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
Capsules (the foil covering the neck of the bottle)
Case boxes
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.