What is Cheap Wine

Many factors make cheap wine

SalewineThere are many factors that determine the price of a bottle of wine. Although many believe this to be arbitrary, it is not. As a vintner myself, making relatively expensive wines, I have explored in depth how to make a cheap wine, certainly a less expensive wine. In doing so I realized that there is an entire industry, quite apart from my world of artisanal wine making, that is thriving to appeal to the palates and pocketbooks of wine lovers.

Cheap land often produces cheap wine

Real Estate is directly related to the price of cheap wine

Real Estate is directly related to the price of cheap wine

First, let’s start with the land. It may not be obvious, but all wine starts with a plot of land. Wine is an agricultural product, so real estate is the first consideration in the cost of a bottle. The real estate market is a significant factor in the bottle price. Simply put, you cannot make a cheap wine that comes from expensive land.

Areas in France, some esteemed for hundreds of years, are identified on the bottle and hike the price up in relation. The First Growth Bordeaux and Grand Cru Burgundy vineyards are family estates that have been deemed worthy of ethereal status. The prices of the wines from these pieces of land reflect this.

Similarly, land in the Russian River Valley and Sonoma Coast, where I live and grow grapes, is considered highly regarded. The cost of real estate in this area is climbing toward prices of our neighbors in Napa Valley, less than an hour’s drive east. The top prices per acre in Napa have reached hundreds of thousand dollars per acre, and the Russian River Valley is not far behind. Although I had the privilege (and luck) to buy this land decades ago before numbers like these were even imagined, grapes are still being planted here to meet the demands of a growing number of consumers of fine wines. And wineries are selling for 10s of millions of dollars.

Cheap wine, on the other hand, generally comes from grapes grown on inexpensive land. The Central Valley in California fit that bill for some time, but other agricultural states are expanding their vineyard lands to compete on price. Gallo, the largest wine producer in the world, previously focused on California. They have recently been making significant acquisitions in Washington. Gallo is growing with the appetite for wine, and California land is no longer allowing them to maintain their price points. Gallo built its brand on making cheap wine, so has been forced to go outside California to meet demand. China is also expanding vineyard land, so you can expect to see Chinese wine in the not-distant future.

The cost of the land directly impacts the cost of the grapes. Many vintners and wine brands do not own their own land. They have elected to buy grapes on the open market. Grapes coming from places with expensive land generally come with prices to match. So this points again to the cost of real estate.

 Bulk Wine makes Cheap Wine

Bulk Wine creates Cheap Wine

Bulk Wine contributes to Cheap Wine

There are grapes that do not sell on the open market, for one reason or another. There is a fairly narrow window to sell them if they are not pre-sold (under contract). Grapes do not have a shelf life. Also, if the yield is large, a particular vineyard might produce more than is allotted in its contract, so the surplus grapes are fermented into bulk wine. Almost all of the cheap wine on the shelves is made from bulk wines, as they can be stored for some time prior to sale.

Any given vineyard may or may not produce drinkable bulk wine. This is where the winemaker comes in. Every winery, from the smallest family-owned boutique to the largest goliath brand, has its titular winemaker.

For cheap wines, the winemaker draws from brokers and other suppliers to pull samples of the bulk wine available at any given moment in the market. These samples are delivered in small bottles with screw caps for easy distribution and tasting. Most are not bottled and corked in an anaerobic manner as retail wines, but simply poured into the bottles from tanks. They are generally over-night shipped or drop shipped, depending on the location, giving these wines the least time to degrade prior to tasting.

The winemaker can taste through dozens of samples in a sitting, each labeled with a code, designated by region, and the number of gallons available for purchase. The price of these bulk wines is often closely related to the region from which they came, again pointing back to real estate.  But the key, or magic, to making a good cheap wine is in the blending.

Although any single sample may not taste well, blending components can produce a surprisingly good result. So a small infusion of an expensive sample might make a really cheap wine available in large quantity taste wholly marketable. The result can be varietally correct and approaching delicious. The degree of deliciousness is related to price, however.

Wine Brokers create Cheap wineIf, for example, a particularly good blend is concocted to achieve a price-point of $3 per bottle. Based on the tasters and business people in the room, the wine tastes more like a $6 wine, and they believed there was a spot in the market for it, that particular wine might be set aside to fill the $6 niche. More work to find a $3 bottle would ensue. Thus, they would achieve a higher margin for their first effort, but look to a less delicious wine to hit the $3 mark.

There are always wonderful discoveries to be made in great value wines for the price, but the business people who produce cheap wines have a feeling for how much flavor they can deliver for a particular price to protect their higher price products.

Other contributors to the price of wine have nothing to do with the wine in the bottle. The glass itself, for example can contribute more than $1 per bottle. For an expensive wine, this is incremental. But for a cheap wine, it is quite significant. Bottle price varies by quality of glass, color, weight of glass, even shape. Yes, there are “designer” shapes. The bottle is a noted “quality cue” in the perceived value of the wine.

Other pricing factors are corks (which can also cost $1 each in expensive wines), labels, capsules (those foil closures around the neck), shippers, distribution method, quantity available, and quantity upcoming in the next vintage. But, price is primarily a factor of “the juice in the bottle”.

So, with cheap wines, there is some truth to the adage, “you get what you pay for.” And equally, there are always exceptions. The enormous size of the market, the volatility of Mother Nature, and the plentitude of products offer infinite possibilities of discovery. And that’s where the fun is!

Enjoy!

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