My $100 bottle of wine

Thought provoking article here. Where’d the author get it wrong (or right)?

I love that article enough that I’m printing it.

Transparency is super-senior to perfection.
I love it.

Now, we can see how mailing-list and cult wines, which are FAR more expensive, tend to be complete rip-offs.

All you need to do is spend $28k in one ad to sell over a million in cult wine with no history or brand? Shit son, I did it all wrong!

Also, I didn’t realize I could buy a commercial working building in Napa for $150k. Boo yah!

We need some of the winemakers to weigh in. Something tells me the math isn’t right…too good to be true.

Just provide me a link to get an allocation of this super uber wine.

It’s definitely not right as the marketing and operations costs are obviously too low, but I think the point is that cult wines have huge margins that are making lucky wine producers tons of cash.

This is an old article…think I originally saw it posted on eBob? Should probably be cost adjusted. Still, always a great read.

I’m sorry…but this just doesn’t factor the total cost right the way I see it. It’s too simplified…

Gave it a quick read, some things it doesn’t seem he factored in…

Taxes on the wine paid? Property taxes since he owns a building and some land?
18-24 months in oak ain’t free. He’s okay to just not make money for 18-24 months + whatever time he wants it to sit in bottle before shipping it?
Nothing went wrong during harvest? No tech had to come out on a weekend to fix something and charge double time?
The winemaker does everything? No interns, cellar hands, admin? I’d want some help with 60 tons.
My guess is $4k/ton isn’t getting you fruit from a vineyard that you’d want to print on the front label, but that’s still not affecting his bottle price.
I feel like he lowballed on “assorted winery equipment.” People would be shocked how expensive small stainless steal accessories cost.
I also think he lowballed on the cost of the building and utilities. Maybe he’s in Lake or Solano county.

And at the end of the day, NO ONE is going to sell wine for what it costs to make. No industry works like that.

It is an old article.

Jim - do a search. There have been threads about this before. It’s somewhat dated.

From the Napa Valley Register last year:“At an average of $6,319 a ton, the price for the valley’s cabernet sauvignon continues to climb, up 6 percent over last year’s value of $5,930 a ton.”

Note that’s an average, not the price of top-end grapes. Plus I think the cost of barrels is now north of $1000 if you’re getting a top-end piece.

The central point of the article is that the price of wine doesn’t reflect the cost to produce it. That’s still true.

But price is based on cost only for commodities. For non-commodity items, price is based on what the market will pay.

I’d think tasting room staff too? And even if a star winemaker only makes $50k a year (which I find hard to believe) he costs the winery more than that through at a minimum the payroll taxes and then any benefits being paid.

tl;dr: as others have said, oversimplified, leaving things out.

REAL winemakers might have a <15 year old Toyota or Honda. Might.

Consultants are a different story.

Thanks for finding that, I was looking for it too. Piper’s analysis there is the best I’ve ever seen on the economics of wine pricing, a lot better than this older piece.

Nolan, certainly I understand the economics aren’t in favor of winemakers (or really almost anyone in the business up to and including the owners). But do not even “star” winemakers make more than $50k?

Depends on what you mean by “star” and “winemaker.”

I guess I can expand.

Within the hierarchy of a decent sized winery (let’s say 20,000+ cases) you may have

Director of Winemaking
Associate Winemaker(s)
Assistant Winemaker/Enologist
Cellar Foreman
Cellar Staff

The bottom 3 positions are doing the physical work of winemaking, the top 3 are writing work orders and directing the bottom 3.

Director of Winemaking may be consulting at other wineries as well as running the “home base” winery, this is likely the highest paying position. The Associate/Assistant/Enologist positions are the ones doing the day-to-day tasks and making $35-50k (all depending).

I don’t know these guys super well, but I don’t think Larry, Joe, Roy, Jamie, Evan, Andrew, Hardy, etc. are getting rich. That comes when they sell out in a few years neener

Nolan speaks truth. Compared to production workers Tasting room employees can have a higher income when factoring in wine club/sales bonuses.

I would have expected that a new and untested $100 wine spends at least $10 per bottle on marketing in all its forms (advertisement, promotions, tastings, etc…).

I would also expect that 30(+)% is a reasonable internal gross margin.

I am sure there are other examples, but the original story mirrors what I know about Epoch wines. They never got to $100, but everything else is so similar. I fell hook, line and sinker for it early in my wine journey. Lesson learned.