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Dear Jo,Imports,Wine

Why do imports seem to cost less than domestic wines? Answer is quite simple.

Because they do cost less. And below is the reason…

Each day I analyze who is clicking onto my blog, from aggregated sources. I found my story about Marlene Rossman, an extraordinary wine writing talent, at BabyBoomerKnowledgeCenter.com.

I noticed at the bottom of the story that there was a comment. I also knew, given the nature of the question, it was going to be unlikely that the publisher of this site was going to be able to answer it. Honestly, I had been in the wine business for over 16 years before I even had that answer. It took working with Delfim Costa of Enoforum Wines, based in Évora, Portugal to have an answer to the question.

And, it’s just not a topic discussed anywhere that I’ve seen.

QUESTION from Terry:

Visiting France a few years ago, I was pleasantly surprised to see wine priced very reasonably. For $5-$10 you could buy quality which would cost you double that in the U.S. Some say wine here, both imported and domestic, is overpriced in general, at least compared to Europe. Is that true?

ANSWER from Jo:

…It’s not that wine is over-priced in the US. I wrote a blog on the cost of a bottle of wine. The Cost of a $50 Bottle of Wine

The breakdown is staggering for the fees associated with producing a bottle of wine. It’s priced fairly in the US (mostly), given the stream of people who must be paid within that system.

What causes imports to be less expensive is that the cost of living for land, supplies, and labor in other countries is less; consequently, it costs less to make that bottle of wine.

The next consideration is the costs involved in importing the wine… the licenses, the taxes, the transportation, the storage of it, and now the sales and marketing to support in the US… But it still remains less by comparison. (It costs more to live here than most places where wine is produced in the world, right?)

You can always travel the world to get your less (cost of living) expensive wine, but now you have all the expenses of going abroad. It’s cheaper, in the long run, to let the pros bring it into our country, but it’s definitely more fun to go get it yourself. ;^)

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6 Responses to “Why do imports seem to cost less than domestic wines? Answer is quite simple.”

  1. Jo, you have already given me my Hanukkah present by writing a piece on me earlier this year, now you have given me my Christmas present!!!
    Best wishes for a happy, healthy holiday season.
    Marlene

  2. Jo Diaz says:

    Best wishes to you, too, Marlene. It’s been a blast working with you this past year, and I look forward to many more years working together.

    BTW – You’ve got a great comment on your story that just came in from another publicist ;^)

  3. Mike says:

    Hailing from wine regions in California and being lucky enough to have been able to live in Southern France, I can offer this perspective about wine costs.

    Because of what Jo points out about the cost of distribution, the quality of inexpensive wines ($2 to $8) in the US is horrid compared to the cost and value of the wines to be found in France/Italy at their source. Those local wines are an incredible value and are virtually consumed 100% within 10 miles of where they are produced. The local consumer support the local vintners.

    At at the next pricing tranche ($10 to $25), French/Italian supermarket wines are horrid and US supermarket wines become a decent value for the money. In Europe, they only let the plonk go out of the region, while in the US, the Big Guys with Distribution can feed all of the players in the chain and make a decent quality wine. There are lovely wines made by European producers at this price levels, but it’s like in the US – you need to go actually find the producers and make your choices.

    In the upper pricing levels ($30 up to $50), the US wines are pricing from scarcity and demand. Conversely the European wines at this pricing level have earned their chops over a long period of production at a quality level predictable by consumers.

    In the highest pricing level ($75 and up), US wine demand at these prices is driven by celebrity wine reviewer recommendations or the actual cost of starting a Napa/Sonoma winery from scratch. Or ego. This pricing range in Europe has again been earned by long term reputation building and consistency.

    At our winery we have priced our wines in the “come to us and get it” price points of $16 to $30 and also at the scarcity/ego levels up to $50. And we sell out – even though we’re in a poorly marketed region. We can survive because we have less participants in our food chain and our repeat business is built on the experiential side.

    Take-away point? Shoot for the mid-range wines from the West Coast US market and if you want the best value – get out and visit some wine regions and pick your favorites. Wines go best with stories about your great wine experiences. Cheers!

  4. Jo Diaz says:

    Thanks for your perspective, Josh. You’ve found your own niche in California, and seem to be doing quite well.

    I can’t speak for other countries or producers.

    I can speak for a group of investors from the Alentejo region of Portugal, known as Enoforum Wines, because I’ve been there and spoken with three very important/prestigious winemakers about what they are exporting.

    They’re putting their best foot forward to have Portuguese wines become world class, so they’re not putting out horrid wines (that you referred to in the $2-$8 category). They’re distributing the best quality available, in order to show the world the best that the Alentejo has to offer at that price point, and other price points. I’ve tasted those wines, and know their quality. I tasted them there, and then again in the US once they landed.

    Edward Dietch (of Reuters) and now his own wine blog Vint-Ed… I first learned about him through MS-NBC. “Based on a tasting of three Enoforum wines at our dinner last week, I believe there is no reason Americans shouldn’t embrace them. In terms of quality, the wines exceeded my expectations and the prices are surprisingly attractive and competitive given that quality.”

    In the US, what Enoforum is offer in its Finisterra Wines would be equivalent to Central Valley bulk wine prices. Except, from the Alentejo, that price point is wine coming from what we would think of as Russian River Valley wine… Very regional and very disctinctive.

    We’re back to my original statement… The costs of their doing business (labor, supplies, etc.) in Portugal is what keeps their prices in much more reasonable price categories, even given the import tax costs of doing business in the US.

  5. Jeff V. says:

    Mike,

    Right now, you are my favorite person in the ‘internets’. Your comment is probably one of the best summations of the price differences that I have read.
    Thank you for this. I will be quoting you.

    The only addition I would like to make is that most US producers are purchasing their; barrels, tanks, hoses, corks, glass, destemers, filtration systems, and presses to name a few all from Europe. All of these bottle supplies and winery equipment are then loaded on containers and shipped over to the US. In Europe, this is all purchases locally (or inter-Europe in the same currency).

  6. Jo Diaz says:

    Jeff,

    Good *point of purchase*…

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