25-August 2010 Phil Mercer

Australian wine producers say that counterfeiters are threatening the country’s multi-million dollar trade with China as exporters discover more fake Australian wines in China.

Australia sells about $127 million worth of wine in China a year. Australian producers have hoped that China could become their biggest market within five years, as demand in the United States and Britain suffers because of economic problems.

With sales to China on the rise, counterfeiters are taking advantage. Winemakers say there is growing evidence that imitations of popular Australian labels, including the famous Penfolds wines, are found in Chinese shops and at trade fairs.

Vintners fear that substandard copies threaten the image of Australian wine in China.

Good for business?

But Justin McCarthy, the owner of wine exporter De-Mac Australia, said while the problem appears to be growing, bottles with fake labels could inadvertently boost demand for the real thing.

“I was at a wine fair in Chengdu around four to five months ago. It was incredible the amount of copied-type wines that you would see there,” McCarthy said. “There was actually a full stand – the stand was Benfolds, looked exactly like the Penfolds label but with a B where the P is. It is very hard to try and gauge exactly what damage it is doing. On one hand it can be seen as a terrible thing, but on the other side, it is getting more drinkers into the market,” said McCarthy.

Australia is one of the world’s largest wine producers and its wines are sold in more than 120 countries. Exports are vital to the Australian economy and wine is fifth on the list of farm exports behind beef, wheat, wool and dairy products.

Market growth

Official figures for 2008 show that the top five international growth markets for Australian wine were Denmark, Hong Kong, United Arab Emirates and Japan, while China was ranked number one.

Over the past six years, wine sales to China, mostly of shiraz and cabernet sauvignon, have risen by more than 80 percent a year. But foreign companies all over the world complain that their goods are illegally copied and sold in China. Pirated goods range from movies to clothing to medicines and foods.

Last month, Australian wine producers helped Chinese authorities raid a suspected counterfeiting operation in the southern city of Guangzhou.

Demand for foreign wines is growing among the swelling middle class. French exports dominate in a market that has been largely polarized — drinkers buy very cheap bottles or very expensive ones.

BEIJING — — At a time when recession-pinched Americans are swilling Trader Joe’s “Two Buck Chuck,” Sun Xiao thinks nothing of entertaining his friends with $150 bottles of wine at his private club.

“I like wine — very rich wine,” Sun, chief executive of a real estate investment firm, said one evening as attendants in traditional Chinese gowns stood nearby, ready to serve up an expensive bottle at his beckon. “It’s the perfect example of humanity and nature living in harmony.”

Sun’s appreciation of foreign wine is increasingly shared by others in China’s swelling middle class, many of whom are replacing the long-popular “baijiu” grain liquor and beer at their dinner tables with French Bordeaux and Napa Valley zinfandels. And that has the U.S. wine industry tipsy with anticipation.

“More and more Chinese want to take good care of their health and are shifting from baijiu to the grape,” said Jimmy Ye, an executive in a Shanghai investment fund and a wine convert.

Opening up an expensive bottle — say, a $4,000 Chateau Petrus — to seal a business deal signals the seriousness of the relationship, said Wu Jianxin, owner of the Beijing private wine club QingPing HuiGuan, which serves only revered French wines. “It shows generosity and indicates you are cultured.”

But China’s new appreciation of foreign wine also reflects “a nouveau riche mentality that the most expensive must be the best” that is prevalent in China’s booming economy, Wu said.

“People ask me, ‘What’s the most expensive wine you have?’” said Gaylen Richardson, vice president of Via Pacifica Selections, a wine exporter started by David Duckhorn, a member of the prominent Napa Valley wine family who set up a Shanghai store about two years ago. “I’ll say Quintessa, about 2,500 yuan ($366). They’ll say, ‘That’s not expensive enough.’”

Richardson is among a growing group of pioneers seeking business in China after wine sales for California wineries last year fell for the first time in 16 years, according to wine industry consultants Gomberg, Fredrikson & Associates.

“I get a call from wineries all the time. They are sitting on inventory,” said Christopher Beros, managing director of California-China Wine Trading Co., which has offices in San Francisco and Shanghai. He holds regular wine tastings with his nine-person China staff to educate them on the subtleties of vintages and himself about the Chinese palate. One reason Chinese have a strong preference for red wine, he has learned, is they believe the color signifies good luck.

“China is literally the wild, wild West of the wine world,” said Eric Pope, who oversees international wine programs for the San Francisco-based Wine Institute, a trade group representing more than 1,000 California wineries.

Wine consumption in China, promoted in part by a small but growing domestic wine industry, nearly doubled from 2004 to 2008 to about 900 million bottles, making it the eighth-largest wine market in the world, according to Vinexpo, organizer of one of the world’s largest wine and spirits conferences. Over the next three years, consumption is expected to soar 32 percent, to 1.26 billion bottles. The United States, the world’s second-largest wine market, consumes about three times as much wine as China.

Much of China’s wine market is polarized — consumers either buy cheap bottles for a few dollars or dole out more than $1,000 per bottle for elite French vintages, Duckhorn said. “Our job is to open up the middle market, $15 to $100 a bottle,” he said.

Imported wine in China is slapped with a 50 percent tax, so it’s pricier for Chinese to explore U.S. vintages than it is for Americans. But cost is not the only challenge.

U.S. wine makers face tough competition in China, especially from the French, who have been selling wine in China for decades and who aren’t above a little vinous trash-talking. They promote their wine as superior to all others.

“The French wines always come in first in China,” said Yanguang Jin, general manager of AWA (Shanghai) Trading Co., a year-old company that is importing California wine. In 2008, French wine represented 46 percent of all imported bottled wines, while the United States had only 5 percent of the market, according to the U.S. Department of Agriculture.

The Wine Institute has launched a marketing push in China to educate the newly wealthy masses about California wine, whose fruity intensity is more in line with the Chinese palate, some sellers say.

In addition to competition from France, Italy, Australia, Chile and other wine-making nations, U.S. wineries also face a threat common to many industries in China — copycats.

“There are a lot of fakes, and the government has one eye open and one eye closed,” Wu said. “The fake wine industry will employ a lot of people.”

Widespread official corruption in China is another problem.

“A full case arrives on the dock and the inspector says, ‘I have to keep one bottle. It’s called inspection,’” Wu said. “A cargo comes in and two cases are taken.”

The success of California wines in China will depend largely on word-of-mouth branding and “guanxi” — gaining favor through networking and relationship-building. A bit of unorthodox salesmanship might help as well.

Richardson sometimes slings a wine bag around his body and charges through the streets of Shanghai: When he spots a restaurant, he walks in and asks if the managers would like a taste. On other days he organizes wine tastings at Via Pacifica’s wood-paneled outlet. Wine racks along the wall hold such star wines as the Goldeneye pinot noir, served at President Barack Obama’s inaugural luncheon.

HONG KONG — When the Hong Kong government eliminated a 40 percent tax on wine last year, oenophiles, importers, retailers and entrepreneurs popped open the bubbly. Then they quickly got down to business.

Auction houses rushed to hold multimillion-dollar sales. Neighborhood wine shops, classes, tastings and workshops appeared where there had been none before. Jeannie Cho Lee, a Master of Wine, is releasing her first book, “Asian Palate,” here next month.

And two major wine expositions were organized, with two more on the way: The Hong Kong International Wine and Spirits Fair in the coming week and Vinexpo Asia-Pacific next spring.

Give this city a 40 percent price cut, and it runs with it.

Wine imports soared 80 percent in the 12 months after the tax was dropped, in February 2008, to a total of 3.2 billion Hong Kong dollars, or about $400 million, according to the Hong Kong Trade Development Council. As a comparison, mainland China, with a population of 1.3 billion, imported $184 million worth of wine in 2007, though that number is expected to grow.

Although some of these enterprises might find success elusive because of the hard economic times or the sudden saturation of the market, the heightened interest in wine is palpable.

Two new companies in particular are taking novel approaches to wine-related services here.

At the top end of the market is Sarment, which started a custom sommelier service in Hong Kong and London in May.

A quirkier enterprise is The 8th Estate Winery, which is not going to let a little inconvenience — the fact that Hong Kong has little arable land and no vineyards — get in its way. Using imported flash-frozen grapes, it presses, ferments, ages and bottles its own wines in a Hong Kong high-rise. It opened for business in December 2008, and most of its wines are becoming ready now.

Sarment offers round-the-clock, individual access to top sommeliers to a small number of clients. It offered 25 memberships this year, of which 18 have been reserved, and is planning to have no more than 450. There is a membership fee of £50,000, or $83,000, plus a £12,000 annual fee.

The service employs four sommeliers, all of whom have worked at restaurants with two- or three-star Michelin ratings.

“It’s very much one-on-one service,” said Niels Sherry, the company’s managing director, during a trip to Hong Kong from London, where he is based. “Our sommelier will visit you in your home, look at your cellar and make suggestions. If someone was in a restaurant and couldn’t decide between the ’95 and the ’96, he could text one of our experts.”

“Some people are going to enjoy pulling out their phone and saying, ‘I’m going to call my sommelier!’ Others will be more discreet,” he said.

While limited in number, the clientele varies greatly.

“Some clients have thousands of bottles. Another has just finished a new house and has no bottles. He wants us to help him start from scratch,” Mr. Sherry said. “We have older, experienced collectors, as well as newer wine lovers, especially from China and Russia.”

Philippe Messy, a sommelier based in London and one of Sarment’s co-founders, said he wanted to push clients past “just Lafite-Rothschild and Pétrus.”

“We learn about your tastes and requirements, and then we challenge you,” said Mr. Messy, who was also visiting Hong Kong.

He also said the service could help oenophiles, particularly in burgeoning markets like Hong Kong, from getting carried away by the frenzy of buying and selling.

“We see bottles going for auction here in Hong Kong, selling for three times the estimated price,” Mr. Messy said. He added that Sarment was able to secure hard-to-find bottles directly from winemakers and collectors all over the world.

But the company does not allow its employees to sell wines or to charge a commission on any sale. “We are not wine merchants,” said Richard Green, managing director for Asia. “We’re unbiased.”

Mr. Sherry said one client was recently offered a bottle of Louis XII Black Pearl cognac for €60,000. A Sarment sommelier advised that it was worth far less, and the deal fell through.

The bottles at a recent tasting at The 8th Estate, named in part because eight is a lucky number in Chinese culture, were significantly less expensive, averaging about 250 Hong Kong dollars, or $30.

Its 2007 vintage, made of grapes from Washington State, yielded whites, reds and dessert wines. The 2008 grapes were mostly from Italy. The company is looking at Australian harvests for future vintages.

Dozens of visitors, mostly from Hong Kong and wielding digital cameras, milled around rooms filled with oak barrels and lit with chandeliers.

Lysanne Tusar, a director at the winery, said that most of its initial sales had been of the finished product. Customers liked the novelty of having a wine made in the urban center of Hong Kong.

But their goal is to sell custom wines to serious wine lovers by the barrel. The price of a barrel, which yields at least 280 bottles, starts at 66,000 Hong Kong dollars.

“With the advice of our winemaker, you can create your own,” Ms. Tusar said. “You can mix varietals, you can customize your own label. It’s very popular with corporations, weddings or as an anniversary gift.”

Their grapes are shipped to a 1,100-square-meter, or 12,000-square-foot, warehouse in Hong Kong, where they are thawed, fermented, pressed, fermented again and aged in oak barrels from 6 to 30 months.

Representatives from The 8th Estate and Sarment said they had started planning their companies even before the wine tax was scrapped.

“We already felt, several years ago, that Hong Kong would be a good opportunity,” Mr. Sherry said.

By Le-Min Lim

Oct. 5 (Bloomberg) — A 6-liter bottle of Chateau Petrus 1982, a vintage described by the seller as smelling of prunes and spices, fetched a record HK$726,000 ($94,000) at a sold-out auction of fine wines in Hong Kong, spurred by Chinese buying.

The imperial, the equivalent of eight standard bottles of wine, went to an unidentified Asian bidder after a tug-of-war of several minutes yesterday. All but five of the 1,010 lots offered over the weekend sold at auction, fetching a combined HK$61.5 million, compared with host Sotheby’s presale estimate of HK$47.8 million. The last five lots were sold privately after the auction, according to Sotheby’s spokeswoman Rhonda Yung.

Estimates don’t include a 21 percent buyer commission. Consignors’ charges vary.

“The lots were priced rather low, probably to attract buyers,” said George Tong, a Hong Kong-based toy-factory owner and wine collector who said he has a 5,000-bottle cellar.

Citing a three-bottle, double-magnum lot of Chateau Petrus 1989 with a top estimate of HK$280,000, Tong said the same wine recently sold for 7 percent higher in London. The Hong Kong lot fetched HK$387,200 at yesterday’s auction.

Hong Kong is rivaling New York and London as a hub for fine wines as locals and mainland Chinese show their penchant for top-grade vintages, especially rare Bordeaux, by paying a premium for them. Sotheby’s and Christie’s International began holding wine sales in the city months after the government abolished duties on the drink in February 2008.

At the weekend’s auction, only one in 100 lots was bought by non-Asians, said Yung. Mainland Chinese led the purchasing, followed by Hong Kongers, Taiwanese and Singaporeans, she said. Nearly all seats were occupied during the morning sessions of the auction, thinning out as the day wore on.

The weekend’s wine sale starts Sotheby’s five-day auction of 2,300 artworks and gems that the New York-based company expects to fetch a combined HK$780 million. The sale continues today with the sale of fine Chinese paintings.

To contact the reporter on the story: Le-Min Lim in Hong Kong at lmlim@bloomberg.net

Last Updated: October 4, 2009 12:15 EDT

2009-09-24 14:57 BJT

When Julia Zhu left her rural home in northeastern China six years ago, the only wine she had ever tasted consisted of a glass of sweet, carbonated grape juice out of a magnum-sized bottle of Chinese sparkling cider called Changyu.

In 2007, Zhu received her certification as a sommelier from the Canadian Association of Professional Sommeliers in Toronto. She was the only female from China in her class.

“I wanted to learn something about the culture of the Western world,” said Zhu, 28. “This was kind of a bridge or channel.”

Now Zhu, one of the country’s first female sommeliers, is back in China, working to bridge the wine culture of the West with the culinary culture of the East.

“I wanted to come back to work on promoting China’s wine culture,” she said. “China needs people to promote it and to educate people that it is quite enjoyable if you have the right wine to go with food.”

Zhu leads a weekly wine club at Hilton Beijing’s restaurant One East where she works as a sommelier. On Saturdays she has a special segment on China National Radio on wine appreciation. She also holds special classes to educate Chinese on viticulture.

While two decades ago, wine consumption in China was near zero, the value of the country’s vino market has more than doubled over the past five years to become one of the 10 largest wine consumption markets in the world, according to food distribution firm Golden Dragon Holdings.

Imported brands have witnessed double-digit growth rates as wealthy younger generations living in major cities, like Beijing and Shanghai, acculturate their tastes to Western styles of eating and drinking, Golden Dragon reports.

Especially popular among young Chinese are new worlds from South America and California, said Zhu. Many in the country’s growing class of super wealthy prefer to drink expensive vintages from France, she said.

China’s domestic wine industry is also prospering. There are now 600 wine enterprises in the country, according to Xinhua.

Many of the country’s wineries have operations around Beijing where grape growing flourishes due to the region’s warm, arid climate.

Zhu divides her time educating Chinese on imported new and old world wines and foreigners on Chinese wines, which she says have matured since she left to study in Canada.

“They are getting better,” said Zhu. “There is still room to improve, especially with the balance and the finish.”

Some of her local favorites include labels from Grace Vineyard, a winery located in Shanxi province that specializes in French wine-making traditions.

Zhu said she also likes bottles from Dragon Seal and Great Wall Wine. Both have operations just north of Beijing in Hebei province. “The price is usually an indicator,” she said.

Profiting from Chinese demand for Australian wine doesn’t involve rocket science, said wine négociant Bede Doherty, but a knowledge of the Asian culture helps.

Mr Doherty sources wine from Australian vineyards and sells it through brands specially created for clients in the burgeoning Chinese market.
                 
The key objective of his Melbourne-based company Bede Doherty & Associates is to create viable brands for Chinese buyers by supplying “a product-range that is custom-designed to attract positive attention and increasing sales in China specifically.”

No small feat considering the gulf of difference between the Australian wine culture and the Chinese market. As a négociant – or dealer, brander and vendor of wine produced by smaller vineyards – Mr Doherty’s business is on track to hit $1 million in revenues this year.

 Nonetheless, catering to Chinese clients brings unique challenges.

‘Let’s get sit down and get drunk together’

Branding, for which Mr Doherty works with a native-speaking Chinese consultant, is a critical, with factors that rarely matter elsewhere.

A perfectly appetizing name in the western world may in China bring to mind unpleasant images or connotations. Ditto with numbers in a culture that places great significance on the luck – or lack of it – associated with numbers.
 
For example, the English word “bin” used in a well-known Australian wine brand is similar to the word meaning “sick” in Mandarin. Western brands incorporating the number four may bring to mind the idea of “death,” because the word and the number sound remarkably similar.

 Australian wine makers oblivious to these differences may find their wines don’t go very far in China.

Although a name like Bester, which will be used for a forthcoming brand, does not mean anything in English, it sits nicely in a market filled with brands such as Dragon Seal, Great Wall, and Xanadu Estate.

 The meaning of the sub-brands on the label, the part that would give a region or grape type, can be blunt. One brand created and exported for China has a sub-brand name in English that is similar to the Chinese symbols for, “Lets get sit down and get drunk together.”

Expectations

“The Chinese have a particular interest in owning the brand,” Mr Doherty said, “because when they import established brands from overseas, those wine suppliers often expect sales to increase by a certain rate, especially into a country famous for its phenomenal growth.”

For Australian and western companies producing household name brands in wine, there are expectations for the volume to be sold.

“It has been known for importers overseas to have brands taken away from them by the owners of the brands in the source country because they weren’t able to keep up with sales expectations,” he said.

In addition to the branding, Mr Doherty handles the production and legal issues related to wine importing which in turn allows Chinese customers to focus on the distributing their product.

Supply limits

Often Chinese importers wanting to start importing from Australian vineyards come up against supply limitations.

“The problem wineries have is that they run out of wine,” Mr Doherty said. An interrupted supply forces importers in China to either find a suitable replacement, or to import a slightly different type of wine.

The disruptions in the importation process bring an added expense and difficulty.

 Importers may have to register another type of wine to bring into the country. In some cases, it’s enough to make the importer start the process again from scratch.

With Mr Doherty’s services, the Chinese client typically takes control of the brand in China, while Mr Bede retains ownership of it in Australia.

Giving the example of the fictitious “Xylophone” brand Mr Doherty said the Chinese buyer would have to buy it from him because he owns the brand in Australia, which  protects his local competitors vying to fulfil his orders.

Quality control

Once the type of wine is settled upon with the client, Mr Doherty assures a steady consistent supply.

“It’s a manufacturing process,” he said. “One can adjust the alcohol and sugar and ph (level).”
 Part of his job, conducted from his home in Melbourne, is to sample wines, checking for taste, acid, and other aspects of its chemistry, which can be adjusted if needed.

“I do the quality control for the customers,” he said, adding that it’s surprising how many people in the wine dealing business forget to keep samples of past vintages for future reference.

 ”I keep samples of the previous wine so I know what it tasted like,” he said. “I can cross compare the new batch with the old batch.”

“It’s simple stuff. There’s no rocket science in this at all.”

Reds for China

The Chinese are primarily interested in red wine, using requesting it at $US20 a case, although Mr Doherty only sells at the US$30 a case level and above. The prices work out to about $US2-$US3 a bottle.

As an American living in Beijing explained, “There are a lot of western wines in China but of course, the market is still very undeveloped and immature.”

Local wines may cost 20-40 renminbi ($3-7)  on a menu, whereas a cheap bottle of foreign wine would be around 80 renminbi ($14).

Nonetheless, demand for western wine is growing.

Last year, the China imported 25.1 million litres of Australian wine, a jump of 84.3 per cent from a year earlier, according to data from the Australian Wine and Brandy Corporation. 

 Based on growth of that scale, the thirst for Mr Doherty’s services should remain for some time.

czappone@fairfax.com.au
BusinessDay

BEIJING, Sept. 8 /PRNewswire-FirstCall/ — Golden Dragon Holdings, Inc. (Pink Sheets: GDHI), www.gdfbhk.com, today announced that it has register its trademark of private label wine “Endless Wines” in the Peoples Republic of China.  The company has commenced its blending of exclusive grapes in Spain’s Rioja region to produce its selective red and white wines for the Chinese market.  Additionally, the company plans to market wines from different wine regions throughout the world under the Endless Wines brand.

http://www.pinksheets.com/otciq/ajax/showFinancialReportById.pdf?id=24058

Mr. Cesar Cuenca COO stated, “We have identified a unique niche in the wine market in China, we call this niche the 100RMB retail wine market.  Typically imported wine in China sells at a higher end of the wine market, we have selected exceptional grapes to start producing high quality red and white wines at reasonable cost to consumers.  Good wine does not mean expensive wine.”

Current State:
China is a large emerging country with an amazing potential of wine consumption. The influence of western eating, drinking habits and rising average incomes have been key factors in the fast development of wine market in China. China has stepped into one of the ten largest wine consumption markets in the world. The value of the market has more than doubled over the last five years and a lot of signs are showing a bright future of China wine market.

Growth Rate:
What greatly spurs the speedy growth of imported wines from wine producers around the world, such as France, Italy, Spain, Australia, New Zealand, Chile, Argentina, South Africa, Austria, US and some other European traditional wine-producing countries. The annual growth rate of imported wines is up to 13-15%.

Targeted customers:
Wine is now becoming the fashionable drink for the wealthy younger generations in China’s cities, and the “badge” drink for China’s wealthiest elite. With about 600 million young Chinese exploring new types of alcoholic drinks, the potential market for sales of wine in the future is so great without any
doubt.

Safe Harbor Statement
Information in this press release may contain ‘forward-looking statements.’ Statements describing objectives or goals or the Company’s future plans are also forward-looking statements and are subject to risks and uncertainties, including the financial performance of the Company and market valuations of
its stock, which could cause actual results to differ materially from those anticipated. Forward-looking statements in this news release are made pursuant to the ‘Safe Harbor’ provisions of the United States Private Securities
Litigation Reform Act of 1995.

SOURCE  Golden Dragon Holdings, Inc.

Golden Dragon Holdings, Inc., +1-888-889-8185

By David Hendricks – Express-News

Like everyone else, Hong Kong is struggling with the worldwide slowdown in business activity. When the recovery begins, Hong Kong might expand with a little sparkle.

A special administrative district of China since the handoff from Great Britain 12 years ago, Hong Kong has a tariff-free agreement with China. In certain sectors, it can export to mainland China without duties, giving some of Hong Kong’s trading partners an advantage, Donald Tong, the district’s economic and trade affairs commissioner for the United States, explained in a San Antonio presentation Wednesday.

One global product Hong Kong wants to emphasize is wine. “With 7 million population, there is only so much that people in Hong Kong can drink,” Tong told about 50 people attending a Free Trade Alliance San Antonio luncheon.

Hong Kong has signed agreements with numerous nations — including France, Spain, Italy and Australia — to become a wine hub for mainland China, with its 1.3 billion population.

“I know you produce wine in Texas,” Tong said.

He’s also visited with Mayor Julián Castro during his visit, part of a trade promotion swing that includes Austin, Houston and Dallas. Tong stressed Hong Kong’s low tax rates and its continuing investments to improve transportation systems.

“We are always looking for new opportunities,” Tong said, adding:

“Despite our small economy, we are the 30th-largest destination for Texas’ exports. In 2008, the state of Texas exported over $1.26 billion worth of goods to Hong Kong — ranking third amongst all U.S. states after California and New York. The top exports to Hong Kong were computers and electronic equipment, chemical products and transportation equipment.”

Tong recognized San Antonio-based Rackspace Hosting Inc., which a year ago opened a 9,500-square-foot, $20 million data center as its Asian base for worldwide customers who do business on the Internet.

Rackspace Chairman Graham Weston said the company chose Hong Kong because English is predominantly spoken there to conduct business.

“You also, in 30 minutes, can take a train to a major city in China,” Weston said. “Hong Kong is a perfect jumping-off point for China.”

What Makes a Wine so Expensive…Or so Cheap.
by Felicia M. Sherbert

Walk into any good wine shop and you’ll be surrounded by shelves, stackings, and bins of wine. Scan the shelves in search of your potential wine purchase and your eyes may glaze over due to the sheer number of choices available. Take a closer look at the bottles; you may do a double take and wonder why there is such a broad spectrum of prices. Why is one Chardonnay $7.99 and the one next to it $25?

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, it costs more per acre to plant vines in the Napa Valley than in some other California wine regions. It is cheaper for producers to buy Napa Vally grapes than planting the vines themselves. In addition, producers will most likely pay more per ton for Chardonnay than per ton of Sauvignon Blanc. 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 expensive new French oak barrels 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.