What's a Bottle of Wine Worth?

I took a tour of Penfolds yesterday and was really struck by how industrial it was. When we visit Napa wineries there's almost always a customer-facing emphasis on the care and individual attention given to each grape, every barrel, and practically every bottle. I kept thinking about Opus One where they refuse to pump any grape product but rely instead 100% on gravity to gently move their wines through the production process. But Penfolds was the opposite - they are all about big production with huge crushers, mountainous fermenters, and acres of air conditioned barrel "sheds." During the tour I asked if Grange, their AU$500 a bottle wine, went through the same process. I expected them to say something along the lines of, "no, we have a small special winery just for Grange." Instead I was told that Grange went through the exact same sets of crushers, pipes, fermentation tanks, and new American oak barrels. The best grapes from Penfold's vast portfolio of vineyards are chosen for the Grange, and there are some differences in when and how long the juice used in Grange is on wood, but it pretty much goes through the exact same machinery.

So this led me to wonder just why this wine is worth so much. I agree, it's a really top class Shiraz/Cabernet blend, but is it really $500 great? It's now obvious to me that the cost of making the wine is only marginally greater than any of Penfolds' other "Bin" wines. In fact, I suspect the cost of making Grange is much less than that of making their "Magill Estate" which does come from a very small dedicated vineyard using small scale production equipment yet sells for less than $90.

I strongly suspect that Grange's price is purely market driven. Grange is probably the most widely collected wine in the world. Almost everyone I know who has even a moderately sized wine cellar has at least one Grange in their collection. People love to collect Grange verticals. This demand coupled with the Grange mythos continues to let Penfolds earn huge margins on this wine. And the sad thing is, I suspect a very large percentage of those $500 bottles never get drunk.