Grapes are just one of a bunch of costs reflected in the price of wine

Key Points:

If you have a spare $5000 you might want to secure some 2005 Chateau Petrus. That will buy you just the one bottle of what is one of the world's most expensive wines.

There are many reasons why some wines can be very expensive and others so cheap. One factor is the cost of the grapes, although this often represents a surprisingly small percentage of what you pay.

On top of the costs of land and labour, climate plays its part. Warmer regions can ripen higher quantities of grapes, resulting in comparatively cheap grapes.

In cooler climes such as ours, the yield of fruit is lower and viticultural costs higher. This makes for more expensive grapes, but also greater concentration and quality. That's why you don't find many 100 per cent New Zealand wines on the supermarkets lower shelves.

What happens in the winery also has an impact. Processing large volumes in big tanks is relatively cheap. Making small batches aged in oak is a far more costly. Then there's the bottling and packaging, which - if there are snazzy labels and chunky bottles - can contribute more to the price of a bottle than the grapes.

Before the winery can take its cut, financing loans, marketing and other overheads have to be paid.

A winery's profits can often be a single-figure percentage of the bottle's retail price, with the taxman and some parts of the distribution chain reaping substantial rewards for their labours.

Before the final GST, add 30 per cent to the price at the winery to cover distribution costs and returns, another 35 to 50 per cent for the retailer - or 100 to 300 per cent by a restaurant - and you have your final price.

These margins may seem high, but are at the lower end internationally in a labour-intensive industry where few are making big bucks.

Most wines we drink reflect these costs, and quality rises with price. Grossly overpriced products are soon smoked out in a competitive and critical market, but there are exceptions. In the bargain belt, wines sold through an online outfit such as Blackmarket can come at lower figures. Here, a winery sells direct to the public though its website, which cuts out a chunk of distribution and retail costs.

Wines such as Petrus operate in a completely different sphere - demand for its limited production means people are prepared pay top dollar.

Although Petrus and other top-class wines usually spring from some of the most valuable vineyards on the planet and are meticulously made, their price - like all luxury goods - no longer reflects their intrinsic value. Wonderful wines they are, but unless you're an investor, good value they ain't.

Price-Conscious Picks
Overlooked Icon
Penfolds St Henri Shiraz 2003 $69

Penfolds Grange may be the Southern Hemisphere's most iconic wine, but for those unable to afford the $500 for its latest release, an alternative can be had in St Henri. With a history almost as long as its big brothers, it's a concentrated and silky shiraz with a palate of black cherries, plums and spice, and less overt oak influence than other top Aussie shirazes from being matured in large old oak casks.

*From Fine Wine Delivery Company, Glengarry and fine wine stores.

More Affordable Alternative
Stonyridge Airfield 2004 $40

New Zealand is arguably still establishing its own icon wines, but one contender must be the expensive and eminently collectible Stonyridge Larose. Again, easier on the pocket is its second label, Airfield, a fragrant bordeaux blend with elegantly rich dark fruit and spice.

* From Glengarry.

Cut-Price Class
Shepherds Ridge Chardonnay 2004 $13.99

Another lesser known line, this time from Wither Hills, that offers great value everyday wines exclusively online. Cheap chardonnays can be sweet or insipid, but not this one with its ripe stone fruit, citrus and toasty notes from barrel fermentation rather than the oak alternatives used to flavour many wines at this price.

* From www.blackmarket.co.nz