Wine is becoming a luxury

Bargain hunting is getting ever more difficult for wine lovers. Penfolds' latest baby, pictured here, is designed to retail at £850 a bottle. A version of this article is published by the Financial Times.

Have you noticed how expensive wine is getting? It would be easy for those of us in Brexit-torn Britain to blame it on the decline of the pound, particularly since so much of the wine we import comes from the eurozone. But wine price inflation is a global phenomenon that applies to wines from the bottom to the top, especially the top, of the scale. 

Admittedly here in the UK those looking for bargains from the supermarkets were able to benefit from a golden age in the 1980s and 1990s when the supermarkets’ professional wine buyers were motivated and tried really hard to have a better-quality selection than their rivals and prices moved hardly at all. Then in the early, super-competitive years of this century, prices remained remarkably stable but quality nosedived as a result, and brand owners tired of making pennies per bottle turned their attention to more lucrative markets such as China and some other northern European ones, leaving the supermarkets to depend increasingly heavily on their own bottlings – often bottled in the UK to shave more pennies off transport costs.

And in the last few years, thanks to the plummeting pound, successive duty increases and, significantly, a UK wine market that has at last started to shrink, even supermarket prices have been escalating. The big retailers need to maintain turnover, but the £5 bottle has become a distant memory for those who want their wine to have some sort of character at least. 

With notable exceptions such as Germany and the Netherlands, other countries tend to be much less price-sensitive than the UK. Indeed it sometimes seems as though Americans and some Chinese actively seek out high price tags on bottles. Until recently wine sales were soaring in the US and China, the two markets wine exporters have been most likely to pin their hopes on, but both of these are slowing in total volume too. 

But this doesn’t (yet?) seem to be putting any sort of brake on price rises at the top end of the scale. You only have to look at the remorseless price rises of the Bordeaux first growths, emblematic trophy wines that can easily cost £500 a bottle, which have been actively selling themselves as luxury goods. And, just like the LVMH stablemates of some of them (notably Ch Cheval Blanc and Ch d’Yquem), they are hard at work trying to forge direct links with the end buyer rather than continuing to rely on Bordeaux’s many-linked distribution chain. 

Now that Burgundy has become the height of wine fashion, the prices of Burgundy’s most revered wines, grands crus from the top-drawer producers, have leapfrogged those of the Bordeaux first growths in the last few years. A bottle of Domaine Armand Rousseau’s Chambertin would be a four-figure sum – except that it would rarely be offered by the single bottle; it would be much more likely to be traded by the stratospherically priced case on the fine-wine merry-go-round, escalating with every deal. 

This price inflation has percolated right down the Burgundian hierarchy. At least one London fine-wine importer blames the internet. Speaking off the record, for fear of losing his precious allocations, he told me, ‘The problem is that they can all see what their wines are selling for all over the world now, and they want a bigger share of it.’ The days when producers added a modest percentage to their production costs are long gone. 

And a crucial factor in support of all this ambitious pricing is that nowadays the number and wealth of people willing to buy famous wines is exponentially greater than it was even 20 years ago. A producer with a reputation knows that if a budget-conscious British or American buyer passes on their trophy wine, there will be a collector or trophy hunter in Asia, Russia or Brazil who will be only too glad to take up the slack. 

And the succession of short vintages in Burgundy that coincided with the rapid expansion in demand encouraged the better-known producers in, say, the Rhône and fashionable parts of Italy to increase their prices. (California, with its ready-made, well-heeled domestic market, needed no such encouragement. Silicon Valley is but a short limo ride from Napa Valley.)

At least in Burgundy there’s an accepted hierarchy of appellations and long-held reputations. How does a much newer producer in a wine region without much of an international reputation price their wine? After all, the price bracket that surely interests most of us is way below trophy wine level.

Not so long ago, it seemed that prices were relatively modest initially, until reputations and/or high scores were won. But now, from where I sit, more and more wine producers dive in at the deep end, asking really quite ambitious prices from the get go. They may be emboldened by the fact that, even if less sheer volume of wine is being drunk in many countries (particularly Britain, where no and low-alcohol social drinks are enjoying as much of a vogue as gin, craft beer and cocktails), drinkers are tending to trade up. Those who treat themselves to one really special bottle at the weekend punctuating virtuous trips to the gym are starting to encroach on the little and often brigade, which will presumably gladden the hearts of the medical preachers?? 

On UK shelves and retail wine lists, I view £10 to £25 a bottle as the sweet spot that is likely to be of most interest to my readers (and I will try to concentrate on this price bracket in my four weeks of specific recommendations leading up to Christmas). But it is becoming increasingly difficult to find wines of real interest under £25 a bottle. 

The Languedoc should be a source of great-value French wine because land is relatively inexpensive and only producers such as Grange des Pères and Mas de Daumas Gassac have established an international reputation. But when I tasted a range of wines from relative newcomers this summer, prices were all over the place, up top €40 a bottle ex cellar, without much apparent logic or justification. I had the great pleasure of tasting through the current range of wines from an ambitious wine estate, La Pèira, on rocky hillsides in the Languedoc’s Terrasses du Larzac appellation recently. Its delicious top red, called La Pèira, retails for about £50 a bottle, which I presume to imagine is quite a difficult sell, even though it is every bit as good as many red bordeaux at the same price.

Will Berlins, an American who settled in Western Australia’s Margaret River region only a few years ago and started to grow and make his own wine, decided to start at the top. Qantas Wine are currently offering his 2016 Cabernet at AU$350 (almost £200) a bottle. His neighbours may be envious, but are also delighted by the permission it gives them to raise their prices. As virtually everyone else seems to be doing. 

Wines that seem underpriced – for now

  • Côtes du Rhône rouge
  • Bordeaux crus bourgeois and the like
  • Loire whites, especially Muscadet
  • Beaujolais
  • Alto Piemonte
  • Barbaresco
  • Alto Adige
  • German whites
  • Greece
  • Portugal
  • Spanish Garnacha
  • South Africa
  • Chile

For international prices, see Wine-Searcher.com.  You could also try searching for GV (good value) in the text of the 175,000 tasting notes in our tasting notes database.

Penfolds Special Bin 111a