I think we are going to see a big correction coming soon with wine prices. Todays CA cab prices are just a joke. I was paying 45.00 for 97 Staglin now its 150 a bottle. O'Shaughnessy 2000 vintage was 40 now they are at 75. 02 Insignia 100 bucks a bottle now its 165. Then you have the Cult wines that charge about 40 bucks more each year. There is just way to much high priced wine on the market today. The bubble is just about to Burst!

quote:

Originally posted by TERPS:
I think we are going to see a big correction coming soon with wine prices. Todays CA cab prices are just a joke. I was paying 45.00 for 97 Staglin now its 150 a bottle. O'Shaughnessy 2000 vintage was 40 now they are at 75. 02 Insignia 100 bucks a bottle now its 165. Then you have the Cult wines that charge about 40 bucks more each year. There is just way to much high priced wine on the market today. The bubble is just about to Burst!

But the problem is people are still buying. My LWS just recently sold their stock of 2004 Staglin for 149.99 (why somebody would spend that much on Staglin is beyond me).

Staglin is without a doubt one of the most over priced wines on the market.

Don't hold your breath, son. I've been in this game for nearly 40 years, and I've been waiting for the "price correction" for about 35.

To put it in perspective, in the early 1970s I was paying $8 to $12 for top-rated California Cabernets. My cellar records show that I paid $7 for the 1974 Mondavi Cab (regular bottling), $6.75 for the 74 Stag's Leap Petite Syrah, and $5 for the 74 Ridge Fiddletown Zin, etc. etc. When the "wine of the century," the 1974 Heitz Martha's Vineyard Cab hit the floor in March 1979, it listed for $25 ($20 from TJ's with what at the time was an illegal discount). That was about twice what any previous newly California Cab had ever fetched on release.

Since then, things have only gotten worse. Although there's now a lot more wine available, and most what is available is of higher quality, the number of wine drinkers has increased at an even faster rate, not only in the U.S. but worldwide. Add to that the hype generated by Robert Parker, Wine Spectator, and other critics, something that was almost unheard of back in the day, and you have a perfect storm, marketwise. What used to be a relatively rare interest, especially among the general population, has spread like the flu.

I've got three bottles of 2003 Ch. Lafite-Rothschild in my cellar, current market value about $1200 each (interested? I'll probably never drink it as no wine is worth that much, IMNSHO). That's just insane! But I traded one (overrated) bottle of 94 Sine Qua Non "Queen of Spades" and 2 (very overrated) bottles of their 95 "The Other Hand" for those -- I paid $31++ for each of the SQNs about 10 years ago.

The market for wine is nuts, but it is all about supply and demand. Maybe the coming (?) recession will dampen it a bit, but don't look for anything beyond a small reduction in prices. At least that's my guess for now.

TERPS

You are correct. We will see a correction in wine prices and soon. It will be interesting to see just how much prices will recede and exactly who will be effected.

I am in agreement that Staglin's fall is certain. Although their Estate Cabernet is very good at the same time it is grossly overpriced.

US wine consumption has been going up for at least 13 years according to the good folks who own WS. And worldwide demand has been increasing as well, as developing countries get richer and compete for the "top" names, even as some of them try to develop their own wine industries.

So when you hear Indians describing an area as the "Napa Valley of India", it seems to indicate that there is still cachet to the wines from Napa somewhere in the world.

If the European wines get more expensive, as they have, and people switch, what do they switch to? A $150 Cali cab seems like a bargain to someone who would pay $250 for a Bordeaux. But it's basic business to increase your price until you start seeing a falloff in sales, so why wouldn't the Cali producers push up? And then again, people who buy wines at those prices are as likely to simply pay the increase because they prefer one area over another. I can understand price sensitivity between $10 and $15. Once you're over $100, it matters less.

So either way, I can't see any downward demand on prices in the near future. Moreover, see what happens if WS gives a $30 wine a score of 98 or calls it Wine of the Year. Either merchants raise the price or the $30 wine reappears on the secondary market at double its original price.

Remember Chateau St Jean? Or try to pick up a bottle of 2001 Reiussic, 2002 Insignia, 2004 Numanthia or a similar wine at the release price.

So the key is to find wines that you like and that haven't been scored or that have scores that you don't agree with, at prices you are comfortable with. It's not easy, but kind of fun.

Prices may stabilize somewhat but they aren't going down......

Dream on.

I hope you're right, TERPS, but I'm guessing GA is correct.

Tell me - has any CA winery ever reduced their prices?
I'm with GA. Your best hope is for prices to hold for a few years.

quote:

Originally posted by GregT:
If the European wines get more expensive, as they have, and people switch, what do they switch to? A $150 Cali cab seems like a bargain to someone who would pay $250 for a Bordeaux.

Good point, but an $80 Chateauneuf du Pape or Brunello seems like a bargain to someone who would pay $150 for a Cali Cab. I can't help thinking that the increasing success of other regions ought to exert some influnce as well. I would think that some people would switch to them.

quote:

So the key is to find wines that you like and that haven't been scored or that have scores that you don't agree with, at prices you are comfortable with. It's not easy, but kind of fun.

I couldn't agree more! Not just for myself but also when entertaining friends who know a bit about wine, it's a rush for me to serve them something they really like that they either hadn't tried or had heard mixed reviews. It's still a big adventure to find great wines that aren't merely the obvious choices.

quote:

Good point, but an $80 Chateauneuf du Pape or Brunello seems like a bargain to someone who would pay $150 for a Cali Cab. I can't help thinking that the increasing success of other regions ought to exert some influnce as well. I would think that some people would switch to them.

That was a bad example..but only because I've never had a Brunello worth $10, much less $80. I do get the CdP analogy though!

quote:

Originally posted by Chilepepper:
That was a bad example..but only because I've never had a Brunello worth $10, much less $80. I do get the CdP analogy though!

Just because YOU haven't experienced a good Brunello Chile, doesn't make it a bad example. There are a LOT of other members here that would indeed regard Brunello as their most desired/appreciated wine.

Or was that 'tongue in cheek' and I'm being just too serious this evening?

It's a matter of taste, obviously.

KSC02,

Obviously "tongue in cheek" since I believe good Brunello is a myth!

quote:

Originally posted by KSC02:


It's a matter of taste, obviously.

Refer to stickman's signature.

I do understand that wine consumption goes up every year in the U.S. but all these new wine drinkers are no buying the expensive wine. 95% of the people drinking wine are drinking bottles 15.00 and under. I go into local wine shops now and the 04 vintage is sitting right next to the 05 vintage. The only difference is that the 04 vintage is on average 10-15 dollars cheaper. People will be buying the 04 before they buy the 05. Joseph Phelps regular cab is now 50 a bottle. Thats a complete waste of 50 bucks. The new Parker issue on Northern CA wines is comical on the prices. Who would spend 150 on a bottle of 05 LA Sirena Cab or 75 for Pine Ridge Oakville. The list could go on and on.

The top 1% of the wine prices aren't going anywhere but up. First Growth, DRC, Screagle....etc.

Most winery release prices are either going to stay or go up, they are not coming down anytime soon.

With that said, market correction is out there, you just have to look and be smart. For example, 2003 Staglin released at $135, can be found in auction for $90 or less. Actually, for that matter, 1996 Staglin was released at $50, can be found for $45, as I type.

Many other countless examples out there of good scoring wine can be found for 50% off the winery release price, if not more in some cases. Just don't hold your breath waiting for wineries reflecting the auction prices, unless it's going up.

Let's wait and see how the 2007 Bordeaux are priced. We might all get a good laugh at those prices.

One can also be certain that, with the weaker dollar contributing strongly to higher pricing, that this will initiate more buyers hunting earlier vintages for what will now seem like bargains, and THOSE prices will rise quickly.

Buy sooner vs. later, if you're planning to buy earlier vintages.

With the continuing decline of the dollar and the increase in demand, a fall in high end wine prices is quite unlikely. While the US may be flirting with recession other areas of the world are in an economic boom. I also think that a possible US recession plays quite an insignificant financial part for the caliber of people that afford to buy such high end wines. I would think the impact would play a much stronger part in the middle to lower end.

quote:

Originally posted by baja:
With the continuing decline of the dollar and the increase in demand, a fall in high end wine prices is quite unlikely....,I also think that a possible US recession plays quite an insignificant financial part for the caliber of people that afford to buy such high end wines. I would think the impact would play a much stronger part in the middle to lower end.

Agree with you, Baja. The lower end of the wine market will likely experience pressures on maintaining pricing. However, the upper end will be likely unaffected, IMO. Buyers are EXPECTING higher pricing so the Producers and Distributors already have a 'green light' in this regard.

quote:

Originally posted by Powell Yang:
The top 1% of the wine prices aren't going anywhere but up. First Growth, DRC, Screagle....etc.

Most winery release prices are either going to stay or go up, they are not coming down anytime soon.

With that said, market correction is out there, you just have to look and be smart. For example, 2003 Staglin released at $135, can be found in auction for $90 or less. Actually, for that matter, 1996 Staglin was released at $50, can be found for $45, as I type.

Many other countless examples out there of good scoring wine can be found for 50% off the winery release price, if not more in some cases. Just don't hold your breath waiting for wineries reflecting the auction prices, unless it's going up.

They may not go down but I am willing to bet they shoot through their waiting lists. Many buyers of Harlan gave up their spots this year and many people were offered their spots including me and that offer also went into the circular file. Levy & McCellan did it almost immediately and Screagle ... well with Heidi gone and the replanting, it may be a long time before they can resume upward trends.

There's too much good juice out there without paying $150.00 + a bottle.

BTW, where's my Sloan mailer (LOL)?

The price of wine is all about supply and demand. I pose this question. If Harlan has a 500 person waiting list who presumably are willing to pay $450 per bottle, why would not Harlan raise the price of their wine until the price hike creates an open slot for every buyer willing to pay the highest price? If you make wines so much in demand that there is a secondary market where it trades at twice your release price, why do you as the maker of the product not have the right to capture that value? After all, you made the product. It baffles me why some people seem to think that once you get on a subscription list for a high demad wine that you have a long term futures contract for that wine at a price deemed reasonable only by the buyer. Meanwhile, before you take delivery of the wine its value has doubled. That value rightfully belongs to the producer. I am amazed at how many producers keep their prices so far below market for their "loyal customers". The bottom line on pricing is that if you have a waiting list (and many have years long lists) you are underpricing your wines. The proper price is the point where there is no waiting list.

P.S. While I might sound like a wine maker, I am not nor do I have a financial interest in one. I am a lover of fine wine but more importantly a proponent of free markets. That's all.

MorBorDo- The 'value rightfully belonging to the producer' is the price he asks for his product. Nothing more and nothing less. The fact that the 'market' drives his prices higher can be temporary and fickle. Thus, some producers are not so quick to 'cash in' on a recent price spike but to, instead, let their product develop a loyal following (brand loyalty) and slowly, but continuously, raise their pricing. This has the positive result of maintaining a loyal base of consumers/purchasers. Once felt 'alienated' the loyal customer moves easily moves on to 'greener pastures', very uninclined to return any time soon.

I don't disagree that a producer's 'waiting list', once several years long, certainly has the ability to continue further price increases, however this CAN be a thin line at times.

KSCO2 I agree with you 100%...Wineries that keep raising theirs prices 20% each year will quickly go through their waiting list and in a few years will have tons of library wine in their cellar. Each year more people drop of these lists. The prices have gotten so high that people who were on the waiting list when it was 200 a bottle are now being offered the wine at 500 a bottle. They get their offer to buy wine and their offer is put in the trash with all the other junk mail for that day.

I think there is a good chance that demand will drop with some wines. Typically when this happens prices don't drop, but those wineries simply go out of business or sell out. People are stubborn.

Prices might drop a little in Bordeaux.