Fine Wine and Spirits

There are basically two schools of thought as to what justifies the price of an expensive wine. The first school of thought suggests that the price of the wine should be based on the actual cost of production of that particular category of wine.

Of course, all the other overhead factors like transportation, marketing, retailing, profit margins and
other aspects would be added on to the cost of production. But the basic premise is that the price should reflect the various costs involved in finally getting the wine available to the buyer. This seems to be a rational idea and there are a lot of supporters for it though that is obviously unrealistic due to supply and demand.

The second school of thought suggests that the price of the wine should be based on the demand from consumers. If there is more demand for a particular category of wine, the price for it should be higher too.

This is more likely an idea that is promoted by wine makers and distributors. In effect, what they are saying is that if the consumer is willing to pay a higher price, then the wine should be priced as such, giving no regard whatsoever to the actual cost of making the wine. This is a more demand-driven logic that is beneficial to makers of wines and is the way things work in the real world.

While both these ideas seem to have some sense in them, the consumer is always left wondering whether they are paying the right price for what they are purchasing. Especially since some wines cost as much as several thousands of dollars, there is always the nagging thought as to whether the price is really justified.

When it comes to the question "when is an expensive wine worth its cost?", the idea proposed by the first school of thought seems to make more sense. While this school of thought is more or less favorable to the consumer, at the same time it also ensures that the wine makers get their profits too.

What is most important to know is that it is really worth paying a steep price for certain wines because it is
incredibly difficult to make those wines. Certain expensive wines are made from grapes which are cultivated in tiny, unique plots of land, which produce very low yields.

Some other wines are cultivated on steeply terraced slopes making the work extremely difficult. Such wines can definitely demand a higher price. Thus some feel that the factor that determines the price of the wine should be the difficulty of that particular wine's manufacturing process. If the cost of producing the wine is very high, then it can be priced high as well.

I like to look at it in terms of office work. As a boss or manager, are you more interested in efforts or results of subordinates? We would like to think that they are one in the same. Of course, they are not. Results are far more valuable than efforts. I would venture to say the same is so for expensive wine.