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Wine Education

Which Factors Determine The Price Of Wine?

So many people ask themselves this question. How could it be that some wines cost a few euros, while others cost thousands of euros? And are the more expensive wines really that much better?

The answer isn’t so simple. Many variables can influence how the price of a wine is determined, but it’s important to note that any wine enthusiast, or even anyone that’s curious about wine, can completely and thoroughly understand this concept.

Product quantity and wine-making techniques

 It’s easy to figure out that one very important aspect of determining the selling price of wine is production quantity. Each grape harvest has its own fixed costs, which can’t be reduced, and aren’t directly related to the quantity of bottled products. However, if a limited quantity of wine is produced, fixed costs have a major impact on the price of a single bottle – much more than products produced in far greater quantities.

Winemaking techniques also directly affect prices. Winemaking is a bio-chemical process through which grapes are transformed into wine. There are many winemaking techniques, which, as in other industrial or artisan sectors, can be geared towards quality as well as yield. Using quality-oriented techniques invariably leads to higher costs than yield-oriented techniques, because these products would be available on the market in scant quantities.

Besides a winemaker’s choice of tools and available technology, another key factor that seriously impacts the price of a bottle of wine is time – something we seem to be short of in any case. For example, a bottle of reserve wine generally costs more than another non-reserve wine of comparable quality. Since reserve wine remains in oak barrels longer than non-reserve wine, reserve wine lasts longer. It has a more select quality, but it is also more expensive, because producer needs to invest more in things like aging, materials, storage space, etc.

Packaging

Another element of winemaking that’s just as important as the others is the packaging – that is, the bottle, the cork and the label. Here, too, the investment costs can vary from product to product. It shouldn’t surprise anyone that some producers who want to give their consumers a unique “experience” are prepared to pay close attention to the packaging they use for their wines. They may choose to use heavier glass or a label with finer paper or workmanship. The branding of the product may be designed and conducted by professional branding agencies, and the stopper may be made of a finer quality of cork.

Keeping this in mind, it’s worth remembering, also, that the price of a bottle of wine is also designed to offset communication, research, development, and innovation costs

Nevertheless, watch out: there’s no guarantee that a less expensive wine won’t take a similar approach with its packaging and communication. Remember! Many factors can influence the price of wine, chiefly the history of the wine, its geographic origins, its recognized qualities, and the demand in the market for the product.

Territory, production, and critical acclaim

We’ve seen that the price of wine isn’t determined solely by the quantity of products produced, the wine-making techniques used, or the packaging. The lion’s share of the price is determined by a combination of territorial origin, critical acclaim, and the history of the product and the wine cellar.

Certain parts of the world are well suited for producing quality wine for historical reasons, and because of certain climatic traits. Some classic Italian examples include the Piedmontese Langhe and its Barolo wine, Toscana and its Chianti Classico, as well as Brunello di Montalcino and Valpolicella. This list could also include wines from Burgundy and Bordeaux, in France, Barrosa wine from Australia, and wines from many other parts of the world, where people increasingly recognize that wine attaches an element of prestige and identity to their regions. Wine from these regions can boast of its unique quality thanks to the winemaking skills of its people, local traditions, and grapes that have expressed their best qualities since time immemorial.

In the interest of conserving the authenticity of traditional quality, many of these regions are protected and regulated by very strict guidelines, which aim to not only preserve the quality of these wines, but also to guarantee that a quantity of product can be sustainably produced, and that the land itself is used correctly.

These restrictions may have a determinant affect on the price of a wine, but they are also the fundamental tools for preserving quality. And this quality is translated into added value if a company can correctly interpret the tastes of consumers. Besides discerning flavor undertones, a good critique should also be able to understand what people demand, and this will give a wine its first key to success, while contributing to the determination of its price, in a market that is always regulated by supply and demand.

We’ll discuss this a bit later.

The same wines with different prices

Someone understood that two bottles of Brunello, from the exact same geographic regions, could have very different prices. One, for example, might be sold for 25 euros, while the other is sold for 150 euros.

The reasons behind these price differences can be traced to another two factors that can determine the price of a bottle of wine. The first is what’s called a “micro-region”, or a small area within a larger well-known wine-producing region (like Chianti). The conditions in micro-regions are even more favorable for cultivating a specific type of grape that can produce genuinely superior qualities, albeit in very small quantities. These “micro-origins” ensure higher quality – along with a higher price tag, unfortunately.

The other factor that influences the discrepancy between the prices between two Brunellos is an additional actor that appears on stage: the wine expert. Wine experts are professionals that have made a career out of degustation and wine sampling. There are different schools of thought, but they are all united in their quest to understand, decode and publish (authoritative) opinions on wine quality.

Some of these experts, working as journalists, sommeliers, restaurateurs and wine cellar owners, have helped many people discover and appreciate wines that the general public probably has no knowledge of. In this sense, these experts have a role that has an impact not only on the market, but on culture as well.

The influence of these experts, whose opinions are based on authority they have become known for, determines how passionate and curious consumers will be to try a wine, how much a restaurant will want to have a wine on its menu, and how much a wine cellar would like a wine to be part of its collection. The more aligned the positive reviews, the more attractive the wine becomes for the market.

Thus, an increase in demand, caused by the prestige of the product and its natural scarcity, is also responsible for serious increases in the product’s selling price.

Cecchi’s price policy

Having a price policy is particularly important to Cecchi. In fact, it’s a decisive element of our mission.

The prices of our wines reflect the product of three values that lay at the foundation of our field: to make high-quality wine available to a consistently growing number of consumers, to be the voices and the interpreters of the traditions and regions in which our wines are produced, and to safeguard designations.

No prices are inherently better than others. However, when you taste a Cecchi wine, you can rest assured that we’ve always done our best to keep our costs down, so that we can offer higher quality wines at a price that everyone can afford, in various contexts.

After all, loving wine has always meant sharing it.

Header Photo Credits:  Wolfman-K

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