What makes a wine so expensive...or so cheap?

Location, location, location
It all begins with real estate. Where is the wine from? From centuries of winemaking experience, wine producers have figured out the best places in the world to grow their grapes. By law, the top quality wine regions can only produce so many grapes per acre. Once they've reached that magic number, they must either plant grapes somewhere else or buy grapes from a grape grower.

Another factor that determines the price of a wine is the cost of planting or buying grapes. For instance, today it costs about $6,000 per acre to plant vines in the Napa Valley.

However, if a producer buys the grapes instead of planting the vines themselves, in today's market they will pay anywhere from $1,200 to $2,000 per ton for Chardonnay depending on the quality of the grapes. A ton of Sauvignon Blanc, by comparison, costs about $700 per ton. This alone tells you that Sauvignon Blanc generally costs less than Chardonnay.

Winemaking methods will affect the final price of the bottle. The use of wood aging is a good example. Does the winemaker use new French oak barrels, which incidentally costs about $600 each, to carefully age the wine, or does he or she simply toss in some wood chips for flavoring?

Like any other product, the law of supply and demand determines the price of wine. When Chardonnay became the white wine darling years ago in California, it seemed that winemakers around the world rushed to plant Chardonnay, which created a virtual wine lake and softened Chardonnay prices.

We've seen the same thing happen with Merlot. The lower price tags can indeed be tempting, and sometimes you can discover a new "house wine" that you'll keep on hand for daily quaffing, but buyer, beware. With wine purchases, like most anything you buy at retail, you get what you pay for.