Monday, July 5, 2010

Rant: Is Wine Fairly Priced?

"90% of Saké is fairly priced."

Is that true? If so, why? It also raises another question: What percentage of wine is fairly priced?

At the recent Saké Professional Course, the instructor, John Gauntner, made the above statement about Saké prices. It immediately brought to my mind a comparison with wine, as I felt that the percentage is certainly much lower for wine. But am I correct? And if I am, then why is it so?

In general, John meant that the cost of making Saké is directly relevant to the price of that Saké. The more it costs to produce, then the higher the price will ultimately be. The cost is affected by matters such as the type of rice, the amount the rice is polished, and how much hands-on, artisan brewing is conducted. It is very rare for a cheaply made Saké to be given a high price. When you pay a higher price, you can generally expect the Saké cost comparatively more to produce. And the quality should be higher as well.

In the U.S., you might not find many premium Sakés for under $10, but the limit at the high end is much lower than wine. You will probably only find a handful of Sakés that cost over $150, though you can find plenty of wines over that limit. So why are so few Sakés priced over $150?

Before answering that, let me first address wine prices. Though the cost of making wine is a consideration in its price, it is much less connected to the price than it is with Saké. In the past, I have heard anecdotally that the more expensive wines really only cost a small fraction more to produce than much cheaper wines. There are numerous other factors involved which can increase the price of wine, from the vanity of the wine maker to the influence of wine critics such as Robert Parker.

Such factors are far less important, and often inconsequential, when considering the price of Saké. In Japan, there is no Saké critic who has even close to a fraction of the power of Parker. There are reviewers, but no scores and thus reviews do not commonly raise the price of Saké like they do with wine. That may be the most significant difference from wine prices. That helps to keep Saké prices at a more reasonable level, tied more closely to the actual cost. So you won't see many priced at over $150, in a higher realm usually tied to some critic's score or a wine maker's ego.

Though some American critics, such as Stephen Tanzer, provide scores in their Saké reviews, such scores seem to have little effect on pricing in the U.S. Let us hope that remains the same always. I would much rather have people judge Saké by its taste and flavor profile rather than some number.

I have attended plenty of wine tastings, and found numerous wines that I felt were over priced, which did not deliver on the quality I expected at their price range. There will always be people who feel that a $500 wine might be priced fairly, due to various factors, but probably more people might feel differently. Their reasons for considering the price to be fair though, won't likely be tied to the cost of the wine. Even the most expensive wines generally cost a mere fraction of their price to produce.

I would roughly guess that less than 50% of wines are priced fairly, and I think I might even be overly generous in my estimate. Reputation and scores have a strong impact on pricing, and we would all benefit if that were not the case. There are plenty of high-end wines that the average consumer will never get to experience because of their astronomical prices.

My friend Adam actually posted his thoughts on this issue yesterday on his blog Wine Zag, and you should read the article. He too is not too pleased by how wine prices are dictated by far more than the cost of making the wine.

What percentage of wine do you think is fairly priced? Weigh in on this issue.


chris metcalfe said...

I met with one of the owners of a small winery here in Portugal last week. He was saying he felt a good red wine should not cost more than 15 euro. That is what it costs him to make a good wine with a good profit. The costs over the wine making process, like marketing, admin, etc, is what contributes to the prices rising.

As for value however, that is what someone is prepared to pay for the wine... So maybe what I have said above can contribute to the apparent value of a wine. Interesting topic though.

Couves said...

I don’t think of it as “fair” vs. “unfair” pricing, rather some wines are just better values than others. Yes, there are markups for things such as scores, famous regions and hyped vintages. But that markup reflects the fact that people are willing to pay a premium for a wine they feel is more likely to please them. Just as there is no objective standard for quality, there is no objective standard for what a fair price is, although history is replete with attempts to establish one.

Richard Auffrey said...

Hi Chris:
I agree that the cost for more wines is actually relatively low, but the actual price can be much higher due to many of the items you mentioned. What % of wines do you consider to be good values?

Hi Couves:
Same question for you then, what % of wines do you consider to be good values? Thanks.

Couves said...

Richard, I don’t drink widely enough to even begin to answer that question. I generally purchase Portuguese wines (good values to begin with) that are marketed to my local Portuguese community (very frugal), so I am seldom disappointed and sometimes stunned by the value of these wines.

Having said that, I am sometimes disappointed when I try the more expensive bottle from a winery I like. I generally look for a complex flavor and aroma. If the “reserve” wine is only distinguished by having a heavier hand with the oak, I’m definitely going to prefer the cheaper wine that has a truer expression of fruit. I don’t mind paying more for superior fruit, but that’s not always what you get with more expensive wines. It's all relative – I'm sure some people will gladly pay extra for those smooth oaky wines.