Whine Through the Roof
Of course, there's a lot more to it. To start, it costs a lot to produce wine (good wine, anyway); for an insider's look at some of the costs going into that bottle, click here and scroll down to question 7. And the practice of en primeur further jacks prices up into the stratosphere. In case you're not familiar, this is the system in which buyers pay for their wine at least a year before they can actually get it, and often before it's even bottled. Like stock futures, there's a lot of speculation and excitement, and a lot of irrational exuberance.
So these days, when you walk into your local wine retailer for a "special" bottle to celebrate that promotion, you're competing for that wine with the truly well-heeled as never before. Now, some of these wonderful people have stocked their cellars with Bordeaux First Growths, Burgundy Grand Crus and California Cult Cabernets as mere investments; they'll keep them for a year, or five, or 20, and then sell them off at many times the price they paid. And with 2005 vintages of some Bordeaux already going at $500 a bottle for example, some of these wines could eventually make Google look like a penny stock traded on the OTC market.
There's even a "stock" exchange for wine, the Live-Ex 100, and right alongside the prices are the wine ratings, in priority order, of Robert Parker, Jancis Robinson, and Wine Spectator magazine. Big surprise. So naturally, the wine rating systems of these major critics continue to push the market for super-premium wines onward and ever upward. Hype or not, it's pretty easy for wholesalers and retailers to just say "Parker gave it a 97" rather than spend a lot of effort describing its charms or doing a lot of marketing.
Others, though, will buy and drink. In the meantime they get bragging rights for their cellar, until the day they pull one out to impress a potential client, show off for a subordinate, or rub the nose of an even wealthier friend in the most expensive grape juice on the planet. But the effect is the same: prices go up, a given wine gets more scarce until there's none left on the open market, and then the same wine in the hands of individuals can be re-sold for many multiples if the owner chooses to part with it.
What kind of numbers are we talking about? Here's a Live-Ex 100 quote that shows the appreciation of Lafite Rothschild 2003 for a 12-bottle case of standard 750 ml bottles: In April 2006, it was 2400 UK Pounds ($4224 at the prevailing exchange rate) and in April 2007, this case went for more than $10,400. And as a Midwestern boy I was interested to learn that wine is even traded on the Chicago Futures Exchange...a far cry from pork bellies and OJ, and closer to gold, wouldn't you say?
