Why is Expensive Wine so Expensive?

I read ads from time to time. They tell me ... well they tell me lots of things ... but the ones I am talking about tell me that the actual grapes in a bottle of wine -- that is the main components don't cost very much. In other words, you are paying for branding, the bottle, the label, and way too much in profits. It's one of the keys to negociant-produced wines: you are getting [supposedly] great grapes and therefore juice without paying for all the rest of that stuff.

At the low end, Charles Shaw, aka Two-Buck Chuck, has made some award-winning wines. But, there have also been some really bad ones. And, to say a wine is award-winning might not mean much. If you present your wine at one of the myriad of wine competitions and find one judge on the tasting panel who likes it enough to sing its praises, that Bronze Medal might be within your grasp. And, that is an award, so you can say your wine is award-winning.

But, these are not the wines we are talking about. We're talking about the really high-priced wines today. In the US, they are the CULT (California Ultra-Luxury Table) wines, in France, they are wines such as Domaine Romanee Conti (DRC) as well as the first-growth Bordeaux, some of the Italian "super-Tuscans," and we could go on (wines not listed here should not feel slighted, but my typing skills do not permit me to make lists that are too long).

Essentially, the price of an expensive wine comes down to supply and demand. We can illustrate with some particularly high-priced California wines. I'm thinking any of Screaming Eagle, Sine Qua Non, and some of the family estates like Harlan, Bond, and the like (I realize that some former family-run estates are now corporate).

Screaming Eagle is a great example. As the stroy goes, way back in the first vintage, Screaming Eagle's proprietor gave a bottle to (I think this was the right Wine Spectator person) Marvin Shanken to try. Out on a hike with a woman I believe he described as his girlfriend at the time, he brought the bottle with him. It was warmer than ideal and had been shaken around a bot from the jostling, but when he opened it for their picnic lunch, they found the wine remarkable. A legend was born. And, when he wrote about his experiences, every American wine connoisseur wanted to try the wine. But, there wasn't much to be had.

Screaming Eagle raised their prices and demand still exceeded supply, so they raised them again. And again. And demand still exceeded suppply. But, there were people who could not get allocations who still wanted some. So, they bought in the after-market and prices went even higher. And higher.

The 2007 Screaming Eagle was a pretty darn good wine, or so I am told. Every major critic gave it rave reviews. I could drive to a wine shop today and get a bottle. In fact, there are at least three that I know of within an hour drive of me that carry this wine, albeit perhaps only a single bottle. That I recall, the release price of the wine was in the higher end of three figures, perhaps less. If I bought that bottle today, I could get it for $3800. Well, technically, $3799, but when you add in the sales tax, it's up over $4000. For a bottle of wine. A 750 ml bottle of wine. Ain't happening. Not in my world. But, this is supply and demand.

Connoisseurs see Screaming Eagle on a bottle and they swoon. Even their other label, Second Flight, creates similar reactions. Is it a good wine? So, I am told. Is it a great wine? I don't know where the cutoff is between good and great, but people that I know who can evaluate this wine without considering what they paid for it tell me it is a very good wine, but they resist the temptation to go as far as great. I could get a bottle for a bit more than $700. That ain't happening either. Not even for a bucket list wine which the Second Flight is not for me. If I am going into debt over a bottle of wine, it's going to be life-altering, not just very good.

But, this is why expensive wine is so expensive. It starts out being priced for what the winery and winemaker think it's worth. And, after getting reviews and seeing what demand looks like, they re-evaluate. The fact is that if a wine is in enough demand, keeping supply down might increase total revenie. If anyone could go to Publix (or Wegman's or any other high supermarket/grocery store) and buy a bottle of Next of Kyn Cumulus Vineyard, it wouldn't be special. But when you have to be on a special list to get your own bottle of Manfred Krankl's brilliance and you have no way of getting on that list, either you are not getting any or you are paying out the proverbial wazoo [sic]. And, that is why expensive wine is so expensive.