The Real Reason Israeli Wines Are So Expensive

It’s not the demands of kashrut, it’s simply the growing pains of a young industry in a small domestic market.

Noga Tarnopolsky
Noga Tarnopolsky
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Sampling wine at the Galil Mountain Winery at Kibbutz Yiron.
Sampling wine at the Galil Mountain Winery at Kibbutz Yiron.
Noga Tarnopolsky
Noga Tarnopolsky

How much are you willing to spend on a bottle of special-occasion wine? I’ve been putting this question to friends and acquaintances around the world, and responses have ranged from around $15 (a young adult in Argentina) to $200 (a slightly less-young adult in Los Angeles).

My colleague Cathy Huyghe, an inspired writer on wine, believes the question is less about money than it is about living life, and wine, in the moment. If you’ve got a 1970 Grand Cru lying around, a bottle that is to all effects priceless, stop waiting for a special occasion: Drink it now. Make that bottle your own very special occasion.

Israelis buy as much wine during Passover as they do during the rest of the year. Like Shabbat, it is a holiday in which religiously observant Jews are obliged to drink the fruit of the vine, though in Israel an astonishing amount of pure, unfermented grape juice (“tirosh”) is also sold.

Ninety-six percent of Israeli wines are kosher. Passover brings out the kashrut observance in Jews who are usually more lax Jews, creating a single week during the year in which Israelis splurge on local wines for their holiday tables.

But just say the words “Israeli wine” and the question that inevitably follows is “why are Israeli wines so expensive?”

Indeed, Israeli wines are not cheap. A decent local Cabernet Sauvignon you can bring as a host gift will easily set you back 70 shekels ($18).

That’s what you’d pay for a relatively premium bottle in most of Europe, where salaries are, as we all know, significantly higher than in Israel.

To lay one myth to rest, let’s start by noting that the additional costs of maintaining a kosher vineyard and securing kosher certification are not to blame for the high prices.

Keeping an Israeli vineyard kosher, in fact, does not require a significant financial investment. The main requirements for a kosher winery are that the employees who come into contact with the grapes and the wine be observant Jews and that a mashgiah be on hand to certify the operation. In Israel, both are widely available.

The main reasons for the relatively high price of Israeli wines are the relative youth of the local industry and the extremely small size of the local market. Although the total population of Israel is eight million, after subtracting everyone under the legal drinking age of 18 as well as the Muslims, whose religion prohibits the consumption of alcohol, the potential market for wine is closer to four million.

Israeli winemakers must import every single piece of equipment, every implement and tool required for their business, from crushing machines to barrels and corks. Overhead costs are similar for a winery producing 30,000 bottles a year or 300,000 bottles. (The vast majority of Israeli wine, 95 percent, is produced by just 15 of the country’s 300 wineries.) Two essentials for growing wine grapes, land and water, are particularly expensive in Israel.

Israel’s wine industry is still paying for the enormous investments made in the sector in the past 40 years or so, since the resurgence of local wine culture. European vintners often estimate that it can take 100 or 200 years to establish a loyal customer base, while their Israeli counterparts feel lucky if they have a second-generation customer.

These things take time. The good news: The more Israeli wine you drink and the more wine culture you inculcate in your family, the lower the eventual price of the local product.

The local wine industry is worth $220 million a year and rising. Exports accounted for $40 million of that last year, up from just $19 million in 2009 — a rate of growth that outpaced the market as a whole. The United States is the biggest importer of Israeli wines.

The silver lining, for we Israelis who don’t have a century or two to wait, is that the growth of the local wine industry will help to reduce prices. Furthermore, the increasing popularity of Israeli wines, kosher and not, among discerning wine drinkers around the world is testament to the quality of the wine being produced here. Perhaps that can justify the higher price of the local product when you’re considering what to drink on your next special occasion.

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