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Money Myths that Muddle Wine Misers

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Money Myths that Muddle Wine Misers

Myth #1.
Economies of scale made possible by the industrialization of wineries lead to wine that is cheaper, better, more available to more people.

I don’t think so. The retail price of any bottle of California wine is 70% distribution costs. In restaurants, the costs of grapes and winemaking are usually less than 10% of the price you pay. That is, we pay mostly for our distance from our vintner, as sorry as that sounds. What a profound waste of money. And how bizarre that the main thing we pay for is value subtracted – the inevitable loss of quality that occurs while you pay for large scale production and distance from the winery.

Myth #2.
Wines of place, of distinction, need to be more expensive.

This is only true if they require, in addition, to be popularized, Parker-ized, and distributed globally. Americans pay a lot for hype. They want an assurance from a reviewer, an appellation, a varietal designation or a famous brand. They buy Calvin Klein jeans because they can’t tell whether Penneys’ are just as good or not. Stores know they can mark up items much more in the “gourmet” section. Safeway makes 6% markup on a box of cornflakes, but turns it over twice a week. Wines are marked up 50%. Strangely, the store makes more return on investment from the cornflakes!

In Europe, wine is an ordinary part of life, like cornflakes. Distinctive local wines are cheap, because there is less distribution mark-up. The French know Muscadet like we know Kellogg’s – no need for a review.

If you need the reassurance of a high price, it’s impossible to hunt down bargains. CheapSkates trust their own taste!

Myth #3.
Big wineries can sell wine cheaper than small wineries.

Federal excise tax on table wine produced by wineries above 100,000 gallons is $2.59 per case. For small wineries, it’s forty cents. The difference is half our profit margin!

Big wineries do save on labor, so each barrel of wine gets perhaps one thousandth of the attention it would receive in a small winery. Sometimes a satellite image is as close as the corporate winemaker gets to the vineyard!

But here’s the rub: Labor savings = no savings, because wine responds to personal attention. Technology is no substitute for long-term grower relationships and a skilled hand in the winery.