SACRAMENTO, Calif. - When it comes to grapes, there's plenty to debate about what's in a bottle of California's Central Valley wine versus one from Napa Valley.
But in terms of cash, it's pretty simple: The amount of crushed grapes in a bottle of Napa wine costs, on average $4.34, while those from, say, Lodi go for just 52 cents, according to price data from the California 2007 grape harvest released this month by the U.S. Department of Agriculture.
It takes about 2.7 pounds of crushed grapes to make one bottle of wine. While those grapes are the first - and perhaps most critical - ingredient, they're not the only factor in determining whether that cabernet sauvignon sells for $2 or $102.
It's the combined cost of crushing, fermenting, aging bottling, packaging and marketing that yields the price you pay.But it all starts with the grape.
There's no guaranteed formula for growing the sort of grapes that can become a $100 bottle. It has much to do with the grapes' origins - the regional mix of soil, weather and reputation - that consumers have learned to associate with quality and price. In other words, consumers are primed to expect a Napa wine to be worth more than a Lodi wine.
In Northern California, there's a vast range of values, from Mendocino's $1.63-abottle grapes, through the Sonoma valley ($2.77), Solano (88 cents), Clarksburg (70 cents) and the Sierra foothills ($1.44). At $4.34, Napa's grapes are the California industry's high-water mark. (Those figures are calculated from USDA per-ton grape prices.)
Within those regions, there's also a significant price difference among varietals: Gewurztraminer grapes tend to be less expensive than pinot noir, for instance.
Beyond grapes, the price tag on an individual bottle adds up in multiple ways, from production through distribution.
"Any difference in the price of wine ... is amplified more and more as it goes up the chain," said Robert Yetman, a University of California, Davis, management professor who studies wine economics.
It starts in the winery, where the expense of crushing and fermenting the grapes varies widely, depending on labor, economies of scale and other factors.
Costs can escalate from there, especially for high-end wines that get the five-star treatment after fermentation.
Aging wine in imported French oak barrels - $900 a pop - tacks on another $2 per bottle. By contrast, flavoring wine with oak chips in stainless steel tanks costs just pennies.
Packaging - the bottle, label and cork or cap - can cost as much as the grapes within,with heavy European glass running more than $2 a bottle and fine Portuguese corks costing $1 each.
The design and printing of a fancy label can add 70 cents or more per bottle, according to label manufacturers at the recent Unified Wine & Grape Symposium in Sacramento, Calif.
Wineries with renowned reputations can make up those high production costs - and then some - by selling their wines to wholesalers at a substantial markup, as much as 150 percent, said Yetman, the university professor. Wholesalers, in turn, add another 20 percent to 30 percent to the price; retailers an additional 15 percent to 30 percent.
That's why a bottle that a winery produces for $8 can wind up on your table for $20 or more.
On a recent crisp afternoon outside Total Wine, a new wine superstore in Roseville, Calif., Dixie Jackson loaded several bottles, including a $5.97 Bogle merlot, into her car.
When told that the grapes in Bogle's bottle cost only a small fraction of the total price - the average for Clarksburgarea merlot grapes is 75 cents - Jackson shrugged.
"I just know it tastes good," she said. "They've got to make a profit."
The USDA report found that California grape prices for the 2007 harvest fell by an average of 3 percent.
But don't expect to see a similar drop in retail prices. That's partly because grapes account for only a small fraction of the purchase price of wine.
But it's also because wineries have become more sophisticated about managing their bulk wine inventory from year to year, buying and selling to level out spikes in grape prices and availability.
"It can take years for any change [in grape prices] to work its way down to the retail level," said Mike Mulderig, vice president of wine buying for Total Wine. "So much depends on what's already in the pipeline."
Business, Pages 79, 82 on 03/02/2008