Corey Pierce

Walk into any one of Calgary’s fine boutique wine stores and you’re likely to see a wide range of prices. You’ve got cheap plonk, lazily displayed in cases on the floor, ultra-premium trophy bottles, shining proudly behind layers of protective glass. All around you, there’s everything in between. Newbies to my store often gawk at the glass display cases, wondering how a bottle of wine can garner such an astronomical price tag. “Is it really just a matter of supply and demand or is there more to it?” It’s a good question and, to be honest, it’s not an easy one to answer. To understand why wine costs what it does, you need to understand a number of different phenomena — from farming to packaging, taxes, transport and more taxes. So, for all of you wondering why we can’t have more great $10 bottles of wine kicking around our shelves, here’s a little info on where your wine dollar is going. Be warned, you’re not going to like what you read.

There are two main areas you should understand in order to fathom the final price of a bottle of wine. The first involves the actual cost to produce a bottle of wine. The second involves all the charges that are incurred along the way — this is the scary part.

Wine starts off as grapes in a vineyard and those vineyards are expensive to operate. In fact, they are by far the most expensive fruit crops to maintain. Vineyard work requires detailed and sophisticated labour, especially if you’re trying to grow grapes that will make quality wine. As any good winemaker will tell you, most of the work is done on the vines and the winery work is secondary. So your initial costs are labour, equipment (tractors, etc.), land taxes, treatments and water rights (assuming you already own your land). If you don’t own your land you may just spend the rest of your life trying to pay back the bank. Vineyard land is exorbitant. After that, winery expenses can also be large. You need to create a cool and sufficiently large space, maintain staff, pay for tanks, barrels ($500 to $1,000 each) and purchase your bottles, labels, corks, pumps, computers, marketing and so on. So when you look at the cost of putting out a single bottle of wine, you need to consider all the fixed costs behind it — a significant investment. But all of this really just gets us to the starting point; a bottle of wine can leave a winery from anywhere between $1.50 to around $450. Aside from the reasons I have already outlined, there are the obvious market factors of supply and demand — producers will sell wine for as much money as consumers are willing to pay for it.

For our example let’s use the $1.50 model; it better illustrates why there is a lack of great wine in Alberta for less than $10. First, there’s the fun part: freight will run you $1.60, receiving 10 cents, administration 10 cents, storage 50 cents, assembly 12 cents, strip label and bar code 25 cents, duty and excise 50 cents, taxes $3.34, commission from importer (average 30 per cent) 48 cents, bottle deposit and recycling cost 18 cents and, finally, 35 cents for GST. I’ll do the math for you: the total for our $1.50 bottle of wine is $7.52. There’s only one problem, though: we haven’t sold it yet to a retailer. Typical retail margins are 30 per cent to 50 per cent, so now we’re talking in the neighbourhood of $11 by the time you get your hands on it. What happened to our $1.50 bottle of wine?

Because the cost to buy a bottle, a label, a cork, a capsule and put it in a box for shipping can’t be done for much less than $1.50 — never mind all the work that went behind it, very few wines can be sold from the winery at this price. I know winemakers who spend nearly $1 on a cork alone. Making wine is not cheap and getting it here is more expensive than ever, so the next time you grab a $10 bottle of wine off of the shelf, think about this: The actual cost of the wine you’re drinking is less than 10 cents, the rest of it went to getting it here, administration, profit and, of course, tax.