Opinionista Michael Fridjhon 29 August 2013

Rare wines no longer an affordable luxury

After rapid expansion of both wineries and the moneyed class, the world of luxury wine is in crisis. Once an affordable middle class vice, is increasingly out of reach to even the well-off connoisseur leading to counterfeit vintages and worse, a decrease in enjoyment of a luxury meant to be savoured.

The world of luxury wine has transformed in a little over three decades. As recently as the 1970s, even the rarest wines from the Old World made for affordable luxuries for the middle classes of the West. Until the collapse of the rand (in other words, from 1985 onwards), this was equally true for South Africa. Roughly 10 years ago, Johann Rupert brought to the inaugural Single Bottle Club dinner in Stellenbosch a 1981 Mouton Rothschild, with the original price sticker still on the bottle. It cost R14.28, and by Rupert’s estimate it had been bought the mid-1980s. He made the point that nothing better illustrated how over-valued the rand had been in that era. The Mouton cost roughly half of what you would have paid then for a bottle of the Hamilton Russell Vineyards Chardonnay – at that time South Africa’s most expensive wine.

His example also served to make a point about the nature (as well as price) of fine wine in those not so distant days. It was an object of enjoyment and was relatively accessible to people of moderate means. When I was a student I could convert two hours spent teaching extra maths into a 30-year-old bottle of La Tache – then, as now, one of the rarest and most expensive bottles on the planet. Today, the same wine from a comparable vintage would cost between R40,000 and R50,000. I don’t know too many extra lesson teachers pulling R20,000 an hour.

There are several factors driving this change. Chief among these is that the world of wine, especially in the upper segment, has expanded faster than the number of true icon wines. The Old World sites have remained largely unchanged. A few of the great properties have been able to expand their vineyards, especially in Bordeaux, but generally availability has not increased. In fact, it’s easy to argue that at the very top of the ultra-premium pyramid volumes have decreased. Competition for high ratings is so fierce that almost all of the bigger estates now have second, third and even fourth labels in the market, with each tier allowing a quality segmentation, which diminishes availabilities of the most desired label. The volume of 1982 Chateau Cheval Blanc that went to market was roughly 140,000 bottles. Today, a decent vintage will see at best 110,000 bottles of the Grand Vin, with most of the rest going into Petit Cheval, the property’s second label.

While new vineyards areas are being established, and new ultra premium wines are being discovered (or created), they are generally from low volume producers. Add up all the production of the universally agreed new cult wines – the Screaming Eagles, Harlans, Guigal Grand Crus, Penfolds Grange/Torbreck Runrigs – and you might get to 150,000 cases. That’s probably less than the volume that the top Bordeaux properties have shed by engaging in their rigorous, self-imposed “declassification” process.

In the meantime, literally millions of new millionaires have emerged and enough of them regard ownership, and consumption, of fine wine an essential part of their lifestyles. For people with levels of disposable income unimaginable to ordinary mortals, the price of a trophy wine is largely immaterial, whereas the absence of a crucial label is nothing less than catastrophic. The demand for these extraordinary examples of the winemaker’s art has simply skyrocketed, while availability has, at best, remained static. Is it any surprise that a bottle of Romanee Conti, which cost R25 in the 1970s, now typically sells for over R100,000?

There are two largely unrelated consequences to this dramatic change in the status and cost of the world’s greatest wines. The first is that with pricing levels as they are, there is now a considerable market in fake fine wine. Provenance has become such an issue that the key producers are looking to any number of security devices, from computer chips to hidden codes, to verify the authenticity of their current releases. They have the money and the motivation, and no doubt fraud will become more difficult (but not impossible) in the years to come. This will be of little use to those buying now, and seeking purchases with reasonable levels of maturity. They have to buy from collectors, many of who acquired the wines for consumption (and so did not keep any invoices enabling a buyer to confirm provenance and authenticity), so they must take their chances.

This leads to the second consequence: very few of the people who bought such wines for what now seems a derisory amount are comfortable about drinking them. Your Chateau Petrus may only have cost you R60 per bottle, but knowing you could now get R45,000 for it does tend to put a damper on your thirst. This, of course, is a great sadness. As the great benchmark wines recede ever further from the reach of the non-billionaire class they become more like rhino horn and less like great artefacts of human endeavour. They are imbued with mythic properties, raise expectations they can never fulfil and trundle relentlessly towards their own extinction. DM

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