Founded by the late Daniel Rogov, focusing primarily on wines that are either kosher or Israeli.

Wine Prices and Cost

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Menachem S

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Wine Prices and Cost

by Menachem S » Mon Oct 20, 2008 1:51 pm

This is an extension of a topic started on US Kosher wine release alert, but better suited to its own thread.

The question is, CAN they lower prices even if they want to. I know NOTHING about the economics of wine. Does anyone know what the cost is to produce a top wine (yatir forest, El Rom, etc)?
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Daniel Rogov

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Re: Wine Prices and Cost

by Daniel Rogov » Mon Oct 20, 2008 2:08 pm

I will not defend over-pricing of wines but cost is not and cannot be a stand-alone factor as it is inseparable from the quality of the wine and the reputation of the winery, both of which are major factors in the price that can be demanded. The questions that must be asked relate to what percentage of profit are being made, not always by the winery itself but by the importer, the distributor and the store.

Another part of the issue is indeed whether a winery can produce wines that will compete well pricewise. And, of course, the perception of the potential buying audience - whether, for example, a truly fine Israeli wine is worth the same as an equally fine Bordeaux or Tuscan wine. And, to add to that, as you point out, the question especially perhaps in the case of kosher wines, of how valued those wines are in comparison to other both less and more expensive kosher wines from other countries. No-one, for example, has ever accused the better kosher wines of Bordeaux of being cheap.

It is, for example, quite apparent that from an economic position, boutique wineries are not set up in order to produce lower or even moderately priced wines. On the other hand, large wineries can do so, but that primarily in their popular or entry level series. Here the question is partly related to whether those entry level wines can compete in quality at say a $5.00-7.00 level with similar wines from other countries.

Ah...if only I were an economist. Then I might actually understand some of this.....All of which does, however, go a long way in explaining why the issue of "value for money" is a very subjective issue.

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Re: Wine Prices and Cost

by Menachem S » Mon Oct 20, 2008 2:34 pm

I understand that wine should be priced by quality - my question is what does it actually cost to produce a bottle of El Rom, or Yatir Forest?

The reason I ask is that is at least a starting point. If it costs $10 all in (with distribution, marketing, import, etc) then the pricing is up to them and they can charge less but choose to price this way.

If the cost is $40 a bottle, then the price is mostly a function of cost and not of their discretion.

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Daniel Rogov

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Re: Wine Prices and Cost

by Daniel Rogov » Mon Oct 20, 2008 5:29 pm

Menachem, Hi....

Your question is a valid one but the only ones who can answer it definitively are those at the winery and my guess is that they are not about to do so.

The question I would ask in return relates to how much it costs to produce a bottle that retails for US$4-6. In some cases I would suggest that the bottle, the label and the cork involve more of an outlay for the winery than the wine itself.

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Barry K

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Re: Wine Prices and Cost

by Barry K » Thu Oct 23, 2008 12:31 am

Hi menachem
The large price increases are occurring on the premium wines. These are supply and demand driven not cost driven.
As to the cost of manufactue i guarantee you that number is more dependent on the accounting methodology than anything else/ ie cost allocation can vary when you are making various products

The real question is will demand hold up with these huge proce increases. and will the vineyards increase production..

DR : any info on increased plantings at the premier vineyards?
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Re: Wine Prices and Cost

by Menachem S » Thu Oct 23, 2008 7:03 am

The question is whether the Isreali wineries have the ability to price their wines more competitively versus the premium wines of the world.

If it "costs" them $40 to produce a bottle of premium wine, whether it's the relatively low production of these wineries, something about the kashrut, etc, or are they choosing to charge what they charge?

If they want to expand the foloowing, beyond kosher consumers and further beyond jewish consumers, they should price competitively. They will win in the end as awareness and demand increases.
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Re: Wine Prices and Cost

by Barry K » Thu Oct 23, 2008 12:16 pm

Hi DR
Undestandably you would not be privy to the wineries accounting but do you have info on new plantings..
Menachem at the end of the day if the winery can sell all their product for a zillion dollars a bottle , thee their cost of production is irrelavnt . And if they can't they will find a way to lower the prices .
The anser is in the hands of the consumer (demand) and the vineyards (supply )

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