COGS isn’t the sexiest topic, but your winery can’t afford to ignore it
Cost of Goods Sold (COGS) isn’t exactly a dinner-party topic—but your winery can’t afford to ignore it. It’s not just an accounting exercise; it’s the foundation of financial clarity. Whether you produce 500 or 50,000 cases, not knowing your true costs means flying blind when it comes to pricing, planning, and profitability.
In our interactions with winery operations of all sizes, we’ve grown convinced that you can’t afford not to know your COGS. Even boutique operations are running at a disadvantage if they don’t know how much it costs to make each of the wines that they sell.
What is COGS? And why is it difficult?
In its simplest definition, COGS includes all of the cost outlay required to produce each and every SKU coming from your winery. That includes raw materials, labor, packaging, and overhead.
Seems fairly straightforward, right? But the devil is in the details.
Tracking wine COGS is notoriously complex because wine isn’t static. Wines evolve, they’re blended, and materials can sit in inventory for years before ultimately being used across multiple vintages and SKUs. Then there’s overhead: deciding how to spread costs like labor, facility expenses, or depreciation fairly across dozens of ever-changing products is a science in and of itself.
More succinctly put, keeping track of COGS can be a real PITA.
The realities of running a wine business often butt heads with proper accounting. There probably isn’t a wine operation on the planet that doesn’t encounter last-minute modifications, or times when they’ve just been too busy handling unforeseen events to calculate the knock-on impacts of those changes on costs.
These complexities don’t mean you can skip it; they make it even more essential to get it right.
Why you can’t afford not to know your COGS
Spit-balling or even just ignoring your COGS can cost you a lot more in the long run. We’ve seen a myriad of approaches that winemaking operations take for their COGS. Here are the areas where doing it well makes a huge difference.
Spend & Pricing
You might be surprised to learn what it really costs you to make that best-selling wine in your portfolio. We have seen wineries simply average their COGS across all SKUs at year-end, which means that their everyday sipper rosé is documented as costing the same to make as their flagship, ageworthy Cab that sees 100% new French oak. Uhm… sorry, but that’s nuts!
We’ve also seen wineries discover, after seeing more accurate COGS, that they were losing money on their best-selling wine.
Acquisition & Lending
Many wineries at some point consider selling their brand or being acquired. Ask any accountant, and they will tell you that inaccurate financials make selling a business MUCH more expensive in the long run. Accurate COGS has to be unearthed eventually in those situations. You are not saving money by skipping it, you are just delaying (and increasing) the spend—much to the delight of whatever accounting firm you will need to hire to sort it out.
Looking for a loan to expand or invest in the winery’s future? A true understanding of your financial position lets you know exactly how much to borrow. And if you’re seeking a loan with inaccurate accounting (especially at a time when global wine sales are slumping)? Good luck talking to a lender with that.
Overhead Allocations: The Hidden Challenge
Overhead is where most wineries struggle. Costs like labor, utilities, or barrel depreciation don’t attach neatly to one wine—they cover everything. That’s why many teams either guess or give up.
Blended makes this part simple. A single “spread” feature automatically allocates those costs by wine volume and time, instantly giving you accurate, consistent numbers. For more advanced teams, you can customize allocation methods, so even complex expenses like insurance or depreciation are handled cleanly.
Making COGS less of a PITA
This is where the right software can be a lifesaver. Blended tracks anything and everything in your production pipeline from start to finish—including costs. That allows you instant access to accurate COGS at any moment of your winemaking process.
Need to compare COGS by product or vintage-to-vintage to see trends? Blended has you covered, allowing you to make production calls that are data-driven. It can record costs with just three clicks, which is pretty much the opposite of being a PITA. Our clients have called their COGS more accurate under Blended (and told us that using the software provides a level of financial clarity that they’ve never had previously).
Getting COGS right isn’t just about cleaner accounting; it’s about control. When you see your true costs in real time, every decision becomes easier, faster, and more confident. The right software turns what used to be a painful guessing game into a clear view of your winery’s financial health, and that’s worth far more than the effort to set it up.
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