Nowhere is the price of wine more clear than in the hierarchy of supermarket shelves. Look up, the prices go up; look down, they go down. And right in the middle are the mid-range bottles.

That part is easy. Trying to figure out if that $59.99 cabernet is really 10 times better than one costing $5.99? That could drive consumers to drink.

× Price of wine

A seemingly infinite number of variables go into the price of a bottle of wine, from where the grapes are grown, to the size of the winery making it, to whether the finished product is sold in a retail shop or restaurant. From prized Napa Valley cabernet sauvignons to the mocked — yet wildly popular — Two Buck Chuck, everything from basic supply and demand to byzantine distribution networks affects how much wine costs.


But like trying to find a sure-fire remedy for a hangover, nowhere in that blend of economic factors is there a magic answer to the question: Is expensive wine superior to cheaper wine?

“Something costing 10 times more, is it really 10 times better? Is a new Ferrari 20 times better than a new Prius? It’s subjective. It’s what you can afford and what you want to do with your life,” said Skip Coomber, the Encinitas-based founder of Coomber Family Wines.

An increasing number of Americans apparently feel they can afford more expensive wine.

According to data compiled by Liz Thach, a professor of management and wine business at Sonoma State University, sales of U.S. wine topped $38 billion in 2015, up 1.3 percent from 2014, and marking the 23rd straight year of increased growth. (85 percent of the nation’s wine comes from California.)


Consumers have been trading up, or opting for higher-priced bottles, “with double digit value and volume growth in four price points: $11 to $14.99, $15 to $19.99, $20 to $24.99 and over $25,” said Thach’s report on the state of the nation’s wine industry in 2016.

Despite that, she noted, “75 percent of the wine in the U.S. is still sold at $9 and under.”

Since 2010, America has been able to toast its status as the world’s largest wine-consuming nation. But even in pleasure-seeking, it is a country divided — among lovers of mass-produced bargain juice, those who seek out small-production, critically regarded bottlings, and buyers of the sea of so-so to well-made, mid-range wines between them.

They can all peacefully co-exist, said Brian Donegan, an advanced sommelier and a partner at Truly Fine Wine, an importer and retail shop on Morena Boulevard.


“For a lot of people, if they’re getting a vast amount of enjoyment out of that $6.99 bottle of wine, I wouldn’t even talk them into buying something more expensive,” he said.

“I’ve had a $1,000 wine where I’ve said, ‘that’s OK,’ and I’ve had $10 wines where I’ve said, ‘that is brilliant, I’m going to buy that out for myself.’”

The Skater Girl line of affordable wines from Coomber Family Wines.

The portfolio of Coomber Family Wines is separated into three price points. The easy-drinking, accessibly-priced Skater Girl line sells for $14.99 and can be widely found in retail shops. The mid-range Coomber Family Ranch Vintners Collection, which retails for about $24.99 to $28.99 — and is poured by the glass at restaurants and wine bars throughout San Diego County — is the brand builder. The premium-priced Coomber Family Ranch Private Reserve label, which Coomber called his “passion,” includes a showcase $149.99 cabernet sauvignon made from Beckstoffer George III grapes, one of the most prestigious vineyard sites in Napa Valley.


While winery owners can struggle to set the cost of a bottle, Coomber said he had some guidance with the latter one. As stipulated in his contract for the highly valued Beckstoffer fruit, he can’t sell his cab for less than $125 a bottle.

Like most small winery owners, Coomber is sanguine about the economics of the wine lifestyle and the folly in romanticizing it.

“You know what they say,” Coomber chortled, “if you want to make small fortune in the wine business, start with a large fortune.”

To help uncork the complexities of wine pricing, we consulted with several local experts: Donegan; Sabrina Bochen, co-founder of Truly Fine Wine; Coomber; and Mayur Pavagadhi, Coomber’s co-owner at Carlsbad’s Witch Creek Winery and the owner of Paon Restaurant and Wine Bar, also in Carlsbad, among other eateries.


The following are broad explanations of what is often a very bottle-specific situation.

Where the grapes are from

Napa Valley on a label can automatically drive up a bottle’s price, as would Bordeaux and Burgundy’s noted estates. Much of the boost comes from reputation, earned and hyped.

But anywhere in the world, there is land that’s considered better for growing grapes than others. It’s the soil composition, the drainage, the elevation, the slope, the hours of sun, the nighttime cool-downs, and more.

“It comes down to geography,” Bochen said. “If you have a top site ... those are geographically limited. So there’s limited production from there. That land is expensive. It’s supply and demand.”


Contrast that to, say, California’s vast Central Valley, where the land is flat, the soil — while exceptionally fertile — is less-regarded for wine-grape growing, and the heat is relentless. This 300-mile stretch of farmland is also the state’s largest wine-producing area, turning out millions of gallons of lower-end and super-value wines. Famed Napa Valley fruit, by comparison, makes up only 5 percent of the state’s output.

Beyond quantitative differences, qualitatively, regions from Walla Walla to Tuscany, Paso Robles to Rioja, Spain, are regarded for their vineyards that produce well-concentrated, fully ripened, distinctively fruity grapes that have the necessary acidity to provide a wine with structure and balance — the holy grail of winemaking.

To quote the most over-used marketing slogan in the industry, “It all starts in the vineyard.”

Whether a winery uses a natural cork and a tip cap enclosure, as Coomber Family Ranch does, or a composite cork and plastic cap can make a difference of about 45 cents per bottle. Multiply that by hundreds or tens of thousand of bottles — those choices will impact the price consumers pay. (Don Boomer)


The size of the winery

Mega-companies like E&J Gallo Winery and the Bronco Wine Co., maker of Charles “Two Buck Chuck” Shaw, among its dozens of brands, have equally outsized cost-saving advantages.

Often, they can command the lowest prices on land, grapes and production equipment, flooding the market with budget wines, as well as higher-end vintages that can be made for a fraction of what a small winery might spend.

“Their costs really are that low to be able to charge that little amount of money,” Coomber said.

“Everything is automated, they can manufacture their own bottles, they have their own plants for (particle board-like) agglomorated corks, they’re printing their own labels, have their own distribution networks. They’re paying pennies compared to what others pay. They have incredible economies of scale.”


Profit from sheer volume can finance armies of in-house production, legal, permitting, marketing and advertising teams.

On the other extreme are the shoestring, family-owned boutique wineries, whose limited production capacity can inhibit further growth and whose elevated prices reflect the reality that the profit margin on every bottle may be critical to the company’s very survival.

How the wine is made

The price of producing what could be considered better wine is also driven by a winemaker’s decisions, not unlike whether a chef chooses fresh haricot vert or canned greens beans for a dish. Both are vegetables. Both are green. The similarities end there.

Back in the vineyard, plants could be pruned to produce lower yields per acre, resulting in more flavor-packed, higher quality grapes. Vines are tended to by hand, harvested by hand, grapes are sorted to remove underripe fruit or bitter leaves and stems by hand.


“In your farming methods, if you’re doing everything by machine, your costs are a lot lower, but your attention to individual details is also,” Donegan said,

“It’s expensive to be pruning, green harvesting, all by hand. They’re in the vineyards every single day. It’s labor intensive. They’re picking the grapes at harvest. With machine harvesting, the fruit is going to get jostled” and bruised.

A winemaker’s stylistic approach aside, one of the bigger differences in, say, a Napa cab and a jug wine, is the oak. Barrel fermenting and aging can be one of a winery’s biggest expenses, with small barrels, or barriques, which hold about 300 bottles’ worth of wine, costing on average $1,300 for new French oak, the gold standard.

Multiply that even for a small producer — Coomber Family Ranch produces around 2,600 cases, or 31,200 bottles a year — and the cost could be prohibitive. And depending on the winery, each new vintage requires new barriques to impart their singular depth and aging qualities.


Budget wine, however, rarely sees the inside of a barrique, spending time instead in giant vats, perhaps absorbing the flavor of toasty oak from added oak chips, powder, shavings or liquid oak extract.

The markups

During production, wineries choose between packaging material that can increase the price, from the glass of the bottle, to the corks, the cap enclosures, to how elaborate the label is.

Once the wine is produced, a steady stream of price markups is then tacked onto every bottle.

Coomber said the industry standard is for the winery to set the wholesale price at a 50 percent gross margin. Brokers and distributors fees can add another 30 percent before the bottle lands at a retail shop or restaurant.


According to Coomber’s calculations, discount wine stores mark up a bottle by 25 percent, liquor stores and wine shops by 30 percent.

Perhaps nothing causes more confusion for consumers than the cost of wine at restaurants, where bottles can on average sell for three times the wholesale price, and a single glass of wine can equal the wholesale bottle price.

“Restaurants don’t make money on the food, the profit margin is too small,” he said. “But they’re not the villains here, they have to subsidize the meat, the fish, the staffing.”

Donegan, the former wine director at Market Restaurant + Bar, in Del Mar agreed.


“Retail has a lot less other expenses. Look around a retail store, how many people are working there? Two, three, four?” he said.

“Look around a restaurant, and there are 40 people. There’s the glassware, which breaks. Plates, silverware, operational costs are higher to cover.”

Pavagadhi, the owner of Paon and other eateries, said restaurant owners’ hands are tied when hiking up prices by such external forces as the “middleman” — the government-regulated distributor system — and internal factors.

“Although it would appear at first glance that restaurants have the best deal in the wine sales chain, at markups of 2.5 to 3 and 4 times cost, they actually have it the toughest of everyone else in the chain because their overhead is so high,” he said.


“Look at the percentage of restaurants that go out of business.”

Pavagadhi said markups vary depending on the type of restaurant, the inventory it carries, the menu and the accolades it has received.

Some of the best deals on the wine list might be the priciest.

“Normally, wines that sell at $250 and up are marked up at a lesser percentage,” he said.


Perhaps the worst deal in the house?

“In general, wines are not as profitable as hard liquor or beer, especially draft beer.”