Why Does This Glass of Chardonnay Cost $21?
In Paris, anyone looking for a snack can find a baguette with salted butter and a glass of Sancerre for a mere 11 euros. In Barcelona, a glass of wine at a local tapas might be 2.50 euros, the same price as a small bottle of Diet Coke at the corner bodega. And in New York, the price of a glass of wine at many restaurants … has crept far past the $20 threshold that once might have seemed unthinkable.
Yet, ask Gabriella Borg Costanzi, the service and wine director at Le Crocodile in Williamsburg, why a five-ounce pour of 2021 Sandhi Sta. Rita Hills Chardonnay costs $21 at her restaurant, and she will tell you that it’s actually something of a bargain. (A Cabernet blend from Bordeaux is on the list for $22 a glass; Champagne is $25 per serving.) “People sniff at California Chardonnay, which is understandable, because what they usually get is high-volume wine from a huge flat plain that’s baking hot and with fertile soil,” she says. “I remember the first time I tasted this — I’m not a very holistic or spiritual person, but there are moments when I taste a wine and something happens, my world changes.”
The wine is, by all measures, good; its balance of tannins, alcohol, and acidity mimic a higher-priced Chablis. But the real reason it commands a premium price is not necessarily its pleasant notes or the organic farming used to grow the grapes. It’s the three-tier distribution system that determines how wine, beer, and spirits are distributed in the United States, a complicated network created after the repeal of Prohibition, with each state maintaining different regulations on how alcohol can and cannot be sold. “The constraints of how you can get wine, where you can buy it, and how you can buy it are way more complicated in the U.S. than in Europe,” says Pascaline Lepeltier, a former sommelier in France and Belgium and currently the beverage director at Chambers in Tribeca. In France, wine producers can sell directly to French retailers and restaurants. The U.S., meanwhile, usually requires intermediaries.
The first tier is winemakers, who sell their wines to distribution companies. This is where the pricing runs up against the relative youth of America’s wine-making industry, at least as it compares to Europe, where families have owned their operations for generations. “Most domestic wineries are working with some kind of debt,” says Sashi Moorman, managing partner and co-founder of Sandhi Wines and the CEO of Provignage, a wine-centric branding agency that works with small wine producers. “That goes down to the bottom line, which is where you have to try to price your wine.” On top of that, the minimum wage in California is $16 per hour, with some counties and cities offering a higher wage than the state minimum. Agriculture, however, is not a nine-to-five job. There’s overtime, and organic grapes need to be grown without herbicides or insecticides, before they’re handpicked by field workers, unlike mass-produced Chardonnay, which is usually machine harvested. Moorman says Sandhi only breaks a little more than even when it sells the Sta. Rita Hills Chardonnay between $15 and $18 per bottle to the wholesale distributors.
From there, a wholesaler’s margin is, on average, 30 percent. That covers operating expenses, including sales- and marketing-team salaries, shipping and delivery of wine, and storage in temperature-controlled warehouses. Wholesalers then sell to the final tier: retailers and restaurants. The nameless “fourth tier” is consumers, and if you’re selecting wine by the glass at a restaurant or a bar, you can typically expect the glass to cost the same amount that the restaurant pays for a bottle.
Le Crocodile prices its wine differently. A standard 750-milliliter bottle contains about five glasses, but instead of dividing the bottle price by five, Borg Costanzi divides the bottle price by how many glasses she thinks she’ll be able to sell, factoring in waste and how long the wine is open, an important factor, as this Chardonnay uses indigenous yeast to ferment the wine, which runs the increased risk and acceleration of spoilage.
The Chardonnay is among Le Crocodile’s lowest-selling wines BTG, but Borg Costanzi is an advocate. “I would love to make this $14 a glass so that everyone can try it,” she says, “but at some point, I would have to put it back to normal, because I’m not going to devalue the wine.”
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