While there are more wealthy people and I’m sure tastes have changed as a function of knowledge, I expect the biggest contributor to the rise in prices is increased efficiency of the wine market. Wineries are price hedgers - their objective is to sell their offer year in and year out. I suspect wineries were selling out in 1990 just like they are today. So why didn’t they increase prices faster? I would guess it’s because they weren’t plugged into as deep a market and didn’t have as much price information. The maturation of the secondary market and the reduction in frictions associated with trade like freight and currency flows make it easier for wineries and distributors to know where the market is and change pricing. So, it might be that these wines were actually cheaper than they should have been for a long time but the market was too dislocated for that to get resolved through regular market forces.
the secondary market is clearly a driver here - for recent vintages, if they’ve gone up, why wouldnt you as a producer minimise the spread between your current vintage and comparable historic ones?
Income inequality and expansion of wealth are not contradictory terms. Increased concentration of wealth isn’t incompatible with there being more rich people than there used to be, including entire new categories of rich people.
Total global wealth has expanded due to many factors including a lack of any world wars in the last 75 years, lack of any major famine or plague in that time frame (this year notwithstanding), increased free trade, technological advancement/efficiency gains, and on and on. And while the bottom 50% (globally) are no doubt much better off than 75 years ago, within the top 50% globally (or some large percentage - basically corresponding to the developed economies that had strong middle classes in the '50s and '60s), wealth has become more concentrated in the top 1% and the top .1%. But that it still a lot of people, and of course there are way more people in the top 1% than there were in 1950. So expansion of total wealth, more people, more concentration of wealth at the top - all of that gives you a much larger number of super-wealthy people, and a much larger average net worth for each of them, than we used to have, be they old-fangled barons of industry or new-fangled hedge funders, athletes, kleptocrats, tech entrepreneurs, or social media influencers. Then you add the increase in education and interest in wine, globalization of cultures and tastes so that great wine is a topic of interest over a much larger percentage of the globe than it used to be, and you have a higher percentage of the super-wealthy chasing wine. Then you add in the part about how Chambertin isn’t getting any bigger, and the rest writes itself. More people with more more money chasing the same amount of wine, and you can do the math.
The interesting thought experiment is to ponder how much of this effect is from wealth concentration/inequality and how much would exist even if all this increased wealth were distributed more evenly. I think there’s an argument to be made that the same increase in total global wealth and total global population, chasing the same non-increasing amount of DRC, would result in the same price increase even if everyone had the same amount of wealth (and thus there were no millionaires, let alone billionaires). I think there’s also an argument to be made that the wealth concentration/inequality we have now is what produces at least some of the effect for the most coveted wines, where that wealth inequality means that some people have “the price is irrelevant” wealth, but even with that concentration there are still way more people with that level of wealth than there are bottles of DRC to go around. I think I lean pretty strongly toward the latter, but it would be interesting to see someone game this out. I think in part it’s because these things are interdependent - for example, if there were no wealth inequality at all, I don’t think you can assume that the increase in fine wine knowledge and interest around the globe that we’ve seen recently would have occurred.
Yup. Drink Old Vine Zinfandel or Mixed Blacks from California. Vines older than most of the Grand Cru/Grand Vin vineyards in Europe at a fraction the cost. At the least, the vines were around when Burgundy and Bordeaux were starting their run at what they are today. Think Pagani, Monte Rosso, Nervo to name a few…
Had to look it up out of curiosity. Per this US inflation calculator site, $20-$50 in 2020 dollars correlates to:
2010: $16.76-$41.89
2000: $13.23-$33.08 (~1.5x multiplier)
1990: $10.04-$25.11 (~2x multiplier)
1980: $6.33-$15.83 (~3x multiplier)
1975: $4.13-$10.34 (~5x multiplier)
Of course I agree that if you were extremely plugged-in to the global wine scene forty years ago, you could find fantastic deals on wines that are much, much more expensive today. But you could also buy a Basquiat for fifty or sixty bucks in 1980 if you lived in NYC and had really great taste and/or a heckuva prescient view on art prices.
Like you said, the main point here is contained in your last couple of sentences.
I think its a pretty tough argument that net global wealth evenly distributed would result in the same wine prices tbh. Like, for example, I dont believe for a second we’d have had the same level of technology innovation in the last few decades if wealth was evenly spread; you need to have a certain amount of money to be able to invest in getting a rocket that can self-land, or create a vision big enough for tens of thousands of people to invest their wealth on a blind shot on you.
Yeah, I added a sentence at the end as you were posting this giving a different example of the same point - many of these things are interdependent. BUT if you could assume “all other things being equal” like any good economist can … ![[wink.gif]](/uploads/db3686/original/2X/0/04707e6a7bbb03e0153e349d8a9270d30e1e9525.gif "wink"){kind=small}
Fair enough - being rich does not in itself mean that your intentions are different. I will admit that I am fascinated reading these boards when long time collectors, who are clearly now able to afford very expensive wines, talk about their wine journeys and discuss specific wine experiences from 20-30+ years ago. So I have no doubt that there are indeed wealthy folks with tremendous passion, knowledge, and experience with wine - I just don’t think that they are the ones driving the increase in prices.
In my experience and observation, there are many among the newly moneyed crowd where brand and status symbol are far more important that the underlying product - this is particularly true in many emerging markets. I am certainly not saying that it isn’t possible that some of these folks are indeed passionate and knowledgeable about wine, but I would put those people in the distinct minority.
That being said, it is a pretty subjective topic so ![[cheers.gif]](/uploads/db3686/original/2X/0/0ff9bfcdb0964982cd3240b6159868fbdf215b1a.gif "cheers"){kind=small}
, may you enjoy the most expensive wine you can afford very soon.
To add: take another luxury good like a diamond that has had a well functioning market and has a tight control on supply. It’s prices have doubled since 1990. Take a market like concert tickets which has typically had problems reconciling face value and the secondary: prices have at least tripled.
Let’s all just be happy that neoliberalism is collapsing:
Drink the most expensive wine you can afford, and not anymore expensive than that!
posted by Howard Cooper
Fine. Double every price I listed and my point is still valid.
Disagree. Those wines you list are very, very good, but they are not iconic nor best of class. There are many wines who are both for relatively inexpensive prices. They are just not lusted after nor fetishized by the wealthy. You need to taste outside Bordeaux and Burgundy.
The price of benchmark wines has grown in almost exact proportion to the drinkers of those wines ability to social signal their consumption.
You can plot the graph.
These wines are now pretty much enjoyed less by richer people rather than enjoyed more by oenophiles of normal means. So, net enjoyment of these wines has actually waned.
And I’m fine with, I belief in a free market, just just don’t dress these poseurs in ‘wine-drag’ as champions of discernment or educated palates.
That being gotten off my chest…Flame away. I picture the market as having shifted from nerds hanging at the wine shop over to the Clampetts, not connoisseurs, so to speak.
I will attempt to bear my anticipated criticism with the grace of Jeffrey Toobin after a Zoom call.
Agreed. I started drinking good wine in the 70s because my father was an expert and then I was buying wine by 1980. A friend and I had starting subscribing to the Wine Advocate about a year before the 1982 Bordeaux futures came out. The prices were great, even for that time - significantly cheaper than prices in the market for 1975s, 1978s and 1979s. A lot of the real sweet spot I think was not in the early 1980s but probably more the late 1980s and 1990s when prices for Bordeaux were still excellent and small importers like Terry Theise, Kermit Lynch, Peter Weygandt, etc., etc., had started bringing in wines from top quality small production wines from Germany and all over France. By the late 1980s, it was easy to buy Burgundies from producers like Jacky Truchot, Bachelet, Lafarge, etc., etc., etc., and at relatively reasonable prices. And, it my local market at the time, David Schildknecht was working at retail pouring great wines for people to try and helping separate the great wines from the mediocre.
I may have shown emotion with what I said but it was not aimed at you but rather at my sadness in what has happened to wine prices.
From what I have seen, in many small estates in Burgundy at least this is not what is happening. US prices are far higher than prices at retail in Burgundy (and very far above prices a friend of mine gets at a couple of wineries where he gets allocations) indicating that the trade is making a lot of money on a lot of highly allocated wines, not the wineries.
Gotta disagree on this. I could “afford” more expensive wines than I buy but choose not to. Law of diminishing returns and all that
I’m somewhere in between you two. I’m more able to afford a First Growth today at $1000 than when I graduated and they were $100. Still not buying them. I buy some higher end wines but within reason, plus a lot of regular wines for daily drinking. Even still, I feel like I drink pretty high on the hog as it is highly informed buying.
You guys are reciting the CCP playbook. ie, things are ‘bad’ because…(drumroll) rich people.
But how many centimillionaires, billionaires, etc, from China have acquired refined wine taste? China is THE economic (raw corrupt capitalism) power in the world, with three times the US population. Do you think something other than economic hegemony of China is driving insane pricing of status wines?
But that’s exactly what’s happened. Think about formerly rustic regions now producing cult classics such as St. Joseph, Cornas, unicorn Jura wines, etc. These are status symbols too, just among a smaller cognoscenti. Hard to see how it happens without the internet and resulting explosion of knowledge.