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54 WINES&VINES August 2015 BARRELS I n Bronze Age Europe, amphorae were state-of-the-art wine vessels, and their primary function was to hold wine while it was transported from winemaker to wine drinker. The amphora—essentially a clay jug with handles—was a fragile entity, and many a drink was lost in the holds of ships as they tossed about on the high seas. Can you imagine an amphora of wine in the hands of our modern-day baggage han- dlers? Obviously, improved technology was in order. The advent of the wooden barrel rep- resented a quantum leap forward for wine commerce, as barrels provided a much more durable shipping container. Unfortu- nately, the wooden barrel was also consid- erably more expensive, a reality that remains unchanged more than two millen- nia after the barrel's invention. New Ameri- can oak barrels are priced at approximately $380 apiece, and French oak can cost more than twice that amount, which means populating your barrel room can eat up a significant portion of your winemaking budget. Today wine is not usually transported in wooden barrels. Their purchase is driven instead by the contributions barrels can make to our winemaking efforts. Just as it behooves us as winemakers to understand the impact oak has on our wines, it's equally im- portant to understand the contri- bution oak barrels have on our costs of production. Why would anyone go to all the trouble of dealing with these heavy, awk- ward, space-consuming and prim- itive wine containers if there's no real profit in using them? In order to know if there's profit in barrels, you have to be fully informed as to their true cost, which, we will see, goes well beyond the original cash outlay for the barrel itself. There are a number of vari- ables that come into play when calculating the true costs of oak barrels used in wine production. Knowing these variables and being able to calculate their impact on the cost of a bottle of wine will make you a better steward of your company's gold. As wineries' barrel practices differ broadly, so will the costs associated with barrel use. For this analysis we will apply some realistic values to our variables to produce an accurate estimate of the true costs of using oak barrels in our model winery, Chateau Bigteaux. We will walk through the process in such a way that it will be no great feat to swap in numbers unique to your own operation to yield numbers fine-tuned to your reality. Equally, it will be pos- sible to play with different scenarios to judge the impact they will have on your return on investment. The Economics of Wine Barrels How to determine the effect of barrel choices on profits By Chris Stamp KEY POINTS The author presents a method and a calculator for determin- ing the true cost of barrels. Evaporative loss, labor in- volved in cleaning, duration of fill and the cost of space all add to a barrel's true cost. One finding is that upgrading from American oak to French oak—or from used to new barrels—is not as expensive as many assume. Chris Stamp takes a barrel sample at Lakewood Vineyards. Your barrel room itself adds to the expense of using barrels; it is an important element in a complete barrel-cost calculation.