Archive for wine cost

WHAT DOES IT COST TO MAKE A BOTTLE OF WINE??

Posted in Info on Wine, Uncategorized with tags on October 6, 2009 by ballymote

I HAVE COPIED AND AM PRINTING THIS ENTIRE ARTICLE HERE BECAUSE IT PROVIDES ACCURATE AND ENTERTAINING INFORMATION ON EXACTLY HOW WINEMAKERS PRICE THEIR WINES. THIS ARTICLE HAS APPEARED IN NUMEROUS PLACES ON THE WEB AND IS WELL WORTH TAKING THE TIME TO READ.WINE AND MONEY

My $100 Bottle of Wine
aka
 “The People Deserve To Know the Truth”

by
Brendan Eliason
Assistant Winemaker, David Coffaro Winery

 

Extravagant Prices
for My Uber Wine 
(price per bottle 
based on 3,000 cases)

Grapes $7.00
Oak   $2.67
Bottle   $1.50
Label   $0.60
Cork   $0.50
Foil   $0.40
Bottling   $0.21
Overhead   $6.82
Utilities   $1.11
Employees   $6.67
Marketing   $0.77
   
TOTAL 
COST
  $28.25

   
My 
Profit
  $20/bottle
($720,000)
   
Wholesale
Markup
  $25
per bottle
   
Retail
Markup
  $24.75
per bottle
   
Restaurant
Markup
  $150.00
per bottle


Brendan Eliason
is a “Wine Brat”
who writes for
Wine-X Magazine
where this article
also appearswww.winexwired.com

 


By way of comparison Dave Coffaro thought it would be interesting to compare his own (real) figures (these weren’t included in Brendan’s Wine-X article):

Grapes $2.50
Oak   $0.25
Bottle   $0.50
Label   $0.11
Cork   $0.12
Foil   $0.09
Bottling   $0.20
Overhead   $2.50
Utilities   $0.10
Employees   $2.00
Marketing   $0.00
Capital
Improve-
ments:
Toys, DVD’s,
Presses,
Buildings
  $1.73
   
TOTAL 
COST
  $10.00

As the new winemaking year begins, I find myself reflecting on the  previous vintage. In the process, I do a quick mental check of how much  we have to ante up in order to go from happy, green vines to squished  juice in a bottle. Our costs add up to slightly more than $7 a bottle. This usually doesn’t hit me until I’m walking through a wine shop and happen to compare this price with the prices on the shelves. My reaction usually goes something like this: “What the &#@%!? A hundred dollars for a bottle of wine? How could this happen? What went wrong? What can you possibly do to make a bottle cost $100? Were the grapes individually crushed between the thighs of Cuban virgins? Were many overpaid  psychologists hired to deal with the wines’ post crush stress? How can $50, $70, $100 or more a bottle ever seem reasonable?”Then I had to stop. Wait, I’m thinking about this the wrong way. If there are people willing and able to pay these obscene amounts for wine, then who am I to stop them? Heck, I should take advantage of these people. I should make a $100 bottle of wine! It’s brilliant. I’ll make millions.

Now if I’m going to make a $100 bottle of wine, then I need to start with great grapes. Not just any grapes will do. I need incredible grapes. World class grapes. Uber grapes. Grape prices are at a major high right now, but for my wine, price is no object. This year, old vine Dry Creek  zinfandel was going for around $2,500 a ton (higher for some vineyards). This is really expensive. That puts Dry Creek zin in about the top one percent of all wine grapes. Unfortunately, zin just won’t cut it for  elitist appeal. So my grapes will have to be cabernet – more specifically, Napa Valley cabernet. And the top one percent just isn’t going to be good enough, either. Let’s crank it up a notch. Let’s assume I’ll pay $4,000 per ton. This is probably around the top one percent of  the top one percent of all wine grapes. 

Because I don’t want to get too greedy, I’ll make 3,000 cases. Wine geeks  usually call this size  “boutique.” Personally, I call it a license to print money. Anyway, to make 3,000 cases, I have to think forward. Of course, I’ll lightly press the grapes and take only the best of the  free-run juice. This means I’ll only get about 50 cases (600 bottles) of wine per ton of grapes. (If I pressed harder I could yield as many as 15 additional cases per ton. But I can afford to be picky.) So I’ll need to buy 60 tons of grapes.

Having been very selective with the world’s most expensive grapes, I now have a total investment of only about $6.66 per bottle. Add another couple of cents for special processing and individual loving care (not to mention easier math), and I’ve got $7 invested in each bottle. Hmm? I better bulk up my costs substantially if I expect to justify an additional $93 a bottle. 

Okay, I’ll need to age my wine in the best oak barrels. I can get good  American oak for less than $200/barrel (plus or minus 70¢ a bottle). But for my Uber wine, I clearly need French oak… and the pricier the  better. I can get great French barrels for around $600/barrel, but I’ll up that to $800 apiece just to be safe. That adds about $2.67 to every bottle, bringing my total cost to about $9.67. Drat! That’s still not enough money. 

Overhead! I’ll need equipment! If I employ any “used” equipment people might talk, not to mention laugh. I wouldn’t want that. So I’ll need new toys. Lots of new toys. Let’s see… I’ll need a crusher/stemmer  ($10,000), a must pump ($12,000), a new forklift ($20,000), a nice state-of-the-art press ($45,000 – for that price it better slice, dice, saw an aluminum can in half and still cut a tomato paper thin), and  assorted hoses, clamps and other cellar equipment ($5,000). Toss in a good winery building ($150,000) and $40,000 for utilities, and I’ve parted with an additional $278,000. This factors out to an extra $7.91 per bottle. And given that my dedication to quality is so great, I’ll buy new equipment every year and donate the old stuff to charity. And I won’t even take a write-off. (Won’t the Boy and Girl Scouts just love their new Brusher membrane press?!)

I‘ll also need a winemaker. This could be difficult. I’ll need someone who can act. Why? ‘Cause not only are our wines worth $100 a bottle, but they’re also a steal at anything less than $200. And consumers should be grateful that we’re letting them spend a C-note for our “masterpiece.”  Winemakers like this don’t come cheap. The average salary for a winemaker at a premium winery this size is around $50,000 a year. I should at least double this because I want my winemaker to be happy. Yep, $100,000 for a thespian winemaker. Add an assistant at $30,000 a year (because I really can’t expect my winemaker to work too hard for only 100K) and I’ve successfully added another $130,000 to the total cost. Then the benefits  (health, dental, vision, regular massage, espresso bar), and that’s an  easy $200,000, or $6.67 per bottle. My total now… $24.25 a bottle.

After aging, processing and pampering my wine, it’s ready to bottle. I’ll openly mock the normal 50¢ per bottle most wineries pay for glass, and scoff at the standard 20¢ per cork. My wine deserves nothing less than triple the cost across the board. That should get me custom designed  glass bottles and cork that’s hand processed by blind Portuguese artisan  monks who’ll individually bless each cork as they personally package and send it to me. Toss in label and foil costs at the same triple markup  (normally about 33¢ — $1 for my wine), along with $2.50 a case for bottling, and I’ve managed to up my spending to roughly $27.56 per bottle.

Now that my Uber wine is bottled, I’ve pretty much run out of ways to spend more money to better the quality. All I can do now is market it. First, I’ll buy the back cover of the Wine Spectator. It’ll cost $28,000 (or 77¢/bottle) but heck, it’s only money. Even with all this spending I’m only up to $28.25 – a far cry from my $100 goal. Luckily I still have an ace up my sleeve: the three tier marketing system in which I have other people selling my wine. (After all, I don’t want to actually deal  with the public, do I?)

From here on out my job is pretty well set. I’ll add a “reasonable” profit (about $20 per bottle or $720,000) to my cost, thus selling my wine to my wholesaler for $50 a bottle. Taking the standard 33 percent markup, the wholesaler will sell my wine to a retailer for about $66.67. At the standard retail markup of 50 percent, my wine will, finally, reach $100 per bottle. But my biggest joy will be when my wine’s sold in restaurants. There, it’ll go for triple the wholesale cost a downright  reasonable $225 per bottle. This is so beautiful I could cry. 

At this point I have only one possible impediment: the customer. If no one’s willing to pay full price for my uber wine, then all of my well laid plans will be ruined. I think I’m pretty safe, though. There never seems to be a shortage of people who want to spend excessive amounts of money on a “cult” wine. Once someone’s ready to pay for the $75 profit and the marketing, then the cycle will be complete.

Whew. That was tough. Making a $100 bottle of wine isn’t as easy as I thought. I think I need to hire strolling mandolinists to walk through  the vineyards (for “cultured” wines) and trained linguists/agriculturists (because multi-lingual grapes are tasty grapes)! Maybe I’ll have to start hiring individual workers for each vine (personal attention can be very  important), or maybe I can just build an oversized chateau so I’ll have a  place to relax while trying to figure out how to make next year’s $150 uber wine.

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