LEARNING WHAT FACTORS DRIVE WINE PRICES CAN HELP FANS CRACK THE MYSTERY OF LIQUOR STORE LOGIC WITHOUT BREAKING THE BANK

By Blanca Torres, Times Staff Writer

Mike Williams says he can taste the difference between a $5 bottle of wine and a $10 bottle. But when it comes to contrasting $30 and $60 bottles, his tastebuds don't say much.

Instead, he said, "I'll probably go for a bottle of Charles Shaw. It suits our purpose." At $2 a bottle, Shaw's wine, also known as the "two-buck Chuck," is a "good everyday wine," Williams said.

The varieties and price choices for wine abound, leaving consumers like Williams to wonder what's in a price tag.

A number of factors -- from the type of soil in which the grapes were grown to how long the wine was aged -- can influence the price of a bottle. The main component, experts say, is the perception of quality, which is often based on where the wine originated or the winemaker's name.

"If people are willing to pay $50 for it, then charge $50 for it," said Tony Lima, a wine industry expert and economics professor at Cal State East Bay. "What matters is what people out in the market are willing to pay."

Wine consumption in the United States increased by 19 percent to 668 million gallons in 2004, compared with 543 million gallons in 1999, according to the San Francisco-based Wine Institute of California.

Accordingly, wine production has increased dramatically, which helps keep prices low, Lima said.

The wine market functions on the basic supply-and-demand model, Lima said, but demand largely depends on what kind of quality a consumer is seeking.

"There's two parts," he said. "First, the mystique: 'Oh you're drinking a $100 bottle of wine.' The other part is what's in the bottle."

Producing wines is a costly endeavor. Expenses include land, farming, labor, harvesting and processing. Operating costs also can depend on the type of wine grape grown -- grapes for pinot noir, for example, are one of the more expensive to grow while chardonnay and cabernet wine grapes are cheaper, said Wayne Wickham, owner of Wine Sellars in Danville.

"There's a difference between Napa and Lodi," Wickman said. "There's a big difference in how much sun they get, the temperature, the type of soil, the drainage. -- Some excellent wines are made in rocky soil." Those details often are apparent only to trained connoisseurs, not average consumers like Lisa Songster of Martinez, who was buying wine for her siblings last week. "I'm just going for the one with the best label in my price range," Songster said. Hoping to spend between $5 and $8, she turned down a $15.99 bottle of Cardinal Zin, despite its "great label."

"I don't want to spend that much," Songster said. "If it's not good, at least it will have a good label. I'm a sucker for the marketing."

Many retailers -- such as Concord-based Beverages & More!, WineStyles in San Ramon and San Francisco, and Wine Thieves in Clayton and Lafayette -- boast filling most of their wine inventories with "value-priced" bottles.

For example, at Wine Thieves, 75 percent of the store's wines cost less than $10.

At Wine Sellars, the best-selling wines range between $10 and $25 a bottle, Wickman said, but the retailer has lots of customers that shop in the $30 and above range.

Consumers who opt for pricier bottles are looking for more sophistication, layers of flavor, stronger flavors and a longer aftertaste, Wickman said.

"Someone who buys a $125 bottle wine is probably going to lay it down for five to 10 years and enjoy the results of the aging process," he said.

Some wine drinkers just want a good deal. That's when Shaw's "two-buck Chuck" becomes a good option. The brand is made by Ceres-based Bronco Wine Co. and is sold exclusively at Trader Joe's grocery stores. Bronco makes about 30 different wines priced from $2 to $20. "Efficiencies of scale allow us to produce wines that are of high value," said Harvey Posert, a Bronco spokesman. "It happens because Bronco is a high-efficiency, high-volume business, and we found a partner in Trader Joe's. Both sides were willing to reduce margins and make this incredible value."

Different wine varieties are made with the same type of grapes, such as chardonnay or cabernet, but the source of the grapes vary. Some wines are labeled from California because the grapes may have come from different regions throughout the state. Other bottles list a specific place, such as Napa or the Santa Ynez Valley, indicating where the grapes were grown and processed.

"I know my friends come here for two-buck Chuck," said Jan McDonald, who was buying a bottle of wine as a gift last week in Trader Joe's in Concord. "Then I thought I'd buy them a better bottle of wine, but I don't even know what I'm looking at."

She quickly retreated to a large two-buck Chuck display near the store's entrance.

Despite its popularity, the brand receives criticism for using surplus grapes, which are often considered low grade.

"You're going to get a wine that you can drink right now and that's not going to have a lot of what is called complexity," Lima said. "You're not going to swoosh (it) around in your mouth and make profound statements about its flavors and textures."