How Costly Is Making Wine?

Yes, it seems that wine costs too much. But you must realize the cost of production. Perhaps its just as well that we don't have statistics on the taxes.

Wine's production cost helps explain its price

It costs about 90 cents per bottle to age wine in a used French oak barrel, but about $2.50 to age it in a new French oak barrel. These costs can be approximately halved by substituting American oak barrels for French oak barrels. The use of oak chips cuts the cost, and usually the quality, even more.

In the year 2000 Americans spent $20 billion on wine, almost three quarters of which went to California wines.

Top quality Napa Valley vineyard land sells for more than $100,000 per acre. If we remember that the average yield per acre is five tons or 10,000 pounds, this means the land cost may be $10 per pound of grapes. Remember also that an average bottle of wine requires 2.4 pounds of grapes. Putting these numbers together, the land cost for a bottle of top quality Napa Valley wine may be $24. Obviously before going into the wine business you have to be more precise, but these figures are in the ballpark.

The average cost of the grapes in a $20 bottle of wine is estimated at $2.64.

The most expensive bottle of wine was auctioned at Christies, London, in December 1985. The buyer paid £105,000 (over $180,000 depending on the exchange rate) for a bottle of 1787 Chateau Lafitte red Bordeaux, engraved with Thomas Jefferson’s initials. This story ends tragically, before it was consumed the cork dried out, slid into the bottle and ruined the wine. If only they had used screw caps.

One of the greatest wine displays is in the Wine Cellar and Tasting Room of the Rio Suite in (where else) Las Vegas, Nevada. Valued at more than $6 million, this display includes renown centerpieces such as the $2 million Chateau d´Yquem collection, with a bottle from every vintage produced between 1855 and 1990, and a bottle of 1800 Madeira once owned by President Thomas Jefferson. (I hope that someone is checking the corks.)