adding to the cost.

Website design By BotEap.comSome other things to consider: Winemakers and good winemakers are expensive. Even when they are just consultants and not on staff, their costs add up to the cost of the wine. Names like Bob Levy, Phillip Melka, Thomas Brown, and others are well known; They make great wines and using their name helps sell the bottle. Some part-time consultants can cost $ 30,000 for 4 days of consulting services during the year. There are winemakers who produce 90+ point wines in Napa, who work for a winery, who make $ 250,000 per year. I met a vineyard owner who told me that between his vineyard manager (acquaintance) and the winemaker (acquaintance) he had to sell his wine for at least $ 100.

Website design By BotEap.comNew oak barrels add costs. I spoke with Mark Heinemann, the sales genius at Demptos USA. He seems to have forgotten more than most will know about kegs. But suffice it to say that kegs are a science. Demptos is a French company and they have a laboratory that does nothing more than test the chemistry of the oaks used in their barrels. If a winemaker wants a certain result in the barrel aging process, he can specify his wishes and Demptos will give him an oak from its sources that will give him the results; soft tannins, great aromas and even specific bouquets. If a winemaker wants a firm grain white oak, air dried for a minimum of 3 years and from a specific country; they call that barrel “Reserve barrel”. A barrel in that category will cost a winery about $ 1,250 each.

Website design By BotEap.comNow you have another problem, such as the amount of time the wine spends in the barrel. Then, once bottled, how long does it stay in the bottle? Many wineries will launch their 2009 Cabernet in mid-2011; Silver Oak will not launch its 2009 Cabernet until 2013. Time is money!

Website design By BotEap.comWhat type of glass will the wine be bottled in? An average bottle of wine with wine weighs about 3.3 pounds; some of the premium bottles weigh more than 4.5 pounds. Then there are corks to buy. Premium wines use better and longer stoppers. A high-quality cork can cost $ 1.00 each.

Website design By BotEap.comThen there is the label, the neck foil, advertising and marketing, although in some of the cult wines, advertising and marketing are not important, but the point is to get a good rating. Label design can cost $ 20,000 and small run label printing can cost $ 1.50 per label with 2 labels in a bottle.

Website design By BotEap.comThe score and the availability of the wine will also be a big impact.

Website design By BotEap.comScores – Highly rated wines by Wine Advocate or Wine Spectator Magazine, or Steve Tanzer, and Wine Enthusiast and other publications add value.

Website design By BotEap.comScarcity – Once a wine is highly rated, it runs out quickly. But wait, what if they only produce 125 to 300 cases of this highly rated wine? Everyone wants highly rated wines. To get access to that wine, you can join the winery’s mailing list, but once the mailing list is full, no one else can get the wine. Therein lies the dilemma. There are some wineries with waiting lists just to get on the mailing list, which could take up to ten years.

Website design By BotEap.comOnce a winery has a wine that scores well and has a full mailing list, the price can start to climb. The winery knows that at a higher price some of the customers may leave the list, but there are more customers waiting to join who will pay the money. For example, Screaming Eagle Cab at $ 750 can get closer to $ 830 a bottle when you pay for taxes and shipping. Harlan costs $ 500 a bottle, and many others cost $ 300 +.

Website design By BotEap.comThere is an interesting phenomenon that occurs when a wine reaches ‘cult’ status. Some people are willing to pay more than the original selling price for the wine. There is a secondary market that used to see Screaming Eagle prices go up to $ 2,500 a bottle, a bottle of Harlan’s go up to $ 800 and $ 900 a bottle. Since the economy hasn’t done so well, some of these secondary market prices have dropped, but still, the Eagles have sold for $ 1,500 or more.

Website design By BotEap.comStill, having tried some of these wines, I keep wandering off wondering if that bottle was worth $ 500, $ 300 a bottle, or even $ 200 a bottle. Today’s wine lovers can buy a great case of wine (12 bottles) for $ 500. Taking this logic further, it’s still about perceived value. The sommelier at Aureole Restaurant at Mandalay Bay Resort in Las Vegas confirms they have a $ 14,000 bottle of wine and vows it will be sold for consumption. They claim that wine in this price range can be carried over to sister restaurants around the world. Right now, Asian markets are experiencing strong demand for high-priced wines.

Website design By BotEap.comIn short, there are a wide variety of ways in which a winery can establish and enhance its value. Here is our summary:

Website design By BotEap.com-Costs of facilities and land

Website design By BotEap.com-Fruit cost if a winery buys high quality varietal fruit

Website design By BotEap.com-Fruit impacted by vineyard management and cultivation costs

Website design By BotEap.com-How the winery is selected in the selection of clusters

Website design By BotEap.com-Selecting and manipulating by hand the fruit once cut from the brought vine to crush it into smaller containers

Website design By BotEap.com-Quality of the barrels

Website design By BotEap.com-Quality control of the fermentation process

Website design By BotEap.com-The length of time the wine remains in the barrels is added to the storage costs

Website design By BotEap.com-Quality of packaging and labels

Website design By BotEap.com-Number of cases produced to distribute the cost among

Website design By BotEap.com-Marketing / sales cost and G&A

Website design By BotEap.com-Professional-winemaker costs, wine consultants and vintage evaluations.

Website design By BotEap.com-But the most important element: what is the perceived value of the finished product in the eyes of the consumer?

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