31st March 2015

What Price Brand?

By Martin Skeet

Just which red and white labeled drink is the world’s most valuable drinks brand?

After an interesting debate on what might be the greatest value that a brand brings to product, I remembered Coca Cola and how it is considered to be the most valuable drink brand. Its value is often expressed as a percentage of its bottle sale price. The consensus is that its brand accounts for around 75% of the cost of a bottle of coke.

Now, I know there is much more to brand value than simply what you can mark a product up by. And, yes, a brand identity is much more than just a label, but for the purposes of this blog (stick with me – it’s fun) we are going to focus on that metric.

So, with Coca Cola in mind, it occurred to me that perhaps the fine wine market might just have a higher value added via brand reputation.

If only I thought there was some way of knowing how much it really costs to make a very good bottle of wine. Bordeaux’s top wine producers are notoriously secretive about their operations. They have been recognised brands since 1855 when French Government officials attempted to classify French wine for the Grand Exposition of the same year. So, like Coca Cola (founded in 1886), they are some of the oldest and most recognised brands around.

Chateaux Petrus’s status as the most famous and most expensive wine on the planet is legendary.

Chateau Petrus has been around since 1837, and its status as the most famous and most expensive wine on the planet is legendary. To be fair, it produces only around 30,000 bottles a year compared with the equally renowned Chateau Margaux, which produces around 300,000 bottles a year. So its status as a rare wine is well deserved. The 2005 vintage (the greatest post war vintage apparently) at today’s prices can be found at a startling 4,500 Euros a bottle at wine retailers.

So, what then is the real cost of a bottle of Petrus? The Revue du Vin de France, Frances most respected wine magazine, analyses the cost of Petrus’s wine production and has the answer. The magazine has looked at the various elements of the cost of a bottle from glass, label, cork to contents and they say the final cost turns in at around 30 Euros. This breaks down to 10 Euros only for the bottle and a special anti-fraud technology and the rest for growing the grapes, harvesting and bottling.

Chateaux Petrus’s brand accounts for a startling 99.3% of its bottle price.

Working with 4,500 Euros, Chateaux Petrus’s brand accounts for a startling 99.3% of its bottle price.

Bear in mind also, that so famous is Petrus in the wine world that is has virtually no marketing costs: it has no website, and very little advertising. Now that is a very cost effective and valuable drinks brand.

So stand aside Coca Cola for another dark coloured drink with a red and white label.