The majority of Americans are subject to a significant marketing tax. You're not going to like this, but we're willing to spend more for more wine in the United States. The margins are just fatter over here because we're so used to overspending. And wineries are continually attempting to persuade us that their wines are worth the exorbitant price tags.

Marketers take advantage of us on a regular basis, especially in the wine business. They know we believe there is a link between price and quality, so we'll presume that costly wine tastes really nice. Price naivety has been demonstrated in studies. They also know Americans love a good tale, so when a fantastic vintage comes along, the price goes up. When a bad vintage occurs, the price rises. Even if we aren't paying high taxes, the government has messed things up more than its fair share. State legislation encourages vineyards to sell through distributors rather than paying a large tax. They're similar to government-sanctioned middlemen. They keep the wine in bonded warehouses until they are able to resell it to authorized merchants such as restaurants and wine shops.

They also take a cut.

When someone spends $100 on a bottle of Napa Cab, perhaps $10-20 goes into the production costs. A large portion of the expense of selling and marketing the wine goes toward making it desirable to distributors, generating incentives for vendors to re-purchase it from distributors, and, of course, getting the brand in front of customers who will re-purchase it from the vendors.

That's why they say, "Start with a big fortune if you want to make a tiny fortune in wine." What about direct to consumer? Wine clubs, cellar door sales, and everything else?

Unfortunately, due of the high cost of sales, the majority of the Direct to Consumer market has kept to the same pricing. Unless you're 100% direct to consumer, you don't want to irritate your wholesalers by undercutting their suggested retail pricing. Not to mention that even if you sell a lot of wine directly to consumers, you still spend a lot of money every year marketing your wine through traditional channels, so it's not like you can just write off those expenses.

You and the winemaker are duped, whether by the "Tax Man" or by the  "Middle Man."

It's like a large voluntary tax that doesn't improve the wine's quality. It's all about the marketing. And the best part is that it's all completely optional. We have chosen to participate in this system. While the government does compel wholesalers in a few places, wineries are increasingly gaining the ability to sell directly to consumers in most regions of the country. That money also does not go to the winemaker. As a result, the two individuals who matter the most: the wine drinker and the winemaker, are both harmed.

So, if you had the choice of making your wine 40-60% cheaper without sacrificing quality or paying the winemaker any less, would you do it? We can't change taxes, but we can eliminate the voluntary marketing tax.

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