Since publishing “The Achilles Heel of American Wine” last Wednesday, I’ve been awaiting rebuttals from American wine producers or members of the wine trade who are willing to cross swords, whether on the issue of sheer quality, or on the economics of making good, affordable wines. Here’s an email addressing cost issues, along with my reply. Anyone else willing to weigh in on this issue? Write to me at [email protected]
Dear Mr. Franz,
I just wanted to comment on your article and fill you in on some facts regarding the cost of making wine. In most cases the 
$12.00 retail wine leaves the winery at roughly $5.75 a bottle F.O.B. with the standard mark up of 28% by the wholesaler and 33.3% by the retailer, the wine arrives to the consumer at $12.00. I will break down cost of goods to produce the wine.
An inexpensive case of glass cost $5.00; corks @ $ 0.35 per cork add $3.20 per case. The foils cost $1.02 per case. Labels would cost approx. $6.00 case. That would put you at $15.22 in dry goods. To make the wine you need the grapes. Farming cost are hard to predict but lets use $1500 / ton as a number (on the low side) at 150 gallons a ton that would be approx. $10.00 a gallon or $24.00 a case for wine not including the cost of labor. Taken from the annual salary survey a winemaker in a winery making under 50,000 cases a year earns an average of $96,211 a year. A cellar worker makes an average of $32,949 a year. If it were possible for two people to make wine without any help that would be $129,160 a year.
I am going to omit the cost of equipment and paying for the land or the winery. Adding the costs up we would get $3.27 for the bottle of wine. If we use the numbers from the salary survey and use a 50,000 case winery, we would have a total cost of production of $292,660 for 50,000 cases and a return of $287,500 for the investment over a vintage or a loss of $5160 a year.
Let’s remember that we didn’t add in the cost of the land or the equipment and that 2 people are making 50,000 cases of wine. No insurance, no sales people, no bookkeeping or compliance. Most of the wines you are talking about are made by negociants or by wineries that have owned the land for many years. The costs of labor in the southern hemisphere are nowhere what they are in the states. Buying wine at $12.00 is great, but to fault people for trying to make a profit is un-American. (Ha! Ha! Just kidding). I don’t shop at Walmart; I try to buy as much as I can that is made locally or in America. We might pay a little more but I sleep better knowing that I am supporting my friends and neighbors. In these times of globalization you should remember this: THINK GLOBAL DRINK LOCAL.
Michael Roth
Demetria Estate
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Dear Mr. Roth,
Thank you for your message, and for the detailed information that you provide.
I don’t doubt that the costs involved in making wine in the USA are considerable, and I certainly do not begrudge anyone a reasonable profit. Similarly, I’m always glad to patronize shopkeepers in my immediate vicinity, and would likewise prefer to recommend American wines when they measure up to the international competition in terms of quality–and value.
However, to really address my core point, we’d need information indicating that US producers confront cost disadvantages relative to overseas producers that have the effect of negating the exchange rate and shipping cost disadvantages confronted by producers beyond our shores. Import duties may also be a factor in the equation.
I know that conceivably there ARE disadvantages to producing in the USA; perhaps land costs are higher, or perhaps regulatory processes are more confining. Likewise, the particular numbers you’ve provided may be lower in other nations. But in the absence of such specific information, it remains difficult for me to understand why the average level of quality of a $12 bottle of wine from the USA remains conspicuously below that of the six countries I cite as examples in “The Achilles Heel of American Wine.”
Again, thank you for your message.
Michael Franz
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