Why Wine Prices Keep On Rising

James Laube
Posted: December 9, 1996

ANY DAY NOW I'm expecting a backlash against ever-rising wine prices, but the sad thing is that aside from a personal boycott, in which you stay out of the market and just say "no" to paying higher prices, there isn't a whole lot you can do to stop the upward spiral. . . .

Seems like every time you turn around prices are up, whether it's for Bordeaux futures, Burgundy futures, vintage Port or California wine, and values are getting harder and harder to find. . . .

What's happened is that the fine wine market has become a truly global one, where you're not only competing with wine lovers in New York, London, Switzerland or Paris, but also the likes of Hong Kong, Mexico City, Tokyo, Toronto and even Beijing. And when was the last time you looked up the population of China? . . .

A decade ago, the Far East markets were largely undeveloped compared to what they are today, so wine marketers are in the position to spread their wines out, a classic example of supply-demand economics at work. Even in Japan, where interest has been keen and Japanese businessmen have bought wine estates in Bordeaux and California, it's pretty tough finding a good bottle of wine that won't cost you a ton of yen. . . .

WINE MARKETERS are betting that if you're not willing to pay the going prices for the world's greatest wines that someone else somewhere else is and they're probably right. . . .

In the United States, and elsewhere, the wine market is growing geometrically, which means that when you find a wine you like and tell a friend or two, and they tell a friend or two and their friends tell a friend or two, pretty soon that wine is scarce. So don't tell a friend. . . .

Several readers are angry that people like me don't slam winemakers for the high prices, but we do when we print the prices next to scores that are out of whack with the quality. . . .

As I've pointed out many times, I believe in the free market: Producers set their prices based on what they perceive to be the demand and a fair price. . . .

I ALSO HAVE LITTLE—no, make that NO sympathy for those who price themselves out of the market, turn their backs on loyal customers who helped build their businesses and get greedy with their prices. . . .

Me, I've always looked at the price-quality ratio with wine and rarely spend too much on a bottle or case. I've stopped buying red Burgundy and many Italian reds because I don't believe the quality is there for the price, even if others do. . . .

Let's face it, greed is part of the capitalistic fiber and usually when things are good for a business, such as they are for wineries today, some people will go overboard in their efforts to squeeze every last cent out of your pocket, even if that might be a very short-sighted strategy. . . .

While many of the higher-priced wines deliver the quality and complexity commensurate with their price tags, many more don't. It takes a while for people like you and me to discover that many of the wines we've paid top dollar for didn't age or develop the way we'd hoped for and next time around we'll be more cautious. . . .

STILL, THERE'S ALWAYS someone else out there who's never had a chance to buy one of these rarities and will put down the money for the experience. . . .

There are ways to combat higher prices for wine, but you still have to be on your toes and watch for older vintages at auctions and in classified ads, as you can often buy older wines at lower prices than you'll pay for new releases. . . .

You'll also have to give up on brand loyalty and become more adventurous by exploring areas such as Chile, Australia or perhaps Argentina, where, thankfully, at least the prices for many wines aren't staggering. . . .

I'M CONVINCED that in California, the new breed of California appellation wines will continue to deliver excellent quality for the price, but it will be hard keeping a lid on that story which in turn will only fuel greater demand. . . .

Bottom line, I don't expect prices for the best wines to drop anytime soon. As long as demand continues to rise, so will prices. . . .

It's staggering to think that in the span of two decades, we've witnessed the wine market come of age only to find that the wines we've been rooting for all these years are farther out of reach than ever before. . . .