Wine Prices,Whats the Deal? Part-2

By October 24, 2017Uncategorized

Before I get in to demand, I should touch on the cost of getting a wine to market. This is a tricky topic because like almost everything else in the wine world, it doesn’t necessarily make perfect sense. You would think that imported wine would be more expensive than domestic product, however in most cases it is actually the opposite due to taxes and trade agreements. Now to avoid going on about boring business costs for too long, lets just acknowledge that there is a cost that comes with selling your wine, and leave it at that, moving on…  Time to talk about demand. As much as you may think this is directly linked to supply, that certainly is not always the case. The demand for a wine can be a very unique thing at times, and does not always follow the normal economic trends like other goods might. It is not always dependent on the individual quality of each wine, and their certainly is not a simple formula that determines the demand of each wine. You have to think about where the wine was made, is it from a famous region? I can re-use my Napa and Bordeaux reference once again to describe regional price influence (they generally garner higher prices as a base). Some wineries have to claw and scratch to gain recognition and then eventually raise their demand. Spending a long time making very little money due to their high production costs making great wine but low margins due to being stuck in a region not well known for expensive wines; see the red wines of the Loire for an example of a region clawing and scratching for a few hundred years, and recently having some success.

Then you have media attention – wine critics, magazines, blogs and so on. Of course there is the fact that wine is produced annually with only a limited supply from each winery, and therefore you have to factor in the supply, even though this often does not become a factor until you get in to back vintages (older vintages of a particular wine).  So what does all of this mean at the end of the day? Well to try and explain this quickly lets use a few examples.  Starting with one of my favourite places on earth to visit and also synonymous with one of my favourite liquids to consume – Champagne.  Right away having the word Champagne on a bottle of bubbly wine will increase the base price that that particular wine will be able to demand when placed along side a comparable product from any region not named Champagne. There are many reasons for this, and I could describe a plethora of them, but how many other consumers can? My point is that as much as there are many good reasons to enjoy Champagne when craving bubbles, it is generally just the recognition of the word Champagne that creates the higher demand in the eyes of the consumer and to be fair, Champagne has largely become what most people call ALL sparkling wine just as people ask you for a Kleenex instead of a tissue, so it is pretty justified. So that is the regional influence in a nutshell, and can be applied to many other regions throughout the world, although Champagne definitely wins in terms of regional recognition.  Next up lets get in to media attention and the influence that can have on a wines final price.  To describe this I may as well use an example from another region that I have mentioned; The Loire Valley. This is of course the ultra sought after and extremely hard to acquire wines of Clos Rougeard.  Never heard of them??? No surprise, they are still under the radar, but don’t expect to pay anything short of outrageous for a bottle of their exquisite Cabernet Franc.

This is a great example of a winery that kept their head down and made ridiculously over-performing wines for years, and sold them for very reasonable prices. Until some time shortly after 1993 when a bottle of their 1990 Le Bourg Saumur-Champigny was snuck in to a blind tasting along side the likes of Petrus and Le Pin among other top 1990 Pomerol producers that sold for much, much higher prices, and was awarded the highest average score!  Just like that, a new cult wine emerged, and the demand skyrocketed to a point that the wines are pre-sold for years. Whats nice is that typically when one winery in a relatively under appreciated region is discovered, it shines a light on the rest of the region and allows other great wineries to start earning a buck or two, or three, or… well you get it.  So what is the end result of this strange and sometimes confusing pricing game that runs through the wine industry? For the most part it simply means that when it comes to wine, you are generally getting what you pay for at the higher price points, which is a relief because at least you know your not getting ripped off. But what is much more exciting, is that it also means you can find some crazy good deals out there that perhaps have not been discovered yet, and you can enjoy wines that hold the same quality as some of your super-premiums without killing your bank account.  So I say good luck to you on your journey to enjoying some beautiful and delicious wines at any price point, and hopefully this helps you feel a little more comfortable when putting a few extra bucks out there, or giving an unknown star a shot at becoming your new favourite.

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By: TJ Harstine/ Certified Sommelier

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