UK Wine Pricing Uncovered

The price of a bottle of wine reflects various things. First are the costs of production, or how much it costs to make the liquid in the bottle. Grapes, oak, time and terroir all have costs, plus utilities and labor. Different grape varieties command higher or lower prices (merlot can offer great value!), and the bit of ground where they’re grown also has a massive impact on cost. The long-established reputations of wines from Bordeaux or Burgundy see that land here is incredibly more expensive than in less-developed areas in, for example, the Languedoc. Barrels can range from £500-£5000 depending on the type of oak and the quality.

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.

Then you have the packaging (bottle, stopper, label), which can range from around £0.35 to over £5.00 per bottle depending on the quality. And, of course, presentation is everything!

You also have to factor in administrative, sales and marketing costs, and in the UK, an excise duty of £2.23 per bottle on all still wines.

If the wine isn’t sold directly to a consumer, then distributors, wholesalers and retailers all have to make a profit, too, so there are mark-ups along the way.

The other reason why expensive wines are expensive is 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 though the cost to make and sell the wine is only a fraction of that.

Verdict? Drink what you are comfortable paying for, and don’t get caught up in all the hype of certain big brands. A lot of really good producers believe the quality of their wine will speak for itself and don’t invest in huge marketing campaigns, but on the flip side, recognize that some wines just cost more because of things that are out of their control. While other wines cost more just because people are willing to pay for them…

Graphic credit: Bibendum “Vinonomics”