28 Aug 2013 - I've been thinking a lot about wine pricing recently and thought that it might be fun to revisit this article I wrote for the Financial Times in July 2004. Not least in view of what has happened to first growth bordeaux prices since, but also in view of the 10-year anniversary of the 2003 vintage. Here are Julia's assessments of how many of the top 2003 red bordeaux are ageing. Incidentally, eastern European wines no longer look such a bargain - JR
it has happened. Thanks to the extraordinarily high price increases
recently announced by the top producers, the Bordeaux market has now
irrevocably split into wines for drinking (most) and wines for trading
(a tiny but important elite). The only reason it matters that the first
growths and the rest of the most fashionable 2003 red bordeaux actually
taste good is so that they can earn a decent score from the
points-givers who sway the market. Most of these wines will sit in
warehouses for most of their lives, passing from one cash-hungry owner
The odd bottle will be opened in the dining rooms of the châteaux
themselves and, very occasionally, at highly priced tasting events. But
very few people on this planet will feel comfortable about opening a
bottle of 2003 when it is ready to drink in 10 or 20 years’ time which
cost in 2004, long before bottling and storing was paid for, almost
£200 a bottle.
As reported here as long ago as the beginning of April, the best of Bordeaux 2003s came from the Pauillac/St Estèphe boundary. Duly châteaux
such as Lafite, Cos d’Estournel and Montrose have come out with quite
exceptional price increases. Cos’s release price on to the Bordeaux place,
the official Bordeaux merchants’ marketplace, was €90 a bottle, even
more than the €57 asked for Cos 2000 on release, and a 150 per cent
increase on the previous year’s release price of €36. The wine is now
selling on the UK fine wine market at well over £800 a case with its
neighbour Montrose (wine of the vintage, as I reported) now commanding
£1,000 a case even though it was released at a much more modest €45.50
these heavily sought wines are ‘mere’ second growths. The most popular
first growths such as Lafite have been selling for £2,000 a case,
sometimes in complicated ‘tied’ deals whereby a buyer of Lafite is
forced to buy wines from other, sister properties (not that this is so
awful in the case of Duhart Milon 2003).
these fashionable wines have been released almost two months after the
Bordeaux 2003 campaign’s first releases, whose prices were relatively
modest. Just up the road from Cos, Montrose and Lafite in the Médoc
appellation, owners of much more modest estates are currently being
offered for as little as one euro a bottle for wine in bulk to be bottled
with a château name by a merchant bottler.
Nowhere else in the world is there such a disparity of price between
the most and least fashionable representatives of a wine region.
So, top of my list of wines that are currently overpriced is top bordeaux 2003.
Prices here are inflated partly by producer ego but also by the
collective hysteria that grips the fine wine buying public every few
vintages - and it is not as though the 2003 vintage will go down in the
history books as a great one.
There are other reasons why wines are overpriced, however. Other obvious candidates as overpriced wines are Piemontese reds,
Italy’s famous Barolo and Barbaresco in particular. The prices of these
have been inflated for years by what looked like insatiable demand from
visitors to the cellars here in north-west Italy from Germany and to a
certain extent Switzerland, and strong demand from the United States,
not least its plethora of ambitious Italian restaurants. This demand,
together with a string of superior vintages, encouraged Piemontese
producers to impose ever-higher prices. Except that German demand has
shrivelled with the German economy. American demand has shrunk now that
the dollar–euro exchange rate is so disobliging. And the two most
recent vintages were by no means so great. Piemontese cellars are
therefore full of unsold stock but, la bella figura being what it is in Italy, remarkably few producers are prepared overtly to reduce their prices.
There is a similar problem in many a Tuscan
cellar, which will soon be aggravated by the fruits of extensive new
plantings, particularly on the Tuscan coast, although Tuscany was not
quite such a popular destination for thirsty German weekenders.
Some wines are overpriced because of excessive local enthusiasm for them. A prime example of this is fine Greek wine,
an oxymoron no more as I shall be reporting soon. Many good wines are
made in Greece today, and some bad ones also enjoy unaccountably high
reputations within Greece. But as wine has become a fashionable
interest for Greeks, so the more popular winemakers have been
emboldened to push their prices to heights that seem unwarranted in an
international context. A few exporters are knowledgeable enough to be a
little more modest, but not many.
For exactly the same reason, extreme modishness at home, top Spanish wines seem expensive once they are exported. Wine is now a legitimate interest with many young, and not so young, Madrileños
and Barcelonans. But as in so many youthful wine markets, most
practitioners follow third-party recommendations, and often exactly the
same third parties at that. So the handful of officially sanctioned
great Spanish wines such as L’Ermita from Priorat and Dominio de Pingus
from Ribera del Duero sell for as much as a first-growth bordeaux, with
a history that can be measured almost in minutes rather than centuries.
And no discussion of overpriced wines can ignore upper-end California wine.
Admittedly there is, at last, feverish activity at the cheap end of the
market. So great is the grape glut in California today that some of the
cheapest wines in the world are special bottlings based on the
California bulk market, sometimes even shipped in bulk to Europe. In
fact these new labels have provided a new stimulus to wine bottlers in
such unlikely locations as Irlam, Corby and Newcastle-upon-Tyne in the UK. But
from the middle of the market upwards, a very substantial proportion of
California wine on sale today looks absurdly expensive.
best wines of California do, as Robert Mondavi predicted all those years ago, 'belong in the company of the finest in
the world', but that is no reason why all the others should think they
have earned a premium price. California wine producers were spoilt by
buoyant demand during the dot.com boom but much of the formulaic
Cabernet and Chardonnay on sale today at $50 a bottle really should be
$30 at most in view of the quality available elsewhere – often in a
very similar style.
brings us on to the much more interesting topic of which wines of offer
today are underpriced. For my suggestions, see below.
UNDERPRICED WINE CATEGORIES
Top bordeaux 2002s
Better AC red bordeaux and Médoc
Sicily and Puglia
Basic Spanish red
All eastern European wine (except Tokaji)