Reality of Wine Prices (What You Get For What You Spend)


April 29, 2016 Blog » Wine News & Entertainment » Reality of Wine Prices (What You Get For What You Spend)

The cost of a bottle of wine is a lot more pre-thought-out than you might think. There are different pricing segments for wine which include words like “ultra premium,” “popular premium,” and “super value.” Let’s take a look at these categories of wine prices (and how they’ve increased) and understand what to expect based on what you spend.

How much should we expect to spend on decent wine? After researching wine pricing segmentation and observing pricing from major retailers online, we’ve come to the tentative conclusion that wines with typicity are much closer to $15 a bottle (in the United States). Also, if you want to buy a bottle of something hand-crafted, it’s hard to spend less than $20 for wine from a small-production winery.

Prices are going up, duh

You can thank inflation for the cost of premium wine going up into the 15-dollar bracket. Fortunately, because the United States still has a strong dollar, there are some good values from economically stressed wine areas (Greece, Chile and Argentina) and off-beat varietals (anyone up for a bottle of red wine, perhaps Mavrud or Agiorgitiko?)

The Reality of Wine Prices

We’ve chosen the US as a model for pricing for a few reasons:

  1. In 2015, the United States was the world’s leading consumer of wine with both a large domestic and import market
  2. The United States continues to grow wine consumption each year
  3. Many Wine Folly readers live in the United States

Wine Pricing Segments 2016 by Wine Folly


Wine Pricing - Extreme Value Wine

Extreme Value Wine

Cost: under $4

The lowest quality tier “Extreme Value Wine” includes some familiar labels such as Gallo Family Vineyards, Sutter Home, Crane Lake (Bronco Wine Co), Tisdale (a Gallo brand), Rex Goliath (Constellation Wine brand) and several bag-in-a-box brands (with a cost per bottle below four dollars). To produce wines for the extreme value category, a winery must have a large commercial production and integrated distribution to make it economically viable. These wines typically are sourced from large efficient commercial vineyards (in California: probably Madera, Lodi and parts of Monterey) and wines are often a blend of several vintages (or NV “non-vintage”), several grapes, and several regions (e.g. “California” or “USA” on the label). This is mashup wine; drink-to-be-drunk wine.


Wine Pricing - Value Wines

Value Wine

Cost: $4–$10

The first step up from the baseline are value wines. On the lower side of the value spectrum are the wines that usually have a dollop of residual sugar to make them more palatable (Black Box Merlot, Barefoot, Lindemans, Yellow Tail, etc). On the higher side of the value spectrum (the $9–$10 mark) is where you’ll find the beginnings of quality. The higher tier value wines are mostly from large US, French, and Italian wineries that focus on good baseline quality wine for everyday drinking. There are also a few wines from economically depressed wine regions or made from esoteric varieties such as Greek Agiorgtiko or Portuguese Vinho Verde. Many value wines are varietal wines from single vintages with grapes sourced from larger regions.


Wine Pricing - Popular "Premium" wines

Popular “Premium” Wine

Cost: $10–$15

This is the sweet spot for most US wine buyers. Premium isn’t really a fair name for this category, we like to think of it more like the “Baseline Typicity” wine. Also, the premium category is a bit of a misnomer because, on the one hand, you can find quite a number of decent varietal wines from good large-production wineries but, on the other hand, there are also a fair number of inflated “white label” branded bulk wines with eye-catching labels that cause buyer confusion. In our opinion, the good wines within this category show the beginnings of typicity in wine (e.g. “a Cabernet Sauvignon that tastes like Cabernet Sauvignon” etc) and are labeled with a slightly more focused region (e.g. North Coast vs California). Unoaked white wines are generally higher quality at this price point than red wines because oak barrels cost money and red wine grapes typically cost more per ton (save for Chardonnay).


What is typicity?

A wine that tastes “varietally” correct (e.g. a Cabernet Franc wine that tastes indicative of the Cabernet Franc variety).


Wine Pricing - Premium Wines

Premium Wine

Cost: $15–$20

Good, solid quality wines with both typicity and the beginnings of terroir. The premium wine category seem to be the true start of high quality winemaking. There will be some exceptional finds with high ratings in this category (particularly on good vintages) and you’ll find more wines from focused regions (e.g. Sta Rita Hills vs. Central Coast). In red wine, they will be oak-aged and from mid- to large-sized wineries that can hand harvest their grapes (especially from economically depressed countries).


What is terroir?

A wine that has flavors (and aromas) that are indicative of the location where it was grown.


Wine Pricing - Super Premium Wines

Super Premium Wine

Cost: $20–$30

The super premium wine category is sort of the entry level for great handmade wines from medium to large production wineries. Also, this price point affords good quality for in-demand wine varieties (i.e. Pinot Noir). Expect terroir, typicity and an element of craft in this category.


Wine Pricing - Ultra Premium Wines

Ultra Premium Wine

Cost: $30–$50

Great-quality, excellent-tasting, cellar-worthy wines from producers of all sizes. Beyond this price point is where wine prices become a diminishing return to buy wines from in-demand wine regions (e.g. Napa Valley, Bordeaux, Barbaresco) or in-demand wineries.


Wine Pricing - Luxury Wines

Luxury Wine

Cost: $50–$100

This will get you excellent wines from any of the top wine regions of the world from near-top producers including special vineyard-designates, unique aging requirements and in-demand wine varieties. This cost will get you into prestige as associated with a region (e.g. Red Mountain, Oakville, Templeton Gap, Bolgheri, Champagne etc).


Wine Pricing - Super Luxury Wines

Super Luxury Wine

Cost: $100–$200

This category will get you into wines from top producers from the prestigious wine regions in the world, although not necessarily their top bottling.


Wine Pricing - Icon Wines

Icon Wine

Cost:$200+

The pinnacle of wines, wineries, and micro sites of the world.


Last Word: Wine Prices

Hopefully, understanding the current state of prices in wine will help make sense of quality in wine and give you the opportunity to evaluate the wines based on their quality-to-price-ratio (QPR). Happy hunting!
 

Wine pricing segmentation  AWBR (2005)

Wine pricing segmentation AWBR (2005)

How we came about this information

The model above is novel and based on the Table 5 from “Analyzing the US retail wine market using price and consumer segmentation models” AWBR (2005) , with inflation accounted for (11 years from 2005–2016) and consideration taken from price observations from online retailers (klwines.com, wine.com, totalwine.com and winelibrary.com). Since the wine pricing segment names are essentially made up, we’ve done our best to use the colloquial verbiage for each segment. Be aware you’re likely to find discrepancies.

 
Sources
The prices we found reflect SRP (suggested retail price) for 750 ml wines and do not include certain types of discounts (i.e. close outs) or restaurant mark-ups (which are generally higher).
Layers of Luxury
Analyzing US Retail
“Fighting varietals” appears to no longer be as relevant as it was in 1989
World wine consumption statistics
State of the Wine Industry 2015
2-buck chuck gets a price hike
wine pricing data from klwines.com amazonwine.com wine.com winelibrary.com and totalwine.com


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By Madeline Puckette
I'm a certified wine geek with a passion for meeting people, travel, and delicious food. You often find me crawling around dank cellars or frolicking through vineyards. Find me at @WineFolly