In a previous blog we quoted noted wine writer Jancis Robinson on production costs for a bottle of wine. Ms. Robinson correctly noted that there is little correlation between production costs and what owners ultimately decide their products are worth. But “production” costs are only part of the picture when it comes to factors that make up the retail price of any bottle of wine .
Looking at an academic cost analysis provided by industry insider Jo Diaz, the production costs of a $50 bottle of wine equal roughly $10, or 20% of the retail price. To get the real bottom line costs to the winery, however, you need to allocate marketing, sales, admin, distribution, and taxes to production costs. With these costs added in, the true cost is $22/bottle out the winery door, or 44% of the retail price.
The remaining $28, or 56% of the $50 price tag comes from mark-ups tacked on by the winery, wholesaler, and wine shop. Don’t you love our three-tier system?
Here’s a more detailed breakdown, extracted from the Jo Diaz pricing analysis: