Why Should Newly Releasd Wines Cost More Than 18 Year Old Whisky?

[Markus_S]

… When the next recession takes place, I won’t at all be surprised to see a lot of $100+ bottles clogging the pipeline.

Combine a recession with 100% tariffs and then you got a Real problem! At least there will be plenty of spirits to wash it down with.

[L_e_o_F_r_o_k_i_c]

Cost of Bushel of grains (56 lbs) is anywhere from 3-5 dollars. No distillery owns fields of grains but buys it from farmers, mainly from mainland and until recently most of it was from abroad. From a bushel of grain one gets around 10 liters of 200 proof pure alcohol after removing heads and tails, so 50 cents per liter of pure alcohol. So, if it is diluted with water to 100 proof, a cost of grain per liter goes to 25 cents, 250 liter barrel will use $62.5 in grain.

Add to that a cost of used Barrel, lets say $150 for a good used one and you’re at 212.50, or 600-700 on new American ones for Bourbon…

A ton of High quality grapes is around $5,000, which will produce around 3 barrels of wine, so a barrel of wine will cost you $1,666 vs $62.5 per barrel of Whiskey

(cost of grapes vs cost of grain for the same amount of finished liquid, around 25 times higher for high quality wine)

[John_Morris]

Thanks, Leo. Interesting figures.

[John_Morris]

High land prices in desirable wine regions are a function of wine prices, not the other way around. If Napa cab producers couldn’t get $100 (or $500) per bottle because they needed to compete with whisky/whiskey on price, then Napa land would cost a lot less. It’s consumers’ willingness to pay LOTS more for high-end wines (not just trophy ones) from certain regions than for a comparable amount of whiskey that sets price, not underlying costs.

Your right that land prices reflect how much value consumers place on the source of the fruit in their wines. It also reflects the egos of people who want to get into the wine business and bottle Napa cab, regardless of long-term profitability.

My point was that it’s not just the variable costs of production (labor, barrels, etc.) that determine the bottle price. In California, in particular, where there are so many relatively new wineries where the owners have bought vineyards, the cost of land sets a floor for the price of the wines, just as the price per ton of fruit does for producers who buy grapes. It’s the same story in Burgundy and the Langhe if someone buys top vineyard sites today.