Whether we like it or not, almost everything in life is stamped with a monetary value. Those values increase and decrease overtime, and wine prices are no exception to that phenomenon. Though it is not considered a commodity per se, it sure is attracting lots of investors! Just like crude oil, gold, or soybeans, wine price fluctuations are closely monitored by a group of people who are mostly interested in the financial aspect of the wine industry. For the rest of us, all we need is a good bargain from our local wine stores! Are those fluctuations actually affecting retail price? And is there a better time to buy wine? Let’s ponder!
A Quick Blurb About Wine Investment
Although the delicate mechanics of wine investing differs slightly from the rest of the financial market, the basic principles remain the same… Buy low, wait for the price to surge and sell. Much like the S&P 500 is the benchmark index for U.S. stock performance, the London International Vintners Exchange is the benchmark for the fine wine market. The company provides accurate, real-time wine transaction prices to merchants and negotiants, courtiers and producers. I can see how a tool like this would be a goldmine of information for those who want to invest in wine for a financial gain. Sure, I could sell my aging wine collection and make a significant profit but where is the fun in that?! I knew going in that my only return on investment was purely based on personal and shared bacchanalian gratification. And for this type on wine investment, all we really need to know is when and where we can get a great deal. So let’s get into it!
Why Do Wine Prices Change And Fluctuate?
Yes, wine prices fluctuate and they generally go up from one year to the next. According to an ongoing research conducted by the Federal Reserve Bank of St. Louis, the average price of a wine bottle (red and white, all sizes, all origins) went from $7 in 2004 to $13.5 a bottle in 2024. That’s a 100% increase in 20 years. Not bad considering real estate increased about 150% during the same time frame. With a cumulative inflation of about 66% since 2004, we can all agree that wine prices have gone up but remained fair, especially if we take into account the growth of the wine industry. The good news is those prices have remained roughly the same since 2021. Why is that? Are we drinking less wine?
In an effort to understand the ups and downs of wine prices, here are some key factors that influence our beloved wine industry.
The Economy
When times are rough, wine is definitely not a priority. The economy of a country has a strong impact on wine investment and consumption respectively. Not too surprisingly, wine prices mirror global economic trends. For instance, the financial recession of 2008 had an adverse impact on the wine industry.
Conversely, the global pandemic that started in 2020 affected the entire world’s economy but not the wine industry. In fact, direct-to-home wine sales thrived during the pandemic. According to the Wine Institute, wine value increased by 18% and wine sales by 12.5%. When in quarantine… Am I right?! Wine sales have since decreased a little which is a sign that the market is returning to normalcy after record-breaking growths. And that would explain why wine prices have not changed much since then.
Competition Between Wineries
Nothing like a good ol’ business competition to create a level playing field, giving everyone a fair and equal chance of succeeding. Having multiple companies in the same industry offering similar products protects overall prices, and wineries are no exceptions. Wine prices are carefully estimated before a new vintage is released, and quality isn’t the only factor. In fact, several criteria will affect wine prices, notably the terroir, the domain, its size, the rarity of the wine, its flavors, its reputation… And the list goes on and on. Prestigious and sought-after appellations such as Champagne or Pomerol can increase the value of their bottle, but the competition within their region will control wine prices somewhat. Simply put, the price of a bottle of wine is defined by taking into account the cost of production, the desired profit, and more importantly supply and demand in a competitive market. And that leads us to our next point.
Supply And Demand
Like any other luxury items, supply and demand plays a significant role in wine prices. Rarity is an extremely effective stimulus to increase appeal and justify a higher market value, granted the wine has an existing reputation to build upon. Take Screaming Eagle for instance, the Napa Valley winery only produces 500 to 800 cases per year. Depending on the vintage, the average price of a regular size bottle is around $4,500! And in case you’re interested in buying a bottle or two, you’ll be hit with a waiting list and a first come first serve policy. The site clearly states that the wine is not available for purchase right now. The only way to buy it at this time is through a wine broker, negotiant, or retailer.
But how much is too much? In that case, prices are entirely driven by how much people want it, and how much they are willing to pay for it. That’s the sad reality of everything in life.
Vintages – Weather Patterns & Climate Change
Some vintages are more expensive than others, and that’s a fact. Weather patterns being so vastly unpredictable nowadays, it could destroy a specific crop and ruin an entire vintage. Vintages with favorable harvest and weather conditions almost always attract higher prices than others. Those vintages always result in better wines overall, securing the perfect balance of sugar, alcohol, acidity, and tannins, hence creating the ideal conditions for greater aging potentials. And that right there is one of the reasons wine prices fluctuate from one year to the next.
Winemakers tend to get all the accolades when it comes to the wine’s popularity, and rightfully so. He is the wine—MAKER after all. But the importance of a good winegrower is just as important in my opinion. His role is crucial to the quality, the consistency, and the reputation of a wine.
Understanding A Wine’s Aging Potential & Longevity
Age is perhaps the most commonly recognized factor in wine values. As the wine ages, the bottle becomes an object of collection and is considered a wine investment as opposed to a wine purchase. A wine with aging potential will be slightly more expensive because it increases in value over the years. Those prices can go very high depending on the vintage and the notoriety of the winery.
Wine Production Methods
I’ve written many articles about sustainability practices in the wine industry. Those global efforts make us feel better about our overall impact on the planet. I wholeheartedly support those practices and always favor sustainable over conventional wineries, but it may come at a price. Those methods of production, harvesting, and vinification can be more demanding and more expensive to put in place, which is affecting wine prices as a result.
And Let’s Not Forget The Wine Critics
Wine critics are the real influencers of the wine industry, and they don’t need halfwitted Instagram videos to gain popularity. Their recommendations are taken very seriously and their ratings have a strong impact on the wine industry, like the Michelin stars in the restaurant business.
Robert Parker and James Suckling to site a few are among the most influential wine critics. Highly-acclaimed wine publications such as Wine Spectator and Wine Enthusiast also play a big role in wine scores across the globe. Steve wrote an article about the wine point system a while back. Get over 90 points from any of these guys and you’re guaranteed to justify a higher price target.
Big wine events also affect wine prices. Take the infamous Paris Wine Tasting of 1976, aka the Judgement Of Paris. And yes, there’s a movie about this called “Bottle Shock” featuring Alan Rickman and Bill Pullman. That tasting placed Napa Valley on the international wine map and changed California wine forever. Once Chateau Montelena Chardonnay was recognized as one of the best wines in the world, its price increased by more than half overnight! The wine was the same, but its perceptive appreciation suddenly became enormous.
So Where Can Find The Best Wine Prices?
I’ve said it before and I’ll say it again… Don’t be fooled by those suspicious deals from large grocery store chains, that shall remained unnamed. Whatever the discount, the price you’ll end up paying is the actual retail price. The best direct-to-consumer deals are from the wineries. They often have online deals and the shipping cost is getting progressively cheaper. A close second is wine & liquor stores, such as Total Wine & More. I’ve spent a long time comparing wine prices and theirs are very competitive. Finally, and perhaps the best option of all if you’re already a member, it’s Costco. I have heard from a reputable source that Costco sells certain wines at cost, without any profit margin.
Is There A Better Time To Buy Wines?
Surprisingly, YES! If you’re buying wine on your way to a party, or as a last minute purchase for a dinner you’re hosting, you’re buying convenience rather than value. According to the shopper-rewards app Ibotta, consumers pay 9% more for beer on Saturday than on Monday and 6% more for wine than on Tuesday. According to the company’s recent findings, weekends are the most expensive time to shop, whereas Mondays & Tuesdays are the best days to buy wine.
Don’t buy wine, INVEST in wine. As a smart shopper, you make more deliberate choices by planning ahead. Stock up on wine whenever you see a good deal. Store your wine in your home and lo and behold you end up showing up at that party with a $50 bottle of wine that you only paid $25 for. And to be able to share that precious bottle with your friends and family, well… That’s priceless.