Cheap Wine vs. Expensive Wine: Isn’t It All Just Grape Juice?

I enjoy talking wine with anyone and everyone, and as a result, have some interesting and provoking questions posed by casual wine drinkers. Beyond the varietals, regions, styles, labels and terminology is a very fundamental question asked over and over again. Why is some good wine cheap while the small lot stuff is so damn expensive? Isn't it all just fermented grapes? Is there really a perceivable qualitative difference tied to the price tag?

Before getting into the crux of it all, I’ll address a common motivation for the question. There seems to be a misconception that the higher the price, the more a winery is “gouging” the customer and pocketing the additional profits. The fact is, whether we talk about a $150 Cab blend, a $50 Pinot or a high volume $8 Chard, the margins may be surprisingly similar.

Large volume wineries are all about economy of scale. Approximately 3/4 of all wine consumed in the U.S. has a retail price of <$8. Meanwhile, large wineries are regularly brought into the fold of even larger beverage monoliths like Foster, Axio and Constellation. There is remarkable savings realized on all aspects of these operations; marketing expenses, materials, shared facilities, personnel and real estate. A conglomerate may buy standard 750 ml. bottles by the millions while a small winery is buying a tiny fraction of that.