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Economics of Wine

Ever wonder why some bottles of wine cost $5 and others $500? The New York Times offers an explanation of why wine costs what it does.

I guess I hadn't given it much thought, but everything from the quality of the cork used, to whether the aging barrels are reused, to the yield per acre of grapes factor into the price. So, too, do the good old rules of supply and demand. And wine is also priced to some extent in order to create a perception of its quality. As the article explains:

Price also plays into the perception of value, said Vic Motto, a senior partner at Motto Kryla Fisher, a wine industry consulting company in St. Helena, Calif. "If I made the best wine in the world and charged $1 for it," he said, "no one would believe it was the best. They'd say it's a great bottle of $1 wine."

Now if only they'd explained why the same bottle of wine that is $15 at the liquor store is $50 at a steakhouse...