According to Xander Oxman, co-founder of subscription wine service Club W, it doesn't have much to do with the way it's produced.
He explains that, contrary to what many consumers may believe, the cost of a bottle of wine isn't based on the cost of grapes and winemaking.
Even on a typical $20 bottle, Oxman explains, the cost of turning grapes into wine is only about $5. "The remaining $15 is markup charged by wholesalers and retailers along with the cost of sales, marketing, and logistics through an inefficient and antiquated three-tier distribution system," he says.
What about the really pricey stuff?
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"There is a threshold below which it becomes very difficult to deliver a high quality and genuinely interesting (which is to say not overly manipulated) bottle of wine," Oxman says. "The cost of packaging along with the other baseline production expenses means that most wines under $10 fail to meet this threshold."
As the cost of the wine goes up, he continues, "the retail price becomes increasingly decoupled from the cost of production, and is simply a function of scarcity in a supply and demand market. A coveted cult wine that sells for $300 doesn’t cost all that much more to make than a well-made $30 bottle."
So if wines under $10 can't always manage to be "genuinely interesting," and $300 wines are priced according to scarcity, where's the best value? What price range produces palatable wines that aren't overly expensive? "The sweet spot on the price-quality continuum is between $10-$20 retail," answers Oxman. "$20-$30 should yield something truly special, and above $30, recognize that you’re mostly paying for rarity or brand name."
Club W's bottles go for $13 each, which probably isn't a coincidence.
Libby Kane, CFEI, is the Executive Editor for Personal Finance Insider, Business Insider's personal finance section that incorporates affiliate and commerce partnerships into the news, insights, and advice about money Insider readers already know and love. She holds the Certified Financial Education Instructor (CFEI) certification issued by the National Financial Educators Council.Previously at Business Insider, she oversaw teams including Strategy, Careers, and Executive Life.Her team at Insider has tackled projects including:• Women of Means, a series about women taking control of their finances• Inside the Racial Wealth Gap, an exploration of the causes, effects, and potential solutions of the racial wealth gap in the US (finalist, Drum Award, "Editorial Campaign of the Year," 2021)• Strings Attached, a series of essays from people who have left insulated communities and how that journey affected their relationship with money• Master Your Money, a year-long guide for millennials on how to take control of their finances (first runner up, Drum Award, "Best Use of Social Media," 2022)• The Road to Home, a comprehensive guide to buying your first house (silver award winner, National Association of Real Estate Editors, "Best Multi-Platform Package or Series – Real Estate," 2022)Personal Finance Insider also rates, explains, and recommends financial products and services.Outside of personal finance, she's written about everything from why Chinese children are so good at math to the business of dogs to hard truths about adulthood.In September 2016, she helped launch Business Insider Netherlands in Amsterdam. She also spent three years as a member of the Insider Committee, a cross-team focus group working on making Business Insider an even better place to work.She's always interested in research, charts, and people: new and interesting research, compelling charts and other visuals, and people who are willing to share the details of their impressive financial accomplishments and strategies.Before joining the company in March 2014, she was the associate editor at LearnVest, covering personal and behavioral finance.If you have something to share, please reach out to lkane@businessinsider.com.
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