The Soaring Price of Wine
As I sit at home drinking a glass of relatively inexpensive 2001 Castelnau de Suduiraut Sauternes (a sweet, white, Bordeaux wine for the uninitiated), I can’t help but consider the significant increase in prices seen in Bordeaux futures over the last five years. For that matter, wine from all over the world seems to be increasing in price at rate which is much higher than the rate of inflation.
Note that I said “relatively inexpensive”. I believe most people would consider spending $30, or about $1.18 an ounce, on a beverage very expensive, but compared to the $420, or $16.56/oz. that you might pay for 2001 Chateau d’Yquem, it seems like a bargain. Not that there is any comparison – Yquem is truly a singular experience from the few times I’ve had it.
You can buy many Bordeaux wines in a futures market that allows you to purchase wines two years in advance of release (one year after the vintage). Sometimes it would seem that this is an excellent opportunity – you purchase a wine at one price, and when it’s released it’s released at a higher price, and you’ve saved some money (well, perhaps, if you consider inflation).
Sometimes, though, you are effectively paying the same, or perhaps even a larger amount, ahead of time, and then the wine is actually released at or below what you paid two years prior. It’s a risk – you have to decide if you want to take it.
For the much-heralded 2000 and 2005 Bordeaux releases, I decided to take it, but in both cases I didn’t purchase any of the high scoring, top priced wines. I purchased lower-end wines knowing that even if the price didn’t go up, it guaranteed that I’d get my hands on some bottles that I could lay down for a couple decades, at a price that I thought was reasonable.
In 2000, you could have purchased some of the top wines, like Lafite-Rothschild or Marguax, for perhaps $300/bottle in futures (I think I saw more like $330, but I’ve heard people swear that they saw $279, so lets split the difference, more or less). For 2005, you could find these for $550. This is two years before you can even lay your hands on it, and perhaps 20+ years before you can even enjoy it (2005 Bordeaux are expected to be very long lived, but also very tannic, which means that they could be difficult to really enjoy for several years to come).
What motivates this 83% price increase in five years? This is around 13% per year increase in price.
Apparently, they are selling well, so the demand is out there. There are rumors that this is primarily coming from emerging markets like Russia and Asian countries, which have seen their incomes grow significantly in the last several years.
This isn’t even the top of the line, either. One of the most sought-after wines in the world, produced in very small quantities, is going for $2400 per bottle. In 1982, another wonderful year, it was $50 a bottle, which at the time I’m certain also seemed insane for a beverage that you might be enjoying now, 24 years later, over a meal.
What else has increased 48x in price over 24 years?
