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 hand harvesting with diligent helpers, around 500 working hours per vintage are required. That’s not too much – especially since the minimum wage in Germany has increased by 30 percent from 9.82 euros to 12.82 euros since 2022.

Let’s do a simplified average calculation with Bernie: The grapes for the approximately 5,000 liters per hectare are picked by hand, a matter of honor. Nevertheless, machines like tractors are used – with corresponding maintenance costs. After the harvest, about 150,000 euros in costs have accumulated for 750 hectoliters or 100,000 bottles of various categories. Converted to everyday wine, that’s 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, pre-clarifying, controlling fermentation. Additionally, the everyday small tasks like keeping a wine book, cleaning tanks, filling samples for laboratory analyses, sulfuring, and preparing everything for bottling. This keeps Bernie busy and costs him around 40 cents per bottle with the usual fining agents and the examination for QbA. That makes a total of 2.54 euros. That would be it with 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 translates to about 18,700 euros per year or nine cents per bottle. For tank storage, another 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. That already makes 3.04 euros.

The Wine Must Be Bottled

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 with them. This adds another 23 cents per bottle – 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. After all, the eye also drinks a little. The pretty bottle costs 88 cents, the cork 60 cents, the capsule seven cents, the label 22 cents, and the shipping box proportionately nine cents. Together with a few other small items, that makes 2.19 euros for packaging.

Interim calculation: 5.23 euros per bottle.

Price Increases Make Life Difficult for Winemakers

So much for theory. However, for many businesses, reality looks different now. “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 not deliver after the Russian attack, the competition stepped in – and made a real profit. “A reliable cost calculation is currently hardly possible,” admits Oberhofer, “we need to fundamentally re-collect the data.” He has prepared a detailed cost breakdown in tabular 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 only the customers are missing. 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 has to book stands at trade fairs, invite customers and perhaps also journalists to tastings. All of this is not something he enjoys as a winemaker. But it has to be done and is not cheap: 33,000 euros accumulate each 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?

For distribution and delivery, Oberhofer calculates 1.46 euros per bottle. These are costs that can vary significantly depending on the shipper, number of packages, and contract. Nevertheless, it is usually cheaper for customers than driving to the winemaker. At the retailer, it is a bit more expensive. However, you can taste beforehand and benefit from their selection. It’s a bit cheaper online: no rental costs, but also no tasting. Direct marketing is therefore unbeatable.

With a few other costs like tax consulting and insurance, a bottle of favorite wine now costs 7.63 euros. However, this does not yet include any profit for Bernie Down-to-Earth and his family. He wants to ensure that something is left for him and his family at the end of the year. Depending on the desired standard of living, about ten to thirty percent, or 2.29 euros, are added to the price. Including 19 percent German VAT, he finally arrives at 11.80 euros per bottle.

What Makes Expensive Wine?

So how much can a wine cost at most? For his Pinot Noir vineyard wine, Bernie invests in tasks such as green harvesting and more leaf management. This brings him to 670 working hours in the vineyard. At other wineries, that can add up to 1,000 hours. Bernie harvests only 30 hectoliters per hectare for this wine. Additionally, red wine requires more work in the cellar, among other things due to biological acid degradation. A barrique barrel costs between 750 euros and 1,000 euros and is usually used three times. This translates to about 1.25 euros per bottle.

In addition, there is the waiting time that must be commercially calculated: a Barolo, for example, is only sold after more than three years. The fine equipment 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 coating. And a good, long cork can cost significantly more than one euro. But Bernie has a good eye. Thus, his top wine costs 11.94 euros to produce. With his markup of 30 percent and VAT, he arrives at 18.47 euros. Even that is still within range.

It Can Always Be More Expensive

But why do some bottles cost 50 or 200 euros? “Here, the marketing costs often exceed the production costs,” says Jürgen Oberhofer cautiously. Dinners in luxury restaurants are also in demand for wineries, preferably around the world. Premium customers are not trade fair visitors. The costs for this are included in the bottle price. With heavy bottles, flights, and hotels, a nice CO2 footprint accumulates, but also a nice margin in the balance sheet.

The trade usually adds 100 percent markup, and the intermediary does the same. By the time the wine, for example, reaches an American customer’s cellar, the net price at 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. Even those willing to pay 15,000 euros for a “La Tâche” must first know a dealer who sells it. Speculators bet on juicy price increases, making the bottles even more expensive.

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, result in more wine. Also in the cellar, he does without any frills.

A simple liter bottle, label, and cheap cork cost only 80 cents together. Here, even 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 his entry-level wine in the liter bottle for 6.95 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 like sales rooms, samples, and especially the time spent on direct sales. “Customers have an increasing need for information and buy less on average,” has also found cost expert Oberhofer. The winemaker must factor this in. “On average, businesses only calculate with 26.6 percent fixed costs according to the agricultural report, but it should be 30 percent.”

Very Cheap for the Discounters

Nevertheless, countless bottles can be found at 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. Just with the harvester, the harvest costs only a third. Instead of barriques, wooden slats or simply chips are used for two to three cents per bottle. As 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 always 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, for that, you only get ten cents worth of wine. With these prices, the passionate winemaker Bernie Down-to-Earth would be bankrupt after one vintage.