The U.S. dollar, even in its weakened state, is worth about three-quarters of a euro. So why does a quality wine that costs €3 in Europe end up costing as much as $12 in the U.S.? Doing the math at the current exchange rate makes it a $4 wine.
Obviously, some of the difference is transportation. Yet Australian wine manages to get the 9,400 miles to the U.S. without that kind of markup. And, in fact, cheap Aussie wine often costs less in the U.S. than it does in Australia (and no, I don't understand why that is).
There are two explanations. The first is the Wine Curmudgeon's Everybody Wants a Piece of the Pie theory. This is one reason why European wine has steadily lost market share to Australian and South American imports, which take smaller pieces of the pie to keep the wine's retail price down. For European wines, the exporters, importers and distributors all take a full cut before the wine gets to the retailer, who then adds his or her markup. That works out to about a one-third increase at each stop in the supply chain -- $4 to $5.50 to $7.25 to $10.75 to $12.
The less cynical explanation comes from one of my pals on the distributor side of the wine business:
"First, add freight to the port. We can't buy a container of the wine if we don't know how it will sell, so that raises the cost. Even if there is no importer -- just winery to us -- we still have to do all the importer work, label approval (Fed and state) and lab analysis (FDA requirement). Next, non-resident sellers permit is required by some states. OK, we get it to the port. Then we have customs and homeland security hurdles. Then freight from port to primary warehouse. Then interstate shipping, cause we have to use fuel to get it to Dallas so you can write about it."
The graphic is from Boroda003 of Russia, via stock.xchng, using a Creative Commons license