How Do You Make a Wine That Costs $3.50?

How does a $3.50 bottle of wine go from grape to store for so little? Megan Krigbaum investigates what actually goes into making such an inexpensive wine, and at what costs.

Cheap Wine

I learned plenty of important things from my parents. How to choose a bottle of wine was not one of them. This fact became ever clearer this spring when my mom brought up a recent wine she bought at Whole Foods in Michigan.

“Guess how much it costs?” she asked, proudly, not giving me a chance to come up with a number: “$3.50!”

I took a breath and let loose an unedited rant: Where does that come from? Think what must be in there! Think how much the people who actually make it must be paid!. And lastly, as the mother of a woman who’d spent the last ten years of her life as a wine writer—how could she?

Quality and provenance aside, I couldn’t stop thinking about what seemed like the sheer impossibility of producing a bottle of wine—a bottle of anything, really—for so little. The value of a high-priced wine has been discussed ad nausea, nearly always pointing to the elusive value of clout. This wine clearly didn’t have any of that, but it did have a glass bottle with liquid inside it, a plastic cork and a label, all of which should have cost someone something.

My mom texted me a photo of the bottle and I began gathering clues, of which there were few. The wine, Three Wishes Pinot Grigio Colombard, was non-vintage, had “California” as the appellation and was “vinted and bottled” in Livermore, California.

A little Googling turned up that Three Wishes is a proprietary label for Whole Foods, with cabernet sauvignon, merlot and chardonnay also made under the brand. Plenty of supermarkets have similar proprietary lines, the most infamous being Trader Joe’s Two Buck ChuckI reached out to Whole Foods to find out more about its wines, but the only information the company was willing to share was that “the producer has been very receptive to creating a wine with the flavor profile and price point that customers love.”

With more digging, I found that the wines were actually produced by a company called The Wine Group, one of the country’s largest wine producers (with brands like Franzia, Cupcake Vineyards and Big House Wine Co.). I contacted the The Wine Group to get more information on their production process—specifically, whether they make their own glass bottles or have their own delivery trucks—but was told that because theirs was a private company, they weren’t able to share any info with me. When I followed up to ask specifically about the wine my mom had purchased—where the grapes were grown, how long the Three Wishes brand had been around, how many cases were made each year—they stopped responding.

So much of life as a thoughtful wine drinker is centered around discovering the who, what, where, why and how of wine. That these companies were so secretive about all of that—nonetheless their methods of making wine affordable for more drinkers, or even where they bought their bottles—was baffling to me. I contacted several more large-scale wine companies to try to get a sense of their costs, but, even though none of these brands make wines as inexpensive as Three Wishes, not one would discuss fixed cost line items. So, I reached out to much smaller producers to get a better sense of the costs associated with a bottle of wine, with the hopes of at least understanding where these big companies might be making cuts.

A comprehensive, though hardly exhaustive, list:

Grapes (labor, equipment, sprays, etc.)
Winery costs (labor, equipment, additives, electricity, water, etc.)
Glass bottles
Corks
Capsules (the foil covering the neck of the bottle)
Labels
Case boxes
Warehousing
State taxes
Shipping to market
Delivery to individual stores
Distributor margin

One producer sent me a spreadsheet that outlined everything one needed to start a winery that makes 500 bottles of good Napa Valley sauvignon blanc per year. For him, the juice itself costs about $3.33 per bottle; the winemaking, including space in a custom crush facility and lab work, is another $3; a well-made glass bottle (it’s possible to go cheaper, he noted) would be about 90 cents; a real cork, 60 cents; and the label and capsule, $1.05. Then there are taxes, insurance, shipping, licenses and permits, marketing, etc. All in, he estimated the base cost of a bottle of small-production Napa Valley sauvignon blanc to be about $11.43.

You can purchase a bottle of Three Wishes for one-third of that cost.

In order to work back from here, I tried to find the lowest possible costs on everything but the juice, which, without knowing where it’s being sourced from, is almost impossible to calculate. I got in touch with Cameron Hughes, owner of a large negociant wine company, Cameron Hughes Wine, which buys, bottles and sells small lots of wines from around the world direct to consumer. Prior to settling on the current model, the bulk of his business was in grocery stores and Costcos across the States.

While there was no way to know where the glass bottle for Three Wishes came from, Hughes told me that a large Mexican bottle-making company called Vitro makes a good portion of the glass used for food and beverages in the U.S. For a 12-bottle case of the flat-bottomed bottles like the ones that Three Wishes come in (assuming The Wine Group doesn’t make its own), Hughes estimated a cost of $3 to $4 per case—or about 30 cents per bottle. The trouble with getting a definitive price is that glass companies cut different deals for customers, usually based on the quantity purchased.

The same is true of corks. Three Wishes is not sealed with natural cork, but a plastic one. Ohlinger is one of the largest companies that make these closures, and when I asked the president of Vinventions (the company that recently bought Ohlinger) what the price per cork would be if purchased in a quantity of more than a million corks, he estimated that the cork, plus PVC capsule, would be about 3 cents apiece.

Lastly, Hughes estimated that a very basic label, printed en masse for 1,000 to 10,000 cases, would be about 10 cents each.

Then there are the federal and state excise taxes per 750mL bottle: 21 cents (federal) plus 5 cents (California excise) plus 10 cents (Michigan’s), for a total of 36 cents in taxes alone.

From here, the prices again become largely incalculable. The industry joke about these wines is that they “age on the truck,” meaning that they can be shipped from the winery to the consumer in about two weeks. If the company owns trucks, shipping costs are negligible; if they don’t, one producer estimated the freight shipping cost to be about $1 per 12-bottle case. And then there are the hazy distributor fees, as well as the mark-up that Whole Foods places on the wines.

Even with all of this research, the impossibility of a wine this cheap doesn’t seem any more possible. One thing you can’t buy for $3.50 is transparency. So what is it, exactly, that you’re getting? I admit, these wines probably aren’t made for a wine drinker like me, but as the United States solidifies its position as the largest consumer of wine in the world, I can’t help but feel a little sad that wines that come from nowhere, wines that no one wants to talk about, make up a big portion of what’s sold. The further down the shelves of the supermarket you go, the less you’ll know about what you’re getting—and the more similarities the wine has with any other grocery item: a box of crackers, toothpaste, frozen vegetables. Knowing truly nothing about these bottles, it’s hard to say whether this is a cautionary tale or just a whodunit mystery.

For my mom’s part, she faced her own mystery the next time she went to buy the wine. She couldn’t locate it in the wine section, so she asked a clerk. It had, inexplicably, been relocated to the baked goods area. There was a sale that day. The wine was only $3.

Related Articles

FROM AROUND THE WEB
  • Brianne Day

    This is a discussion I want to see more of, thanks for writing this. The costs you assessed per bottle are average for a smaller producer, like myself. I often am asked why domestically produced wine costs so much, especially in comparison with wine of moderate quality from Europe or swill like what you described from Whole Foods. It’s perplexing to me that consumers don’t make the obvious connection that what we are making (we being craft domestic winemakers) and the WF wine are in no way the same product. It’s the exact same thing as being confused as to why a McDonalds burger costs $0.99 and a fancy restaurant burger costs $16. Yet no one seems to argue that the fast food burger and the restaurant version aren’t the same product. No one fails to understand that a huge corporation like McDonald’s cuts costs on their inferior product because of huge quantities of material purchased. This is basic economics. Did prohibition set us back so far culturally that we (American middle class) fail to respect locally grown and produced wine the same way we respect and seek out locally, organically produced produce and meat? It’s fucking obnoxious to have to keep having these conversations over an entirely obvious subject. So I do appreciate you bringing it up.

    • Ed Masciana

      I’ve been doing this very thing for nearly 30 years and there are always buys out there. You just have to know where to look. In most cases with wines at this price, someone is losing money.

      • Bob Rossi

        Good point, although that’s not the case with wines like the Three Wishes. I often pick up very cheap “close outs” at wine shops, sometimes with very good results, sometimes not. And when I see them, my first reactions are: “So where has this wine been sitting for the last 7 years.” and “who’s taking the loss, the winery, the importer, or the distributor?”

    • jorvackian

      “It’s perplexing to me that consumers don’t make the obvious connection
      that what we are making (we being craft domestic winemakers) and the WF
      wine are in no way the same product.”
      I disagree, many consumers do understand that these are different products. It is the same with other products like beer, bread and cheese. Commodity vs craft production.

  • BurgerCommenter

    Hey Megan, one other thing that factors into the VERY low prices of some wines: Loss leaders. Whole Foods (TJs, Costco, etc) knows that no one makes a trip to their stores just to purchase a $3 bottle of wine. They may go for the wine, but they’ll stay for the cheese, the crackers, the meat, the seafood and everything else that more than covers the buck or two they’ll lose. In fact, often times those cheap bottles are there SPECIFICALLY so you won’t buy them and instead opt to purchase something more expensive so you don’t feel like a cheapskate. Consumer psychology is a very lucrative business.

    • Kimmi Tyler

      That was exactly what I was going to say– people don’t realize that grocery stores operate on *tiny* margins that include losing money on certain items to get you inside.

  • civey34

    Piggybacking on Burgercommenter’s salient comment, this wine might not even have to be sold at a loss. It could easily break even, given the economies of scale The Wine Group works under and, maybe more importantly, the fact that the juice may have cost barely anything. Non-vintage, “California” pinot grigio and colombard smells of leftover juice from the 2014 vintage for either grape (or both) that someone couldn’t dump. Get a great deal on it, maybe a situation of “take these PG and Colombard lots off our hands and we’ll do the cab deal you want,” cook it up, make it palatable, bottle and ship.

    • BurgerCommenter

      Very true. There was an article years ago that Two Buck Chuck is basically just a blended concoction of all the leftover grapes/juice from the area vineyards that get purchased for pennies on the pound.

      • Bob Rossi

        That sounds accurate.

  • Sarah Green

    Had to add that one cannot underestimate the enormously determining factor of price/ton, which ranges from next to nothing to unfathomable amounts based on variety and growing district. To use the above comparison – French Colombard in California had an average weighted price/ton of $252 in 2015 (ie, nothing); Napa Sauvignon blanc has a weighted average price/ton of $1607.

    It’s also not hard to imagine how cheaply you can produce wine from a vineyard that is machine farmed and harvested, processed at factory scale, never sees a barrel, and can be fermented, finished, bottled and sold in a fraction of the time it takes a boutique winery to do the same – and is guaranteed to be popular by its very nature (my mom would love it too). No dime need ever be spent on educating the consumer about the value of old vines, heritage blends, unique clonal material, terroir, a producer’s “story” – whatever it may be that wineries want to communicate.

    Even mid-range Sauvignon blanc from New Zealand (ie, > $3.50) can be turned around after just a few months inside the winery, at which point many boutique producers are still finishing their barrel fermentations.

  • WineCountryGeographi

    Sorry, you lost me at….Napa- why would you look to Napa or Wente for info on cheap wine? It either comes from the Central Valley or, even if it says California on the label, 25% can be from abroad.

    Two Buck Chuck at Trader Joe’s is $2.50 now. It’s from Bronco Wine in the Central Valley. Many Big Wine wineries make boxed wine that sells for less for the equivalent of $3.50 a bottle.

    Bronco even makes a $4 bottle of organically grown wine that’s sold in Trader Joe’s – Green Fin – and has plans to ramp up a $6+ bottle of organically grown wine under its Rare Earth label.

    Some of the grapes in these wines can come from Thompson Seedless grapes – or “Sultana” as it can be known. It’s not vitis vinifera.

    You can start your own wine brand buying bulk wine in the Central Valley for peanuts. Just go to here: http://www.winebusiness.com/classifieds/grapesbulkwine/?sort_type=1&sort_order=desc&start=61#anchor1

    You could also buy shiners – bulk wine that’s already in a bottle – without a label. You just slap yours on it.

    But it would all be so much greener – and I hope Whole Foods is listening – if we all brought our bottles in to the store and just filled them up from a tank. We sell olive oil that way in this country – in bulk. That’s what they do with table wine in Europe – at least the last time I visited Sicily, this was a common practice.

    And then the wine would be even cheaper!

    • Bob Rossi

      They still do the bulk buying thing in France, albeit in a somewhat different way than they used to. There’s less filling up bottles from tanks and more 5-liter and 10-liter BIB, both at stores and direct from wineries. And it’s often the same the same wine sold by the winery in bottle.

  • Chris Kassel

    ‘…ad nausea’?

    I think you might mean ‘ad nauseam’

  • Bob Rossi

    Very enjoyable piece.
    “Three Wishes Pinot Grigio Colombard, was non-vintage, had “California” as the appellation and was “vinted and bottled” in Livermore, California.” Probably should read “manufactured” rather than “vinted and bottled”