Tag Archives: pricing

Sunday Read: When More is Less

My not-so-secret-anymore-crush Jancis Robinson published an article in the Financial Times recently exploring the pricing of wines, and its correlation – or not – to quality. A rather obvious non-correlation in my book (and it looks like hers as well), but she still takes on the topic from the perspective of newly emerging wineries that decide to go high-end price-wise right away. Yes, I understand that wine is a product and products are up for sale and that clever marketing can work miracles for some producers…Jancis’ point, as I read it, is that we need more education, and more educated wine drinkers to find out the difference between price and quality, a lesson that is as true for America as it is for Europe and Asia.

By taking Asia as an emerging wine consumer market, this also plays on a theme that came up in the discussion to the Reuscher-Haart article I posted.  My friend Ernest pointed out that he had watched the movie Red Obsession which details China’s rise as a wine consuming country and how it is distorting prices. My comment was that this is what the US market had done to Italian and French wines since the late 1970s and most importantly the 1980s…that this phenomenon is not exactly new, it is just a repetition of how some US buyers, who through Reaganomics were able to amass huge piles of money, distorted the market by paying incredibly high prices…

Most importantly, this struck me, because it rings true of what some of my winemaker friends in the steep hills of the Mosel have told me before:

“The joke is that wine is not very expensive to make. Production costs of even the grandest red bordeaux are rarely more than €10 a bottle, €30 at most if the château is run on bank borrowings.”

10 Euros, mind you, is $13. Many German Rieslings which are grown and harvested under extreme geographical conditions are produced for less than that, because they sell for 10 Euros in Germany…that is including a 19% sales tax.

Have a great Sunday!!

Jancis Robinson: When more is less

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