Jamie Goode: Ever-rising wine prices – problematic or not?
By Jamie Goode, 3 May 2023
-
Share:
5
I was involved in an interesting discussion about the price of wine recently (see Tim James on the topic here). A few of us were regretting recent price rises for some of our favourite wines, but we were berated by others for taking this position. In an industry struggling with profitability, how can rising prices of wines ever be a problem? In some cases, perverse as it sounds, I think they can.
We all have stories about wines we’ve enjoyed suddenly becoming out of reach. Back in 2000, my first en primeur purchase was for a case of Jamet’s 1999 Côte Rôtie at £20 a bottle. Now this wine would be eight times this on release. In October 2019 I paid £344 for 12 bottles of Bernard Bonin Initiales Bourgogne Blanc 2016. This works out at £28.67 a bottle. On Wine-Searcher this is now showing as £250-plus a bottle. I remember visiting Olivier Collin at Champagne Ulysses Collin in 2017, and was amazed by the wines. They were wines I could afford, even in restaurants, but not any more. And for those who have been buying Burgundy for many years, bottles they purchased with a view to drinking are now worth as much as a decent second-hand car, which makes it tricky to pull the cork even for those with high disposable income. And price inflation has even reached the natural wine world, where wines that used to be hard to find but affordable – like Overnoy, Miroirs and Ganevat – are not hard to find and insanely expensive.
Examples like this are not abundant. Wines that were the insider’s tips for being top quality but without commanding high-end prices have recently come onto the radar of wealthy collectors who aren’t in the least price sensitive. And they are made in limited quantities, so supply and demand are out of whack. Where people with deep wallets are involved in pursuit, you have the perfect storm for barmy price time. That’s what we are lamenting.
As is usual in many discussions on wine, of you don’t segment the market, you get into trouble. Of course, at the bottom end of the market, producers are squeezed for profitability and they really need a price increase. But this is a very different world to the one my friends and I were discussing. There, even the producers are finding some of the market prices for their wines a bit of a problem. When you start out making wine it must be a dream if your wine is in such demand that it takes no effort to sell it. Excessive demand, however, can be an issue. People get upset if they can’t buy the wine that they’ve been buying in previous years because their allocations have been cut, whether they are private customers or trade customers. Increased demand often leads to an increased market value for your wine, and if you don’t make that extra margin, someone else will.
The obvious answer is to manage demand by increasing the price to the point that the demand is in step with supply. But many producers are keen not to upset the customers who have supported them over many years. Such sentimentality might sound appallingly weak to hard-nosed capitalists, who have an unwavering faith in the market to sort things out. Much of the wine world, though, is built on more human principles of relationship, and valuing loyalty, and there are quite a few winegrowers who’d prefer that their wines were drunk, rather than endlessly traded, or treated like investment vehicles, or used in ugly conspicuous consumption rituals.
The grey market has always been with us in the wine world, but it is particularly jarring for many natural winegrowers. There’s a philosophical slant to the natural wine scene that means that many would like their wines to be affordable to all with an interest in wine, and are horrified to see them changing hands for ten to twenty times their release prices, and drunk in situations discordant to the natural wine ethos.
Wine – even interesting wine – is food. It is something we consume, and something that creates a beautiful openness and spirit of sharing at the table. One of the great things about some of the top South African wines is that people on a normal professional salary can afford to buy them and open them, and share with friends. There’s a lot of fun to be had in the price range of R200-500, and it would be a shame if the interesting stuff all headed north of R1000. This would seriously disrupt the culture of wine. Of course, part of sustainability is financial sustainability, but price rises at the top end are beginning to be problematic for the wine trade, even though we might wish for them at the bottom of the market.
- Jamie Goode is a London-based wine writer, lecturer, wine judge and book author. With a PhD in plant biology, he worked as a science editor, before starting wineanorak.com, one of the world’s most popular wine websites.
-
Share:
Related articles
Opinion & Analysis
Jamie Goode: Is it possible to scale and still make interesting wine?
2 April 2024
In business, there are many economies of scale. But often, scaling up can mean a significant change in product quality. Take craft beer versus big beer. Several years ago I...
5
Opinion & Analysis
Jamie Goode: How soon does wine scoring become defunct?
1 March 2024
Something made me realise wine might be interesting when I was 21. I’d just begun my PhD and was spending quite a bit of time with a group of friends...
15
Opinion & Analysis
Jamie Goode: The challenges of making low/no alcohol wine
1 February 2024
I’ll begin this piece with a rather blunt statement: I haven’t found a no-alcohol wine that I’d like to drink. And I’ve tried a few. But I’d also counter this...
James | 4 May 2023
I get both of Greg’s and Per’s point, but I think the point Tim and Jamie are making is that it would a sad thing if less wine consumers and wine enthusiasts are able to afford their favourite top end wines and it is left largely to those who see it as a fashion statement or investment tool. I completely understand the dynamics of supply and demand and yes, wine producers are in it for a profit and not nostalgia, but wouldn’t it be great to reach some sort of middle ground?
Unfortunately production costs have skyrocketed and we see that in reflected in the retail price, but sustained increases of 10-15+% YoY does make it a sad reality.
Per Karlsson | 3 May 2023
It is, of course, sad when items you have bought and want to buy again have gone up in price. But it is both futile and misdirected to draw the conclusion that “we need to do something about it”. (I am aware you did not say that in the text Jamie, but very many other people do.) Prices are what they are and we can’t do anything about it, unless we aim for a plan economy. Wine is a food product but it is also a luxury product, and as such it is very much subject to the whims of fashion and trends. In fact, the reason we have seen these price rises is that wine itself has become much more popular, has become a fashion. (And as an aside, these fashions are to a large extent driven by the focus that much of wine writing has on a limited number of brands. Think for instance of all the writing about primeurs these days. If writers wrote less about top Bordeaux, grand cru Burgundy, Eben Sadie, Grange, Selosse etc, they wouldn’t be as expensive as they are today.)
And perhaps we should even be grateful that wine has become a fashion (or more fashionable). Without that the US would not be the world’s biggest wine market, China would not have entered the wine consumption scene in the way it has, nor northern Europe. And that would have been a huge problem for the wine “industry” since consumption is shrinking on the traditional markets. Many more wine producers would have gone out of business.
Instead, I think we can be happy that there is an enormous number of fairly “new” wine producers that have entered the market with quality wine (or old wine producers that changed strategy from volume to value). There is a much larger offer of excellent wines today, compared to what you could find twenty or thirty or forty years ago – the time when those today-unaffordable wines were within our budget’s reach. Every time I come to South Africa, for instance, I am surprised (and happy) that there are so many wines on offer that I am not familiar with. I go to the wine shop and say “I’d like a good wine that I’d never heard about.”
Forget this thing that “I want to buy the wines I used to buy, at the same prices” – many more people want the well-known names so prices go up and that’s not a problem. There are no “must taste” wines for anyone who want to learn about wine, or simply enjoy good wine. Instead, be happy that you can find a wealth of very, very good, excellent wines, but names that we were not familiar with “back then”. Wine culture is thriving, as long as you are prepared to look for the less famous. And that’s good, isn’t it? Wine is very much about discovering new things, isn’t it?
Greg Sherwood | 4 May 2023
Also crucially… the “new” consumers have plety of disposable income, are prone to making fashion statements with their wine purchases, and most importantly, are relatively new to wine so do not remember “the good old days” when bordeaux first growths were £20 per bottle or DRC was under £100 per bottle. They have no concept of this period in wine history so are unlikely to lament high(er) prices like all the older, more seasoned drinkers and collectors.
James Bosenberg | 3 May 2023
I think it was Eben Sadie who said we don’t need more wine in the R800-R1000 range but more wine in the R300 range to ensure wine farms turn a profit. It would be incredibly sad if our top end wines are only bought by the 0.1% and traded as a commodity, rather than enjoyed at special occasions and celebrated for their beautiful contents. I’m sure winemakers want the fruits of their labour and skill to be consumed and spoken about around the dinner table.
Please can we cool the 20%+ YoY price increases
Greg Sherwood | 3 May 2023
From my experience, SA fine wine prices are rising… but I would say that has more to do with producers trying to move from the red in to the black and become slightly profitable (thus sustainable), not because speculators are using the wines as an investment vehicle. Any one who has been to SA lately knows how ridiculously expensive everything has become due to load shedding and the extra costs of mitigating it and the use of generators and diesel etc. Also, more producers are culling (or redicing) the unprofitable bottom tier commodity wines that are a lot of effort to produce but make very little profit in return. Wine producers are not charity organisations that exist to make sure consumers can drink a hearty beverage with their steak or bowl of pasta! They are businesses like everyone else and deserve the right to be profitable and successful if they produce the right wines at the right price and receive the right critical praise. Inevitably, if you buy and store a bunch of top end SA wines for 10+ years (or maybe less), you will see them rise in value as a commodity. But after inflation and storage costs, are you really making a fortune? And most people do this by default, not intentionally. We all buy too much wine when we have the disposable income to do so, then realise that we have too much wine to actually drink. In a funny kind of way, consumers having access to a limited amount of mature(ish) top end SA wines from Strauss Auctions might actually help slow the commoditisation of SA’s top wines as collectors can buy elsewhere than directly from the farm. In any case, most top producers like Sadie or Alheit have long waiting lists if you want to try and buy and speculate on new releases. From what I can see, most of the top end SA wine being purchased at the moment in the local SA market is being bought with the intention of drinking it. Overseas, I am not so sure. Plenty of big collectors (who have never traditionally bought any SA wine) are now chasing Sadie / Alheit / Naude / Kanonkop / MR allocations etc. for an investment angle. They can’t get allocations of Coche / Jamet / Roumier etc. anymore or can’t afford it… so you move on to the next hot thing. In some cases, it may even be natural wines like Jamie points out. Collector speculators don’t care if they are natural wines because they don’t intend to drink the wines in all likelihood.