Wine Economics Part II: Varietals

Wine Economics Part II: Varietals

The New World has successfully managed to bring the names of specific grapes (a.k.a. varietals) to the forefront of our minds. Most Old World wines did not traditionally include varietal labeling, opting instead for location specific labeling–Pauillac, Rioja, or Barolo, for example. While much of the Old World continues this original labeling strategy, today I will focus on the varietals within the bottles, regardless of location, and their effect on the bottle price. If you have not read Wine Economics Part I: The Land, partake now.

Pinot Noir and Riesling serve as wonderful varietal exemplars. Respectable examples of Pinot Noir typically start at twice the price of their Riesling counterparts. Why? Winemakers age Pinot Noir, like many reds, in oak barrels–typically French oak for Pinot. New oak barrels from reputed Coopers in France cost $800-3500 per barrel (each contains 300 bottles of wine). This simple reality has obvious consequences for the finished price of many red wines. Cheaper red wines (under $10) frequently use oak chips or staves to reduce the economic impact, but nearly all well-respected wineries continue to use oak barrels.



Once beyond this clear difference, we now must dig deeper. Pinot Noir has earned a unique and significant reputation as the Poet’s Grape, the Devil’s Grape, the Seductress. All allude to the ethereal quality of this grape, which not only presents itself in the glass, but also in the vineyard. Pinot has devastatingly thin-skin, which has unfortunately made many vineyard managers and winemakers bald before their time–you think the presidency is trying! The fickle nature of Pinot Noir requires laborious attention in the vineyard, and this attention costs money–more hands and eyes on the vines. 

Riesling, however, suffers not from these monetary drains (or from want. . . we will get there). Riesling’s crisp acidity and frequent sweetness (for the semi-sweet and sweet wine lovers) needs no oak to shine. Many consider Riesling the ultimate terroir wine, as it has a unique ability to show its place, and the lack of muddling oak contributes to this reputation. Equally important, Riesling is hardy (like Cabernet Sauvignon) in the field. While Pinot Noir needs to be watched for downy and powdery mildew thanks to its volatile attributes, Riesling will quietly go about its slow, steady business of ripening like a stalwart tortoise.

Riesling also suffers not from want. Perhaps the most under-appreciated wine, except by sommeliers*, Riesling still manages to sell moderately well. However, it does not have the reputation for allure or stateliness like Pinot Noir and Cabernet Sauvignon. This diminutive reputation results in deflated demand at the mid and high price points. My recommendation to those on a budget seeking exciting wines with a sense of place–drink Riesling. You will find excellent examples of the varietal at $15 versus $25-40 for Pinot Noir. This lesson extends beyond Riesling to all the other under-appreciated varietals of the world, especially the lesser-known local grapes of many Old World wine regions.

  • Douro, Portugal
  • Loire Valley, France
  • Veneto, Italy 

These three Old World regions produce exciting, unique wines that many have never tasted. Why? The lack of varietal name recognition plays one role. Have you heard of bastardo, tressallier, or glera? These grapes take the main stage in these regions (with others alongside). In short, drink more grapes (and from locales) you have not heard of before. With help from your friend–the local wine shop employee you know (remember, this is a must)–you will find wines that surprise and delight.

The counter-examples, inflated bottle prices, lay in wines where you find varietal reputation aligning with a respected location–Napa Valley Cabernet Sauvignon and Willamette Valley Pinot Noir, for example. Reputation carries great weight, and not only the reputation of the varietal. Next time, Wine Economics Part III: Reputation.

As mentioned in Part I, many simplifications exist in the information above. Economic factors certainly overlap and intertwine in a complex manner–vinification techniques, location, varietal reputation and costs, and reputation are a few of the forces at work. However, generalities are necessary to discuss the topic meaningfully, even if imperfectly. Today is an attempt to isolate the varietal’s economic impact.

*Sommelier = a wine professional, frequently working in reputable restaurants or wine businesses.

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