This column is inspired by a discussion held at the Jamaica Jazz Festival. Of course, I had indeed brought along a number of wines to the event, and as we enjoyed the music, the company and the wines, a friend turned to me and asked, “Chris, I read your last two articles where you listed 10 wines you liked in 2008, the prices varied greatly; what is the difference between a J$1000 bottle of wine and a J$30,000 bottle of wine?” The discussion further expanded to the question of what is good wine and who decides that certain wines are better than others, how does this quality tie to price.

For hundreds of years, from the first time that wine was traded these questions have existed. As there are various schools of thoughts on their answers I began with the simplest economic response: “supply and demand”, but there is lots more to these questions than basic economics. Before any discussion of this type, we need to set our boundaries and definitions as without this the discussions can go on forever.

Two different markets

Let me use food as an example here. I am sure you have friends that fall into one of these two food categories; those who like “fine dining” and those whose idea of dining out is to get a “bellyful”. Similar categories exist in the wine world: the “bellyful” people are those who consider wine to be just another drink so their aim is to get acceptable quality at the cheapest price possible – jug wine, etc, they do not care to understand all the fuss about wine. Then there is the other market that sees wine as “art in a bottle”, they want to learn about the place the wine came from, who made the wine, how the wine was made, the history behind the wine, the producer and the region. While both markets are very important, we will assume that we are talking to the “art in a bottle” group.

Price – Supply and Demand, or Culture?

With respect to the issue of pricing, the economics of supply and demand is one component of the explanation for a complex question. Some wine regions have thousands of acres of land planted with vines, and with the use of the latest in wine-making technology they are able to consistently make good quality wine of practically every vintage. Let us use Australia and the wines of Yellowtail as an example.

Yellowtail is made by Casella Wines, they are the largest family-owned winery in Australia, producing 15% of all the wines exported from that country. They also have the fastest bottling line in the world capable of making 36,000 bottles of wine per hour. They produced 12 million cases of Yellowtail last year. Casella has decided to make wine of a certain style: “fresh, flavoursome, approachable,” and they have their winemakers fashion the wine to match the target market’s palate consistently, and their marketing team ensures that the price of the wine also matches the price that this target market can afford. With this example the wine tastes and price are decided by the producer. Here it is sold for less than J$1000 per bottle.

While the more experienced wine drinkers might describe this wine as being too simple and not complex enough, millions of new wine drinkers around the world love it and it does play an important role by bringing new wine drinkers into the market every day. Their tastes will mature also.

Pomerol

Let us look at another wine region like the tiny (2.9 sq miles) Pomerol in Bordeaux, France, specifically at a 28-acre property. It is said to have an interesting iron-rich clay soil and the most ideal growing conditions in the area. It produces a wine almost entirely traditional in nature, the grapes are harvested by hand, and the yields are kept low which raises the quality of the grapes. Culturally the winemakers produce wines that show the terroir (pronounced ter-wah; a French term loosely translated to mean soil, weather conditions and farming techniques of that specific place), the concept of terroir developed through centuries of French winemaking based on observation of what made wines from different regions, vineyards or even different sections of the same vineyard so different from each other. The 2005 vintage of this wine was being offered at auction for about US$5000 per bottle, but you might be able to get it cheaper if you have connections.

Château Pétrus is the name of this property producing about 4,000 cases of a wine of the same name. Pétrus has long been described as a wine of incredible power, depth and richness, yet possessing an exquisite balance that facilitates its remarkable longevity, still great after 20 years. It is equally famous for its silky texture. Price on release, like any fine wine for which demand constantly outstrips supply, will vary depending on perception of the quality of the vintage and the quantity of Pétrus available. The owners/producers say that distributors and wine shops make way more money on this wine than they do as the average bottle price ex factory is really in the region of only US$70-100 per bottle. The US importers say this claim might be exaggerated, but close.

So, who sets the price, the producer or the market?

Cheers! Now go forth and try a few new wines. Please send your wine stories, comments and questions to creckord@gmail.com. DeVine Wine Services is operated by Chris and Kerri-Anne Reckord and its mission is to improve wine appreciation through wine education and events. Both are members of the Society of Wine Educators and the Chaîne des Rôtisseurs.