They do battle with each other at the most exclusive wine auctions, line the cellars of the biggest collectors, and occupy pride of place on the wine lists of the best restaurants. The world’s most expensive wines come from the Old World and the new, and they carry a big mystique along with their hefty price tags.

The world’s most expensive include Bordeaux’s five First Growths — Chateau Lafite Rothschild, Chateau Margaux, Chateau Mouton Rothschild, Chateau LaTour and Chateau Haut Brion — which usually range from $750 to $1,000 per bottle, depending on vintage. They were named ‘First Growths’ precisely for fetching the highest prices in the first place. Burgundy’s Domaine de la Romanée-Conti can demand even higher prices, given the wine-drinking public’s unquenchable thirst for pinot noir and chardonnay. The list also includes Napa Valley’s “cult wines,” such as Screaming Eagle ($750), Harlan Estate ($500), Colgin Cellars ($325), Bryant Family Vineyard ($335), and newcomer Yao Family Wines ($625) — all Cabernet Sauvignons or Cabernet Sauvignon blends. And bear in mind, these are prices from the estates themselves; resale prices for good vintages and big names can fetch up to ten times the sticker price.

Despite the cachet involved, wineries at the top end aren’t keen to talk about their prices. Perhaps partially in deference to the world economic downturn, winery personnel scurry at the mention of the topic, while the same wine producers embrace the media limelight when it comes to promoting their wines.

But retail and banking sources indicate that the main factors behind the prices of top-tier wines are the cost of doing business and market conditions. Costs include the price of land or grapes (these comprise about thirty percent of the total cost of winemaking in Napa Valley), a winery facility, and salaries for trained workers who do everything from farming the vineyards to marketing the wine.

Many wines playing the high price game these days will call themselves “hand-crafted,” “artisan,” or “reserve” wines.  What does that mean? Sometimes, very little. There are no laws in place to limit or define the use of these terms. But in the case of the world’s most expensive, chances are it means wine producers are sparing no expense in hiring the most knowledgeable winemakers and viticulturalists, purchasing the highest quality grapes and winery equipment, and taking more time to age the wine in ideal conditions.

The price of a bottle also reflects what the market will bear. “What someone is willing to pay for fine wines is what really matters,” says Rob McMillan, founder of Silicon Valley Bank’s wine division in St. Helena, California.

And with a small supply of the world’s luxury wines such as Bordeaux first growths, top Burgundies, and California cult labels, that can be a lot. “Supply and demand is a big factor,” adds McMillan. “All pricey Napa wines are small production. There is a limited supply of real estate here, so there is a limited amount of Napa wine to satisfy worldwide demand.”

Yao Family Wines, owned by the Chinese basketball star Yao Ming, sold out its entire first 2009 release of three hundred cases to buyers in China, where top Bordeaux and Burgundy wines have become status symbols among its burgeoning group of billionaires. In setting the $625 price for its inaugural release, Director of Winemaking Tom Hinde said, “We didn’t look at what the market would bear so much as where we wanted to position the wine on the world stage. Our true benchmarks are luxury classic Bordeaux blends.”

In general, profit margins are slim in the winemaking business. “But at the higher price points, the gross profits are better.” says McMillan. “Those wine producers, though, tend to plow profits back into the brand itself, and they work in much smaller quantities. By far, the most profitable wineries are larger ones because when you make $1 a bottle profit and you sell millions of bottles, that’s going to be true.”

The very highest prices paid for wine have been at charity wine auctions. In 2000, an Imperial (6-liter) of 1992 Napa Valley’s Screaming Eagle Cabernet Sauvignon sold for $500,000 to a California high tech executive. At the Naples Winter Wine Festival in Naples, Florida, a 12-liter bottle of 2003 Sine Qua Non Inaugural Syrah brought a winning bid of $220,000 in 2008, and two years later a $400,000 bid purchased a lot of one hundred bottles that had earned 100 points from the Wine Advocate.

There are social, psychological, and business reasons for why charity auction prices rise to over-the-top levels. A donor may benefit from the publicity surrounding a special bottle, a bidder may need a tax break, and they might just enjoy the excitement generated by a high bid or be motivated to raise money for charity. In the wine-fueled partying that accompanies the top auctions, prices can skyrocket in competitive bidding — so if you have a few hundred thousand dollars burning a hole in your pocket, just head on over to a wine auction and start raising that paddle.