Tag Archives: wine prices

Expensive wine pricing and snobbery have been institutionalized, legitimized, and even admired

expensive wineCan’t afford to buy one of the world’s great wines? Then lump it

This is the second of two parts looking at the conundrum that is wine pricing today – we’re awash in cheap, often crummy wine, while the prices of the world’s great wines are at all-time highs. Today, part II: How we got to the point where no one but the ultra-rich can afford the world’s great wines. Part I: The grape glut, and what it means for consumers.

The problem with expensive wine prices is not that they are expensive or that wine snobs are eager and willing to pay them. We’ve always had both. Rather, it’s that never before in the history of wine has pricing and snobbery been institutionalized, legitimized, and even admired. We’re at a point where people buy the world’s great wines not to drink them, but to keep them in a vault and watch them appreciate in value, using their acquisitions to prove their superiority to the rest of us.

How screwed up is that?

But that’s where we are, and it’s the reason why the world’s great wines cost thousands of dollars a bottle. Consider: I can pay for a place to live for a month, or I can buy a  2016 Harlan Estate cabernet sauvignon for $1,450 at a Dallas retailer. By one estimate, prices of the finest wines have increased eight-fold since the early 1990s, even after inflation.

On the other hand, the price of decent everyday wine, despite premiumization and inflation, is probably about where it was when I started the blog in 2007. I could buy Domaine Tariquet for $10 then, and it’s more or less $10 today.

So how did we get to this point?

Much of it has to do with the seismic shift in U.S. wealth distribution over the past 40 years, where we’re approaching disparities not seen since the Depression. More millionaires mean more people with more money to spend, so why not spend it on wine? Isn’t that what rich people do? Or, as Sports Illustrated’s Jonathan Wilson has called it, the greed of late-period capitalism.

Besides, as one California winemaker told the San Francisco Chronicle’s Esther Mobley: “I’m starting to come to terms with the fact that wine has always been a luxury commodity. Unfortunately, it’s a beverage of privilege.”

And what better way to leverage that privilege than with Liv-Ex, the stock market for wine? Buy a bottle, put it away, and watch it appreciate in value. Who cares if it spoils or goes off? The point is not to drink it, but to use it to amass even more wealth. And, since the supply of fine wine is limited, the more it’s in demand, the higher the price will go. And, as Eric Asimov pointed out in last week’s New York Times, demand is increasing thanks to all that wealth.

How sad is that? Great wine reduced to a share of stock.

The irony, of course, is that legitimate stock markets serve an economic purpose, to help companies raise capital. Amassing wealth is a benefit, and not a stock market’s reason for being (as it is with Liv-Ex). The other irony? Liv-Ex is a lousy way to amass wealth. Its Fine Wine 50 index has increased 26 percent in five years, or about what an ex-sportswriter who writes about wine could do with a mediocre mutual fund. The Dow Jones Industrial Average, on the other hand, has increased about twice that much.

Long-term effects

So why does this matter to the rest of us? Shouldn’t we happy with our Tariquet and leave it at that? Let the snobs waste their money. And don’t we have more important things to worry about, like the increasing disparity of wealth?

Yes, obscenely expensive wine prices are a result of the disparity, not a cause. But know two things: First, that these prices work their way down to the bottom, so every $1,000 bottle of Harlan ends up raising all prices. The Mulderbosch rose, a pleasant enough wine, now has a suggested retail price of $17 for no good reason at all, save rising prices elsewhere. In fact, that’s the sham of premiumization — we’re paying more money for the same  quality wine and not a better bottle.

Second, and more important, can you imagine a world where only the most wealthy are allowed to look at great art and to read great books? You’re not rich enough for Picasso or Rembrandt or Shakespeare or Jane Austen, so lump it.

That’s not a world I want to live in. Do you?

Photo: “Wine Auction” by alans1948 is licensed under CC BY 2.0

The WC Wine Business Index: Four more signs the wine glut is upon us

grape glutThe grape glut means there’s lots of cheap wine on the market, from Aldi to Costco to Albertson’s

This is the first of two parts looking at the conundrum that is wine pricing today – we’re awash in cheap, often crummy. wine, while the prices of the world’s great wines are at all-time highs. Today, part I: The grape glut, and what it means for consumers. Part II: How we got to the point where no one but the ultra rich can afford the world’s great wines.

How do we know the wine glut is upon us? Because the Wine Curmudgeon’s Wine Business Index tells us so. How about $2 wine in many of Albertson’s California stores? An Aldi chardonnay where the bottle probably cost more than the wine inside it? Or a constant flow of samples this fall of cheap wine that I’ve near heard of before?

In other words, there are lots and lots of grapes in California, and neither the Trump tariff or increased on-line sales have done anything to fix it. And why do we care about a grape glut? Because if there are too many grapes, we’re going to see cheaper wine prices, thanks to the law of supply and demand. This doesn’t necessarily mean we’ll see lower prices on established wines; rather, what I’m hearing is that producers are “inventing” cheap wine brands or making private label wine to soak up excess grapes.

First, though, what you need to know about the WC Wine Business Index. It’s my attempt to overcome the contradictions, inaccuracies, and confusion that are inherent in most wine statistics. I interview retailers, producers, and marketers from around the country to see if I can outline where the wine business is and what it means for consumers.

Alive and well

And from what I’ve found, the glut is alive and well:

• Consider Albertson’s Sea Ridge wines, which have been marked down to $2.21 from $3.49 in many of the chain’s West Coast stores. At that price, the supermarket is more or less selling the wine at cost. (And a tip o’ the WC’s fedora to blog regular Nick Angel for sending this my way.)

• Aldi’s $8 Exquisite California chardonnay. It comes in a heavy bottle (about 21 ½ ounces) with a deep punt and a heavy foil cap. This is could well be a “shiner,” said one long-time Sonoma winemaker. That means the wine was bottled by another producer, but sold to Aldi at a discount. “I haven’t tasted it,” said the winemaker, “but it would have been produced by someone who thought they would sell it for $30-plus a bottle, but it became ‘albatross inventory’ and got sold real cheap.”

Costco’s Kirkland Sonoma chardonnay, which has sold for $7 or $8 for the past couple of vintages That’s an almost unheard of price, even for a deep discounter like Costco. It works out to about $3 a bottle for the wine (allowing for $2,400 a ton for chardonnay and 756 bottles to a ton). So, somehow, the cost of production and any profit has to come out of the other $4 or $5. (Another tip o’ the WC’s fedora to blog regular Walter Blood for sending this my way.)

• Sample after sample of wine costing $15 and less from producers I’ve never heard of. Typically, this only happens when there are excess grapes and chance to make a wine at high margins even at lower prices.

Having said all of this, one Napa winemaker told me she doesn’t expect the glut to last much after the 2020 vintage. This year’s harvest almost certainly won’t be as big as 2019’s, which will limit production. So the future for prices as we go into 2021 remains uncertain.

Winebits 670: It’s all about prices

pricesThis week’s wine news: It’s all about prices — supermarket shoppers cast a wary eye, Illinois weed prices stay high, and European Union sets tariff hikes

Not in my supermarket: Shoppers, who’ve seen shortages and price hikes during the pandemic, are focusing on value at the supermarket, says a new study. The dunnhumby Consumer Pulse Survey, reports Supermarket News, found a significant lack of consumer confidence that stores are doing a good job dealing the with COVID-19 crisis, and “remain concerned about rising food prices and are adhering to a value-focused shopping strategy.” The study doesn’t specifically mention wine, but since a majority of U.S. wine purchases are made in supermarkets, it stands we’re also watching those prices. In September, only half of U.S. survey respondents thought stores were doing a good job, down from 52 percent in July and 60 percent in May.

Pricey legal weed: Illinois’ legal weed shortage appears to be over, says the Chicago Sun-Times, but prices have not come down. “According to industry analysts, Illinois has the most expensive weed in the country. Budzu, a crowdsourcing site that tracks the price of cannabis, says the average cost for an eighth of an ounce is roughly $62. In Colorado, the same amount costs around $33.” Reasons for the high prices vary, says the story, but one analyst blamed them on weed growers and a lack of competition. The illegal price, according to one website, is about half the legal price.

Tariff hikes coming? Bloomberg reports that the European Union has set a Nov. 10 target date for triggering tariffs on as much as $4 billion of U.S. goods in retaliation over illegal aid to Boeing Co. This would come in retaliation for the Trump Administration’s tariffs last year, including the 25 percent wine levy. Goods targeted for a tariff include aircraft-related products, spirits and nuts, and  handbags and chemicals. U.S. wine is not apparently on the list, but the U.S. exports relatively little wine to the EU, and especially compared to bourbon and similar whiskeys.

Ask the WC 25: Three-tier reform, wine prices, wine scores

three-tierThis edition of Ask the WC:  Is the Supreme Court going to take a three-tier system case? Plus, what’s happening with wine prices and why does the WC dislike scores?

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Hi, Wine Curmudgeon:
I really liked your post about buying wine illegally. Is there any chance we can get rid of all these stupid laws and buy wine like normal people?
On-line wine buyer

Dear On-line:
A variety of cases are wending their way through the legal system that could make it possible for us to buy wine from out-of-state retailers and on-line. They include my favorite, Walmart’s attempt to overturn a Texas law that says publicly-held companies can’t get a state retail liquor license. Talk about foolish. However, another case is attracting more legal attention — Lebamoff v. Michigan. Lebamoff, an Indiana retailer, sued to be allowed to sell wine in Michigan. In this, it directly addresses out-of-state retailer sales. Tom Wark, who follows these things in his role as executive director of the National Association of Wine Retailers, told me he thinks there’s a good chance the Supreme Court accepts Lebamoff. If so, it should decide once and for all whether Internet and out-of-state retail sales are constitutional. Having said that, there’s no guarantee the court rules in favor of direct retail shipping if it takes the case.

Dear Wine Curmudgeon:
What’s going to happen with wine prices? I thought they were supposed to go down, but all I see is $15 wine in the grocery store.
Cheap wine buyer

Dear Cheap:
Your guess is as good as mine. The grape glut is real, here and in Europe, and I’m working on a post about that for next week. But I agree — prices don’t seem to have responded to an excess of wine on store shelves. The tariff, of course, is one reason. I also wonder if supply chain problems caused by the pandemic are limiting the supply. A limited supply means prices won’t fall, even if demand has decreased during the pandemic. So we will just have to wait and see.

Greetings, Charmingly Grumpy:
I’m new to the blog.. How come you don’t use wine scores like everyone else?
Inquiring mind

Dear Inquiring:
Scores are one of the three or four worst things about the wine business (the others being corks instead of screwcaps, premiumization, and three-tier). They’re biased in favor of expensive wines, regardless of quality; they don’t give enough credit to “lesser” grape varieties or to white wine; and they reflect the critic’s taste and not necessarily whether the wine is any good. In this, they are a crutch for retailers, who can post 88 points and figure that’s customer service. I explain what the wine tastes like so you can make up your own mind.

Photo: “Dallas Food Truck Truck Festival – August 2011” by BetterBizIdeas is licensed under CC BY-SA 2.0

Wine history lesson 2: Maynard Amerine on quality, price, and value

maynard amerineLegendary UC-Davis professor Maynard Amerine told us 45 years ago that price was no guarantee of quality or value

One of the most intriguing things about U.S. wine history is how it repeats itself. Time after time, smart people warn the wine business about what will happen if it doesn’t pay attention to its customers. And, time after time, the wine business ignores the warnings – much to its detriment.

Today’s wine history lesson comes from legendary University of California-Davis professor Maynard A. Amerine, with wisdom from his 1976 book (written with UC-Davis math colleague Edward B. Roessler), “WINES: Their Sensory Evaluation.” It was perhaps the most important wine book of its time.

What made it so important? I asked Randy Caparoso, a long-time wine critic and restaurateur, who wrote about Amerine on the Lodi wine appellation blog. What struck me about his Amerine post was that the UC-Davis professor echoed the analysis of pioneering wine writers Leon Adams and Frank Schoonmaker, who earned their own blog post about a year ago.

“I think people like Amerine, Adams and Schoonmaker could clearly see the writing on the wall,” says Caparoso. “That’s because, even in the ‘50s and ‘60s, they personally knew many a well-heeled wine collector or connoisseur. Same for me during my career as a wine professional, which started in ’78. These kinds of people were already driving up prices with their mania for ‘great’ wines. This was the essence of Amerine’s quote, ‘Drink wine, not labels.’ … But what was true 50, 60 years ago was bound to get even worse in the 21st century, and it has.”

In other words, Amerine – like Adams and Schoonmaker – predicted the mess we find ourselves in: Too much ordinary wine, too much overpriced wine, and a wine industry that doesn’t understand that it has lost its audience because it has focused on either ordinary or overpriced wine.

Enjoying wine –without the fuss

Hence, three of Amerine’s eight guidelines for enjoying wine:

• You don’t have to be an expert to enjoy wine. It’s “nonsense… The expert may know why he enjoys a certain wine but he would be presumptuous to claim that he enjoys it more than the amateur. The latter may, in fact, enjoy a certain wine more fully than the expert precisely because he doe not have the knowledge and experience to make all the possible comparisons among wine.”

• Small wineries are not better just because they are small. “Some of the worst wines we ever suffered came from small, picturesque wineries. We hasten to add that some of the best also came from small wineries. It is the standards of the producer, and a fair amount of luck, that determines the quality of the wines produced, not the size of the winery.”

• Expensive wines are not necessarily better than cheap wines. “Some are, many are not. Price depends on many factors that are not necessarily related to quality. Those who buy wines on a price-basis deserve what they get. … But it is the quality of the wine, not the price, that is important. Some famous vineyards, secure in the knowledge that they have an established market, often charge whatever the market will bear. This means that the wines are sometimes not worth the higher price if quality alone is the criterion for selection.”

Photo courtesy of the UC-Davis Library, using a Creative Commons license

Jacques Pepin: I usually buy wine that costs less than $10

Don’t believe the Wine Curmudgeon about the value of cheap wine? Then listen to the great Jacques Pepin

One criticism of the blog that has been consistent since it started: The Wine Curmudgeon doesn’t know anything about wine. Why else would I recommend cheap wine? This has come from blog visitors, sommeliers, and even other wine writers.

So I offer this, from legendary chef Jacques Pepin. He has cooked for several presidents of France, including Charles de Gaulle; written 36 cookbooks; earned a bachelor’s and master’s degree at Columbia University; and taught classes at colleges around the country. So he may know a thing or two about the subject.

Pepin talks about the role wine played on his series of cooking shows in the 1980s and 1990s, at the beginning of the U.S. wine boom. He thought it was important to introduce U.S. viewers to the joys of wine and food. He also thought it was important to point out that wine doesn’t have to be expensive: “I am not a snob about wine, you know. I usually buy a bottle under $10 or whatever, if you know what to buy.”

Which is where the WC comes in — because I have been here for 15 years helping you know what to buy.

This interview comes from a series Pepin recorded for the Television Academy Foundation, which has taped thousands of  interviews with people from the history of TV — actors, producers, writers, hosts, and the like. The Pepin series is worth watching, and especially when he discusses his friendship and working relationship with Julia Child.

More about wine and cooking shows:
Jacques Pepin loves cheap wine
Christopher Kimball: “Wine is too hard”
Julia Child and wine, both local and cheap

podcast

Winecast 52: Jessica Dupuy, The Wines of Southwest USA

Jessica Dupuy

Jessica Dupuy

Her new book, “The Wines of Southwest USA,” is a candid look at wine in Texas, Colorado, Arizona, and New Mexico

Jessica Dupuy, through her work with media outlets like Texas Monthly, has been fighting the good fight for Drink Local for more than a decade. Her latest effort: “The Wines of Southwest USA” ($40, Infinite Ideas). It’s a candid assessment of regional wine in Texas, Arizona, New Mexico, and Colorado. We’ll give a copy of the book away during the blog’s 13th annual Birthday Week, beginning Nov. 16.

Overall, she says, wine quality is much improved — but that is still much room for improvement. “We’re still not at the point where people see local wine the same way they see local spinach from the farm down the road, or peaches or whatever. So in that respect, we still have a lot of work to do.”

Among the topics we discussed:

• Arizona may offer the highest upside among the states in the book, thanks to a core of impressive young producers.

• Colorado remains one of the most fascinating states in the country, since so much of its grapes are grown at altitude.

• The pandemic has hit regional wine hard, and there remains doubt about how well it survive when things return to normal.

• And finishing a book during a pandemic, with home schooling, is not the easiest thing in the world.

Click here to download or stream the podcast, which is about 16 minutes long and takes up about 11 megabytes. Quality is mostly excellent.