Tag Archives: expensive wine

The growth of ultra-expensive wine

expensive wineDoes the increasing popularity of ultra-expensive wine mean wine has become a collectible and not something to drink?

The Big Guy, who hangs out with a better class of wine drinker than I do, forwarded me the auction company email: “Can you believe the prices of these wines?” he wrote. The list was expensive wine run amok – impressive labels, certainly, but prices that even I had trouble comprehending:

• $8,500 for a bottle of red Burgundy.

• $1,000 for two bottles of an 1872 Madeira.

• $40,000 for a case of 2000 Petrus, perhaps the Holy Grail of wine collecting.

• $4,750 for a magnun of another red Burgundy.

Which raises a host of questions: Who buys these wines? Do they actually drink them? And, of course, the one that has always fascinated me – how does one justify paying thousands of dollars for a bottle of wine?

Because spending that kind of money happens all of the time. It’s just not auctions, but includes trading on Liv-Ex, a stock exchange for wine. In this, the growth of ultra-expensive wine sales and expensive wine becoming more expensive have been hallmarks of the 21st century wine business. Two decades ago, people bought wine to drink it. Today, more and more people buy wine not to drink it.

This matters for two reasons. First, as these ultra-expensive wines grow in popularity, more resources will be devoted to them. If more resources are devoted to these wines, will less be available for the wine that most of us drink? Second, how healthy can the wine business be when its most prized products are kept in locked vaults? How can the evolution of wine — from something to drink with dinner to a version of coin collecting — be a good thing?

Yes, the sale of ultra-expensive wine remains a small part of the wine business. Those 10 million cases of Barefoot that are sold annually dwarf ultra-expensive wine sales. But how much attention does all that Barefoot get? The hype for ultra-expensive wine dwarfs Barefoot, as well as the rest of the wines that most of us drink. That even I’m writing about it says something – and it’s probably not good.

More about ultra-expensive wine:
Wine as a collectible, and not something we drink
Expensive wine prices in the real world
More about wine prices 2018

Expensive wine 112: Chateau Montelena Chardonnay 2015

Chateau Montelena ChardonnayThe Chateau Montelena chardonnay remains classic California white wine

The Big Guy and I were drinking pricey California chardonnay, which is probably worth a blog post all by itself given our devotion to white Burgundy. The point here, though, is that the wines we tasted, which included the Chateau Montelena chardonnay, reminded us that California producers can make some of the best wine in the world.

The Chateau Montelena chardonnay ($48, purchased, 13.5%) remains the kind of California wine that helped earn the world’s attention at the Judgment of Paris in 1976. It’s elegant and balanced, without the too much of one thing or another that makes me crazy when I taste high-end California chardonnay. Yes, some of my colleagues may consider this a fuddy-duddy approach to winemaking, but it’s their problem if they can’t appreciate grace and virtuosity.

What makes the Chateau Montelena chardonnay so classic? Taste this – even just one sip – and you can tell it’s Napa Valley chardonnay. That means more fruit (a lovely, barely ripe green apple) and an undercurrent of minerality, as well as layers of structure. The oak is decidedly New World, but it isn’t over the top and will integrate into the wine over the next several years.

Highly recommended. This is a delicious wine that will only get better over the next five years and could last even longer.

Expensive wine 111: Pehu Simonet Champagne Face Nord Extra Brut NV

Pehu SimonetThe Pehu Simonet is quality Champagne, but not necessarily the kind of Champagne that you’re used to drinking

These days, when Champagne is sold in grocery stores and retailers like World Market, it’s often difficult to remember what all the fuss is supposed to about. Bubbly with toilet paper and rag rugs? Hardly the luxury profile that the Champagne business wants for its product. But that’s where something like the Pehu Simonet figures in.

The Pehu Simonet ($50, purchased, 12.5%) is a remarkable wine, a bubbly from a small family producer that shows off the region’s diversity and quality. In this, it demonstrates that not all Champagne has to taste like Veuve Clicquot.

Call it beguiling, but not for everyone; missing is the brioche and caramel of more commercial bottlings. But it also isn’t made in the fruit and acid-driven style driven style of something like Ruinart, which I enjoy every much. For one thing, the Pehu Simonet is drier than most bubbly (extra brut is more dry than brut, which is the usual designation for a dry sparkling wine). For another, to quote the importer’s tasting notes, the palate is “surprisingly rugged, kind of like skirt steak.”

I don’t know that I’d go quite that far, but you get the idea. There is green apple fruit, almost ripe, and it does eventually show through the wine’s impressive and almost unending minerality. This is Champagne to be considered as much as it is to be enjoyed, and I wasn’t prepared for that when I first tasted it. Halfway through the bottle, though, I was finally beginning to understand what was going on. And I was glad I made the effort.

Imported by Skurnik Wines

Expensive wine 110: Eyrie Vineyards Pinot Gris Dundee Hills 2016

Eyrie Vineyards pinot grisThe Eyrie Vineyards pinot gris is substantial, age-worthy, and delicious – who cares what score it got?

How useless are scores? The Eyrie Vineyards pinot gris got 88 points on Cellar Tracker (the blog’s unofficial wine inventory software). Just 88 points for one of the best-made wines I’ve tasted in my life? So yes, past useless.

The Eyrie Vineyards pinot gris ($22, purchased, 12.5%) is a dazzling Oregon white that doesn’t rely on showy limeade fruit to make its point. Rather, it’s about spice and white pepper, a full and complex mouth feel, and layers and layers of subtlety. In this, what fruit there is (lime peel?) is just one of its many attributes.

But why not? The Lett family behind Eyrie has been making Oregon wine for as long as there has been Oregon wine, and every Eyrie wine I’ve ever tasted reflects their history and passion. This is a substantial wine, as “important” as any chardonnay is in the foolish hierarchy that is part of how wines are scored. Or, as a nationally known expert once told a judging panel I was on: “If it isn’t cabernet, chardonnay, or pinot noir, it doesn’t get a gold medal.”

Highly recommended – not only one of the pinot gris I’ve ever tasted, but a steal at this price. This is a substantial wine that will age for maybe a decade, but is delicious now. Pair this with roasted or grilled seafood and chicken dishes (no heavy sauces), and marvel at what second-generation owner Jason Lett has accomplished.

Expensive wine 109: La Rioja Alta Vina Ardanza Reserva Rioja 2008

La Rioja Alta Viña ArdanzaThe La Rioja Alta Vina Ardanza speaks to terroir, tradition, and quality – and at a more than fair price

Rioja, the Spanish red wine made with tempranillo that comes from the Rioja region of northern Spain, is one of the world’s great wine values. And it doesn’t matter whether you want to spend $10 or $100. Case in point: the La Rioja Alta Vina Ardanza ($37, purchased, 13.5%).

In the past decade, Rioja producers have been caught between Parkerization, which demanded riper, higher alcohol wines for a high score, and traditionalists, who believed in Rioja’s legendary terroir.

The traditionalists won; even Parker likes the La Rioja Alta Viña Ardanza, giving it 93 points.

Their victory is a triumph for everyone who appreciates terroir and making wine taste like where it came from. The blend is 80 percent tempranillo and 20 percent garnacha, and the latter smooths out the tempranillo but doesn’t cover it up. The result is a full, open, expressive, and traditional Rioja that is a joy to drink.

Look for an inviting earthiness, the lovely and telltale orange peel, and rounded cherry fruit, all balanced by a subtle acidity and a hint of tannins. There is even a little baking spice tucked in – the whole is truly greater than the sum of the wine’s parts. This vintage should age and improve for another five years or so, but is ready to drink now.

Highly recommended, and especially as a Father’s Day gift for a red wine drinker who wants something different. Or who appreciates classic wine produced in a classic manner.

Making more expensive wine doesn’t necessarily mean higher profits

expensive wine

Stefano Castriota: “The key is not whether higher quality implies higher prices, but rather whether it boosts profitability, and it does not.”

Italian study finds that cheap wine producers are more likely to do better than those investing in premiumization

No one was more surprised than the Wine Curmudgeon after my email chat with Stefano Castriota, whose working paper about price and quality (“Does Excellence Pay Off? Quality, Reputation and Vertical Integration in the Wine Market”) was recently published on the American Association of Wine Economists website.

“How can you say if price and quality match?” he wrote me. “You can only see whether they are correlated. And they are, in my research and in the previous literature. The key is not whether higher quality implies higher prices, but rather whether it boosts profitability, and it does not.”

In other words, premiumization – the biggest wine trend in the past decade – may be leading the U.S. wine business in the wrong direction. U.S.  producers have been spending hundreds and hundreds of millions of dollars to make more expensive wine in anticipation of higher profits, because U.S. wine drinkers are supposed to be abandoning cheap wine for something they perceive as better.

Castriota, who teaches at Italy’s University of Bolzana, did find that improved wine quality leads to higher prices. But he also discovered that higher quality is irrelevant when it comes to profitability.

“I was expecting these results,” Castriota wrote me. “The outcome of this research did not surprise me, but surprised many others. Most people – both in the academic and in the business sectors – look only at the advantages of excellence, but do not consider the costs/disadvantages. Many entrepreneurs end up over-investing in quality and reputation.”

Producers spend so much money to achieve higher quality – more expensive land, higher-priced grapes, better technology, increased marketing, top-notch winemakers – that they don’t necessarily make the same return on their investment as cheap wine producers, who don’t do any of those things.

The latter just sell more wine: “Being able to sell the wine is more important than producing good wine,” Castriota said in an email. “This is why in my analysis the firm size is the most important driver of profitability.”

The bigger, the better

That’s because the “issue is business scalability, the possibility to increase production once you achieve excellence,” Castriota wrote. “If you spend a lot of money and invest huge capitals to become famous, but cannot increase the supply, firm profitability can be low or even negative. In the restaurant sector is the same: hiring the most famous chef and interior designer and buying the best raw materials is expensive. You have surely higher revenues, but also higher costs and capital invested. In the end, with respect to the capital invested, are you more or less profitable than a whatever medium-level restaurant?”

The caveats now: First, the study measured wine quality using ratings from Italy’s Veronelli, a leading wine guide. We’ve noted here the tenuous link between critical ratings and wine quality. Second, the Italian wine industry is not exactly like ours, and U.S. and other New World producers may not be as constrained as those in Italy. Having said that, Castriota emailed that it would be reasonable to expect the same results “or something similar. We don’t know until we see some study with other data.”

Finally, the study doesn’t specifically address premiumization; that’s my interpretation. But that approach makes sense, given the rationale to premiumization – that producers will make more money selling more expensive wine. Which Castriota says isn’t necessarily true.

“If you succeed in selling bottles at $50 or $100, you make a lot of money, but for every very profitable firm there is another one which is losing money,” he emailed. “On average, looking at the data, I did not find any significant return of excellence, which is very expensive. [A]chieving quality and reputation is not a necessary condition to become profitable because the costs and the required capitals increase a lot.”

Is it any wonder I worry about the future of the wine business?

Expensive wine 108: Patrick Baudouin Savennieres 2014

Patrick Baudouin SavennieresThe Patrick Baudouin Savennieres shows why chenin blanc should be one of the world’s great wine grapes

Chenin blanc may be the least respected grape in the wine world. In California, it’s used to make sweet, white jug wine or a treacly varietal. Even in France, where it’s best known for Vouvray, the wines can be dull and too soft.

This has always baffled me. Chenin blanc can make amazing wine – fresh, crisp and almost steely. I’ve annoyed any number of winemakers over the years, asking: “Why don’t you do chenin blanc?” after tasting their very ordinary and overpriced chardonnay from a part of the world that doesn’t need to be making chardonnay.

Which bring us to the Patrick Baudouin Savennieres ($40, purchased, 13.5%), a chenin blanc that demonstrates the grape’s potential. The Savennieres region is in the Loire in central France, not as well known as nearby Vouvray and overshadowed by the Loire’s reputation for some of the world’s best sauvignon blanc, made in Sancerre.

The Patrick Baudouin Savennieres shows none of this need be true. It’s classic Savennieres – rich and full in the mouth, but not oily or oaky. In fact, this wine could be used to teach how to do oak. There isn’t much fruit at all (maybe barely ripe pear?), but there is that wonderful Savennieres nuttiness and minerality as well as white pepper and an almost clove something or other. Plus, like all great wines from the region, it will age – maybe 10 more years.

Highly recommended, and especially for any Mother’s Day celebration where Mom wants something a little different. Drink this chilled, but open it 30 or 40 minutes before you drink it.