Is Wine Cheaper Where It Is Made?

(Originally published August 2000)

Something has been gnawing away at the very pit of Hanes's dark soul so he raised this issue with his expert wine pals and on wine bulletin boards. Spurred on by many incredulous comments from customers in the store where Hanes works, along the lines of "$15 for Wine A? I buy it in California all the time for $10!," the question may be framed more or less as: Is wine less expensive at its place of origin rather than when purchased far away?

This question avoids the issue of buying wine futures ("en primeur" to our Froggy friends) because this gambit naturally reduces the price, regardless of spatial distance from where the grapes are grown, because the customer assumes greater risk by purchasing the wine when very young (and thus more difficult to assess qualitatively) for a price explicitly below what the bottle will eventually cost on the retail shelf upon release. Purchasing a wine while it is still in barrel, based off of the winery's reputation or what one knows about vintage/harvest conditions may or may not prove wise and only hard won personal experience may guide one here. For obvious reasons, the question also ignores those wines which may be available solely at the winery itself. Moreso, Hanes's question revolves around whether we should save our pennies, fly to California or France or Chile and buy on the cheap there rather than pay whatever goes for our local retail price. That is, is Californian wine cheaper in California than in New York? Is French wine cheaper au France than in New York?

Obviously, many factors come into play in resolving such a conundrum, such as... Plane fare to get to a wine region or, alternatively, the cost of transporting the wine to you safely and securely if ordered remotely. Different tax rates. Currency exchange rates (when applicable). Inter-state and inter-country shipping laws and tariffs. The availability of a particular wine locally and at its fount.

Let's start within the United States. On a certain level, it seems intuitive that Californian wine would be cheaper in California since one does not incur extra shipping costs and sundry costs associated with additional "middle men" along the delivery channel. Initially, there is one fact that flies in the face of the sentiment expressed to Hanes by customers who also purchase wine in California -- when Hanes purchases wine directly from a winery the price per bottle (not factoring in any tax or shipping costs) is just about what Hanes would expect the NYC retail price to be. For example (and not to pick on them!), if Hanes buys a La Jota Howell Mountain Cabernet Sauvignon at a NYC store or directly from La Jota the price per bottle is virtually identical.

This begs the question of whether or not Californian wines really are cheaper in California. If La Jota's tasting room charges the same price as NYC retail, alternatively, can one buy La Jota in a Californian retail store cheaper than directly from La Jota? If so, does La Jota really only sell to out of state tourists (or dumb natives) in their tasting room or via mailing lists? If not, then Californian wine store prices would appear to not be that much cheaper than NYC and Hanes's customers' anecdotal exclamations of being ripped off in NYC would seem false.

Well, this is what Hanes found out! For you! First and foremost, wineries do not want to hurt their relationships with their wholesalers and retailers because these outfits move 99% of the wineries' product. Thus, in their tasting rooms they charge only what they consider to be the "suggested retail price" and do not undercut the retailers who might then take revenge by ceasing to sell those wines in their stores. Second, when one is sampling onsite at a winery they have one by the short hairs because one is all lost in the magical moment of "being there" and will pay almost any price for the wine once it becomes imbued with the memories of the winery visit. Suckas! However, to be fair, there are substantial costs associated with either staffing a tasting room or a mailing list order fulfillment staff. These do factor into what the winery should and does charge for a bottle.

Now, there are Californian "bargain" retailers (e.g., Wine Club or Wine Exchange) that do sell the wine for less than what they could be bought for at a winery. Whether bought in bulk or at a closeout discount, these retailers must be happy enough with thinner margins and higher volume in seeking their profit. Chances are one will not find many "cult" wines there but one will find many respectable names and some harder to find items. Alas, here in Nueva York we no have these stores (all apologies to the Warehouse Wines of the city who in the end ain't that cheap). It seems those bastards in California keep all the bargains for themselves! Thankfully, we rest comfortably in the knowledge that we get to live here in the Greatest City in the World while they must suffer there in culturally denuded backwaters laid to waste by mindless entertainment conglomerates...

All that said, we should not ignore the fact that passing the wine through many different hands from West Coast to East Coast will increase its cost. Even while accounting for each hand taking a fair cut, there are more than a few East Coast distributors who brazenly jack up the wholesale cost of Californian wine and this is passed along to you, the schmuck consumer. Certainly, it is not always the case that the wholesale cost to a retailer of a case of Wine A differs appreciably in California and New York but it happens enough. Such is life in a market economy.

The upshot on Californian wine pricing on the opposite coasts? It seems that the saavy customer can find some bargains in California as long as the money saved remains more than any taxes and shipping costs incurred (if any -- one may leave one's clothes and other belongings behind in California and just take wine back on the plane!). Hanes's advice: buy Californian wine less expensively while in California and get incredibly drunk there before coming back East!

And the rest of the world? Given the strong dollar, one may comfortably assume that one's money will purchase more in other countries. There are a few caveats and exceptions, though. The same shipping issues exist compounded by customs issues. Some countries, Australia in particular, have onerous state taxes on wine which actually may make wines cheaper after being exported than when purchased in-country. Anecdotally, it seems that in some cases higher end wines may prove as or more expensive in their native country than lower end wines. This is especially true of France. This may be partially due to the fact that the cost of shipping, etc. for less expensive wines takes up a greater percentage of the retail bottle cost (if it costs, say, $2 to ship any given bottle of wine from France to the U.S., this will increase the percentage cost of a $10 bottle more than a $50 bottle) even allowing for variances in insurance costs for more expensive wines. More to the point, every winemaker knows which well-known wines the tourists want and will price their wares accordingly. Every red-nosed rube from the U.K. or U.S. wants to buy Château Haut-Brion on the cheap and not Château Marmoset, even if the locals consider it equal and a steal at the price. Shit, the locals would probably kill to keep it a secret from the tourists. And probably have...

Another thing to consider is that many wineries abroad have been making more and more wines tailored to the "international" palate, especially the American palate. After all, we have all the money! So, your favorite Italian or Spanish blockbuster may not even be readily available in those countries since it was all shipped here. The locals back home laugh at anyone who wants to swill that junk. As a result, while the wines for sale there may be cheaper they may be unrecognizable to us New World rubes. Sadly, not having the same wines available for sale in, say, New York and Tuscany makes for poor quantifiable data. Hanes's sense once again is to not expect to find Solaia or Torre Muga or Verget in their respective countries of origin for half the price. See what the well-heeled natives are drinking and figure out if it's decent and less expensive than what you'd buy back home for the same quality. Then return here, create a huge demand for those wines so that they'll export them all for more money, and finally watch those foreign losers weep once their secrets have been all let out of the bag!