Michael Fridjhon: January 2007
Author:
Michael Fridjhon
Published: 29 Jan 07
South Africans do not have an appetite for expensive wine. This is no great failing - we are more cynical than many other nations when it comes to the pricing pretensions of wine producers.Our more boutiqu
e-like cellars owe a debt of gratitude to Tim Hamilton-Russell.
In the early 1980s he set about raising the tolerable price threshold of a consumer
market that believed we made the best wines in the world and then refused to pay
any more than it did for industrial bulk.
Smart wine costs money to make - though as several studies show, even when you are into fully handcrafted small batches, the real production cost rarely exceeds R150 per bottle. For around $20 per 750ml Mouton Rothschild can make Mouton and Lafite Lafite - as long as nowhere in this equation you are expecting a return on the putative value of the asset.
Margaux director Paul Pontallier acknowledged - in the midst of what at the time seemed like insane en primeur madness in 2001 - that the nett revenues for the 2000 vintage would probably exceed the amount paid by the Mentzelopoulos family for the property less than 25 years previously.
Eric de Rothschild once mentioned that when his family bought Lafite in the 1860s they turned it to profit within a few short years. Then came the crises of the Bordeaux trade (oidium and phylloxera) and it took over a century before their income again exceeded their expenses.
The moment someone has to cost the current value of wine property into the cellar's overhead, the arithmetic changes dramatically. I can think of several wineries whose owners have spent over R100m preparing them for their moment of glory. Assume this is a R12m per year theoretical cost. Even if you are selling 30 000 cases annually you have just added R400 to the cost of the case of wine.
There is no reason why the consumer should pay for the proprietor's madness. The only question he/she is concerned with is: "Does the wine taste as if it's worth the price?" This is of course an entirely different game, and much depends on your sense of the global wine market.
The more you are accustomed to tasting in the $100+ per bottle league, the more easily you can persuade yourself that a well-made example at a "mere" $50 is a real bargain. The harder it is to find such desirable examples at that price, the more perceived rarity drives up the amount with which you must part in order to secure it.
There is an Irish proverb that says: "There are more fish in the sea than have ever been caught." It refers, so I believe, to picky courting couples. It could as easily apply to insane wine pricing.
When someone pays over $345 000 (R2.5 million) for six magnums of Mouton 1945 you might be inclined to think that there is more to this price than an admittedly extraordinary beverage - antiquity, rarity, a once-in-a-lifetime tasting. But what of the many buyers of 2005 Château Cheval Blanc who have parted with more than £5 000 (R70 000) for 12 bottles? Are they anticipating a great return on that investment in 30 years' time or are they frightened the sea will run out of fishes?
Neither of these motives offer sound taste reasons for the purchase. There will always be great wine about - perhaps not always the equivalent of the 1945 Mouton but good tipple just the same. You should be able to taste the difference between a R100 and a R200 bottle, and so on.
Finally, no matter who you are, you will reach a point where you cannot distinguish on the palate the increment in your investment. At this point conquest has triumphed over judgement and you can repent at leisure - while the vendor sobs all the way to the bank.
Smart wine costs money to make - though as several studies show, even when you are into fully handcrafted small batches, the real production cost rarely exceeds R150 per bottle. For around $20 per 750ml Mouton Rothschild can make Mouton and Lafite Lafite - as long as nowhere in this equation you are expecting a return on the putative value of the asset.
Margaux director Paul Pontallier acknowledged - in the midst of what at the time seemed like insane en primeur madness in 2001 - that the nett revenues for the 2000 vintage would probably exceed the amount paid by the Mentzelopoulos family for the property less than 25 years previously.
Eric de Rothschild once mentioned that when his family bought Lafite in the 1860s they turned it to profit within a few short years. Then came the crises of the Bordeaux trade (oidium and phylloxera) and it took over a century before their income again exceeded their expenses.
The moment someone has to cost the current value of wine property into the cellar's overhead, the arithmetic changes dramatically. I can think of several wineries whose owners have spent over R100m preparing them for their moment of glory. Assume this is a R12m per year theoretical cost. Even if you are selling 30 000 cases annually you have just added R400 to the cost of the case of wine.
There is no reason why the consumer should pay for the proprietor's madness. The only question he/she is concerned with is: "Does the wine taste as if it's worth the price?" This is of course an entirely different game, and much depends on your sense of the global wine market.
The more you are accustomed to tasting in the $100+ per bottle league, the more easily you can persuade yourself that a well-made example at a "mere" $50 is a real bargain. The harder it is to find such desirable examples at that price, the more perceived rarity drives up the amount with which you must part in order to secure it.
There is an Irish proverb that says: "There are more fish in the sea than have ever been caught." It refers, so I believe, to picky courting couples. It could as easily apply to insane wine pricing.
When someone pays over $345 000 (R2.5 million) for six magnums of Mouton 1945 you might be inclined to think that there is more to this price than an admittedly extraordinary beverage - antiquity, rarity, a once-in-a-lifetime tasting. But what of the many buyers of 2005 Château Cheval Blanc who have parted with more than £5 000 (R70 000) for 12 bottles? Are they anticipating a great return on that investment in 30 years' time or are they frightened the sea will run out of fishes?
Neither of these motives offer sound taste reasons for the purchase. There will always be great wine about - perhaps not always the equivalent of the 1945 Mouton but good tipple just the same. You should be able to taste the difference between a R100 and a R200 bottle, and so on.
Finally, no matter who you are, you will reach a point where you cannot distinguish on the palate the increment in your investment. At this point conquest has triumphed over judgement and you can repent at leisure - while the vendor sobs all the way to the bank.
