The hidden costs of winemaking are often hidden behind the romanticisation of the journey from grape to glass, which challenges profitability. New producers often focus on the obvious: land, equipment, and grapes, while subtle, systemic inefficiencies creep in, quietly eroding the bottom line. Unless monitored with corporate precision, these losses can turn potential profit into negligence.
Read Clayton Reabow’s insightful take on the topic on WineMag.co.za here.
Loss Aversion: A Hidden Cost of Winemaking from Waste
A significant hidden cost of winemaking is product loss. Industry standards might “allow” up to a 4% annual production loss, but financially, this allowance is catastrophic. For a cellar producing 250,000 bottles, a 4% loss represents millions in lost revenue and raw material value. This includes everything from ullage (evaporation from barrels) to systemic waste like neglecting press fractions, the high-tannin “B-grade” juice that, while not free-run “A-grade,” is often dumped or undervalued instead of being intelligently integrated or sold as a valuable asset. The failure to optimise every drop is a massive, unchecked drain on resources.
Quality Compromise: The Yeast Nutrition Trap in Hidden Costs of Winemaking
The pressure to “trim the fat” often leads winemakers to cut costs where it hurts most: quality inputs. A prime example is yeast nutrition. Healthy fermentation requires complex nutrients, but many producers opt for cheap, inorganic supplements like DAP (di-ammonium phosphate).
DAP provides basic nitrogen but lacks the micronutrients, sterols, and vitamins found in more expensive organic nitrogen complexes. While DAP costs only a few cents per liter, organic nutrition can cost ten times more. The short-term savings of using DAP, however, often lead to a greater hidden cost of winemaking: stuck or unhealthy ferments and, ultimately, a less complex, lower-quality wine that commands a lower price. By starving the wine, producers undercut their premium potential for marginal, temporary savings.
Rethinking Value: Cutting Non-Wine Hidden Costs of Winemaking
If cost-cutting is necessary, winemakers should target areas that offer a better Return on Investment (ROI) without compromising the wine itself. The packaging and distribution chain is a common culprit for hidden costs of winemaking.
Consider carton packaging. Wines are typically boxed in 6- or 12-bottle cartons. These cartons, essential for protection during transport, can represent 3–5% of the total cost of sales, yet the wine spends less than 5% of its shelf life inside them. Rethinking bulky, expensive packaging, or optimising distribution logistics, staffing structures, and marketing efforts, offers far more room for savings than compromising on vineyard or cellar inputs.
A Call for Value Optimisation
To address these hidden costs of winemaking, the industry needs a shift from mere cost control to value optimisation. This requires leadership that speaks both the language of the cellar and the balance sheet. Introducing roles like a Chief Revenue Officer (CRO), a hybrid professional, could be transformative.
A CRO’s sole focus would be to identify systemic revenue leaks and areas where costs can be cut without eroding the intrinsic value of the wine. This agile, holistic thinking is essential, especially as market trends, such as the predicted premiumisation of the domestic wine market, show that consumers are increasingly buying less wine, but better wine. Protecting the quality of the winemaking value chain is not an expense, it’s an investment in meeting the consumer demand for quality, authenticity, and sustained profitability.
The wine in the bottle is your brand’s legacy. It must be the last thing on the chopping block.
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At FermTech Solutions, we are at the forefront of a revolution in sustainable winemaking. Our dedication to natural solutions and our commitment to environmental responsibility make us a valuable partner for winemakers seeking to produce exceptional wines with a conscience.
Contact us today and see how FermTech Solutions can help you elevate your South African wines! Contact sales@fermtech.co.za to set up a consultation or click here to book an appointment online. FermTech Solutions are proud to be associated with 2B FermControl, Orion Cooperage, Speidel, Tinajas Moreno Leon, Biorself and DNA Smart Analysis.
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