What Does It Cost to Produce a Bottle of Wine?

Working Hours in the Vineyard

For tasks such as pruning in winter, plant protection, and leaf management up to the manual harvest with diligent helpers, around 500 working hours per vintage are required. That's not too much – especially since the minimum wage in Germany has risen by 30 percent from 9.82 euros to 12.82 euros since 2022.

The 5,000 kilos of grapes per hectare are harvested by hand, a matter of honor. Nevertheless, machines like tractors are used – with corresponding maintenance costs. After the harvest, around 150,000 euros in costs have accumulated for 750 hectoliters or 100,000 bottles of various categories. Converted to everyday wine, that amounts to 2.14 euros per bottle.

What Does Cellar Work Cost?

Now, however, a lot of work awaits the winemaker in the cellar: unloading the grapes, pressing, clarification, controlling fermentation. In addition, the everyday small tasks: keeping a wine book, cleaning tanks, filling samples for laboratory analyses, sulfuring, preparing everything for bottling. This keeps Bernie busy and costs him an additional 40 cents per bottle. The added fining agents also cost about nine cents. Together, that makes 2.63 euros. That would be it for the costs; the wine is now ready. Or? No, not quite.

Machine, Investment, and Maintenance Costs

However, the cellar must first be equipped with the right machines so that Bernie can work properly. Barrels, tanks, pumps, hoses, and other equipment cost at least half a million euros. Just for a good press, he has to pay several tens of thousands of euros. This amounts to about 18,700 euros per year or nine cents per bottle. For tank storage, an additional nine cents are added.

Even if the winery has been in family ownership for generations, costs such as taxes, repairs, and renovations are incurred, averaging 63,400 euros per year or 32 cents per bottle. In the vineyard, individual vines or entire areas must be replanted repeatedly. While the winemaker saves the loan with leased areas, he still has to pay the rent.

The Wine Must Go into the Bottle

For bottling, wineries need a complex, well-functioning, large machine. So-called contract bottlers have them mounted on their trucks and come to the operation. This adds another 23 cents per bottle – regardless of whether you are paying off the loan for the bottling machine or having the process done by a service provider.

And It Should Look Nice Too

When it comes to packaging, Bernie again seeks a good balance. A little bit of the eye does drink along. The pretty bottle costs 88 cents, the cork 60 cents, the capsule seven cents, the label 22 cents, and the shipping box proportionally nine cents. Together with a few other small items, this amounts to 2.19 euros for packaging.

Price Increases Make Life Difficult for Winemakers

So far, the theory. But for many businesses, the reality now looks different. "Since Corona and the Ukraine war, energy and raw material prices have skyrocketed," explains Dr. Jürgen Oberhofer from the Institute for Viticulture and Oenology in Neustadt an der Weinstraße, "in individual cases by up to 100 percent." This ranges from fertilizers to agricultural diesel. When the glassworks in Ukraine suddenly could no longer deliver after the Russian attack, the competition stepped in – and made a real profit. "A reliable cost calculation is hardly possible at the moment," admits Oberhofer, "we need to fundamentally re-collect the data." However, he has developed a cost breakdown in table form with current data and made it available. Experts estimate a general price increase rate of around 30 percent since 2019.

How Does the Wine Get to the Customers?

Now all that’s missing are the customers. Bernie needs a logo, label design, and a well-made website with an online shop. This is today's minimal presence of a winemaker. To find buyers like restaurateurs and retailers, he must book stands at trade fairs, invite customers, and perhaps journalists to tastings.

All of this is not easy for him as a winemaker. But it has to be done and is not cheap: 33,000 euros accumulate in a year. This is bitter for Bernie, who counts every cent throughout the year. Fortunately, he spreads the costs over about 100,000 bottles, which adds an additional 33 cents per bottle. A smaller operation with only five hectares of vineyards has to allocate the same amount over a third of the number of bottles.

Retailer, Shipping, or Preferably Direct?

Shipping roughly costs about 80 cents per bottle, but this can vary significantly depending on the shipper, number of packages, and contract. For customers, this is almost always cheaper than driving to the winemaker. It is a bit more expensive at the retailer. However, you can taste beforehand and benefit from their selection. It is somewhat cheaper online: no rental costs, but also no tasting. Direct marketing is therefore unbeatable.

What Makes Expensive Wine Expensive?

So what can a wine cost at most? For his Spätburgunder vineyard wine, Bernie invests in tasks such as green harvesting and more leaf management. This brings him to 670 working hours in the vineyard. Other wineries may accumulate up to 1,000 hours. Bernie only harvests 30 hectoliters per hectare for this wine. Additionally, red wine requires more work in the cellar, partly due to malolactic fermentation. A barrique barrel costs between 750 euros and 1,000 euros and is usually used three times. This translates to about 1.20 euros per bottle.

Additionally, there is the waiting time that must be factored in commercially: a Barolo, for example, is only sold after more than three years. The fine presentation can also cost a lot of money. An elegant relief bottle costs over one euro. For labels, there are the finest materials and elaborate processes, from handmade paper to metallic coatings. And a good, long cork can cost significantly more than one euro. But Bernie has a good eye. Thus, his top wine costs 12.72 euros to produce. This still keeps him within the range.

It Can Always Be More Expensive

But why do some bottles cost 50 or 200 euros? "Here, marketing costs often exceed production costs," says Jürgen Oberhofer cautiously. Dinners in luxury restaurants are also in vogue, preferably around the world. Premium customers are not trade fair visitors. With heavy bottles, flights, and hotels, this results in a nice CO2 footprint, but also a fine margin in the balance sheet.

Retailers usually mark up 100 percent, and the intermediary does the same. By the time the wine reaches an American customer’s cellar, the net price from the winery has quickly quadrupled.

However, particularly fine and sought-after bottles often sell without all that. Famous crus like Le Pin, Pétrus, and Domaine de la Romanée-Conti are so scarce that the price is primarily defined by that scarcity. Even those willing to pay 15,000 euros for a “La Tâche” must first know a dealer who will sell it to them. Speculators rely on juicy price increases, which further drives up the price of the bottles.

Cheap Can Threaten Existence

However, Bernie can also produce cheaper. Machines save a lot of labor costs. Higher yields, for example with varieties like Müller-Thurgau or Dornfelder, yield more wine. Also, in the cellar, he foregoes any frills.

A simple liter bottle, label, and cheap cork together cost only 80 cents. Here, small details can make a difference: for each bottling, Bernie needs a tank. The larger it is, the more he can bottle at once. This can reduce costs from nine to 4.5 cents per bottle.

In the end, the customer gets their entry-level wine for a good five euros. "Anything below that is not cost-covering," warns Monika Reule, managing director of the German Wine Institute (DWI). Nevertheless, it happens. Many winemakers forget fixed costs such as sales rooms, samples, and especially the time spent on direct sales. "Customers have an increasing need for information and buy on average less," has also found cost expert Oberhofer. This must be factored in by the winemaker. "On average, according to the agricultural report, businesses only calculate with 26.6 percent fixed costs," says Oberhofer, "but it should be 30 percent.".

Very Cheap for the Discounters

Nevertheless, countless bottles can be found in discount stores for under five euros. Such wines are produced in millions of units in a highly automated manner. They preferably come from regions with wide plains, warm, dry climates, and low wages. With the harvester alone, the harvest costs only a third. Instead of barriques, wooden slats or simply chips for two to three cents per bottle are used. As a powder, the aroma costs almost nothing. There are endless tricks and preparations that make a sad drop look better and cover up its weaknesses.

Additionally, there is currently too much wine on the world market. Eventually, everyone sells. If necessary, at a loss. The very cheap wines are snapped up by brokers for no more than ten cents per liter, industry insiders report. On fully automated bottling lines, they flow into Tetra Packs, sometimes a million liters a day. Some cost only 99 cents. However, only wine for ten cents ends up in the glass. With this revenue, the passionate winemaker Bernie Grounded would be bankrupt after one vintage.