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Average Price of a Wine Bottle. Really, America, $8?

Average Price of a Wine Bottle. Really, America, $8?

As consumers, sometimes, we walk into the grocery store and take for granted the supply chain that brought that Watermelon or that Chicken Breast to us fresh, safe, and ready to eat. Now think about that in the terms of wine. Miles and miles of grapevines that, for the most part, is tended by hand along with massive vats that if too much oxygen or sulfites get into the wine it could make the wine taste awful. Let’s not forget the weather and distribution that could make or break even the best made wines in the world.

Christopher Null from Wired takes some information and tries to explain how the wine industry has changed overtime with his recent article titled “Juiced: How to Make Mass-Produced Wine Taste Great.”

Winemaking may conjure images of sun-­dappled vineyards and grand châteaus. But a typical ­bottle of Napa Cabernet owes more to lab-coat-­wearing chemists than to barefoot grape stompers. Like most foodstuffs, wine has been thoroughly industrialized. ­Million-­gallon batches are cooked up in ­behemoth factories in Australia or California’s less-dreamy-­sounding Central Valley and made of grapes that come from just about anywhere. And vintners are under constant pressure to find new ways to save money—California grape prices have shot up 46 percent over the past decade. That leaves ­little room for error. If something goes even slightly wrong in a 350,000-­gallon tank, winemakers can’t afford just to dump it. So they’re turning to science—high tech machines and chemical additives—to doctor their product into something more drinkable. Here’s a look at the secret ingredients and behind-the-scenes manipulation that go into crafting the perfect pour.

One thing that is very interesting is that, according to Null, unlike most markets where overtime due to technology and other advances, the cost of producing wine has actually gone up. Now this could be caused by demand going up and more wineries entering the market, but he doesn’t really offer and explanation.

With almost any agricultural product there will always be somewhat of a lag that if demand goes up, it will take a while for production to catch up. I think this might be his most important point which is that in the past 10 years wine sales have gone up a little less than 36 percent, while production has only increased 22.5% (not that he did the math for us). With the wine industry, you have to have the land and then you have to test and treat the land. After that, you then need to plant and take care of the vines for 3 years before you harvest your first fruit. Talk about a long-term investment.

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Producer Price Index for Wineries

He also shows that the price of wine per bottle has gone up. This is kind of a “Duh!” If demand goes up and supply doesn’t grow with it the price will go up. He uses this to state that American consumers now demand more for the bottles they are buying. I highly doubt that the person spending $4 on a bottle of wine in 2004 is expecting a whole lot more out of a bottle today for almost $8.

Sure, they could trade off to beer or liquor but as he states in his article consumption is going up too.

And really, almost $8 for an average bottle of wine? The U.S. consumer must be loving some Yellow Tail. I am a little ashamed of my fellow wine drinkers.

Did he adjust for inflation on this one like he did when he used a Producers Price Index? According to the CPI, $4 in 2004 had the same buying power as $5 today. So in 10 years the average price of a bottle has gone up less that $3. I am not sure you couldn’t say that about a lot of things.

Now, I do get his point of this article as in it is now more up to science as far as producing a mass marketed wine and then he goes on to tell you “what is in your wine,” which is all and true factual information. I am not sure however he uses the right economics at the beginning to justify this.

I am not sure if he is trying to scare you into saying, “Oh my god, those things are in my wine? Buy from small wineries.” But small wineries use sulfites too. If not, your wine would go bad in the bottle. Or was he just trying to tell you about the wine you were drinking? Either way, I am a bit confused but thanks for some cool charts.

~Justin