Wine Inflation

I did a little bit of reaearch. I looked up some wines that I was drinking about 10 years ago and what I paid for them then and then looked at current prices for the current bottlings today. In doing so, I made sure that I was comparing apples to apples; that is, same winery, same vineyard, just different vintage.

Now, before I go on, let's assume that the increases in cost of producing the wines and getting them to the consumer should have increase by roughly the general rate of inflation. We all know that wages haven't been increasing at massive rates over the last 10 years. While the prices vary wildly from day to day, overall, the cost of petroleu-based products hasb't changed much. And, in fact, the cost of most products hasnt't changed much.

I wanted to see. So, I looked at the CPI-U (without getting to technical, it's one of the broadly used measures of Consumer Price Index). In January 2011, the CPI-U was at 220.223. In January 2021, the CPI-U was at 261.582. That's a roughly 18.8% increase over the 10-year period, or, stated differently, that's average annual inflation of about 1.74% (and that was rounded up to dispel any doubt).

Now, let's consider some wines and I am not going to embarrass the wineries. 

I'm going to start with one where I was a wine club member. In 2011, their premier wine, or if you prefer their flagship wine, was selling for $65 per bottle. Perhaps you could find it for less, but that was the price at the winery. That's not cheap wine. All of their other wines at the time were less expensive (today, they have a number of wines that are more expensive than what was then their flagship wine). That same wine in the current bottling, that is, in the current releases, sells for $90. That represents annual increases of 3.3%.

In case you are wondering, these are the same grapes from the same vineyard made by the same winemaker. But, as you are going to see, that's not particularly obscene in the wine world.

Let's consider another one at a different winery. I recall tasting this one at the winery and it was very good. In fact, its ratings from reputable critics were all at 95 points or higher. The price was $85. $85 for a bottle of wine in 2011 was a lot. In fact, $85 for a bottle of wine in 2021 is a lot.

The current bottling of the same wine made from grapes from the same vineyard made by the same winemaker was not rated as highly. Critics have scored it on average about 2-3 points lower. So, we would expect that a fair price, if the initial $85 was fair, would be about $100 (that's $85 increased with inflation and rounded to the next lower dollar). How much do you think the current bottling costs? Take a guess.

$95 to adjust for the fact that the critics don't like it as much? $105 because they rounded up and wanted to keep it to a roundish number? 

I went to the winery's website and I was dumbfounded. I thought that $195 was a typo. So, I went to Wine Searcher and I found some lower prices, but not much lower. The best I could do was about $160 per bottle. But, at winery prices, the annual increase for inflation was a whopping 8.7%. That's nuts.

So, I guess I am simply choosing the wrong wineries to look at. But, I do want to limit this to American wines because once I move outside of the US, I have to deal with currency exchange rates and that adds an additional complexity that I just don't want to deal with early in the morning.

So, I chose a fairly obscure winery in a fairly obscure place. Trust me, you've never been there unless you got there by mistake. But, we were there in 2011.

Since it is the grape they take pride in, I decided to comare their Zinfandel pricing. In 2011, it was $36 per bottle. Today, the current bottling is $44. The fair price, considering only inflation would have been $42.77. So, $44 is not unfair. 

After all that, here is what I learned. It's not necessarily about cost or quality. What it is about is branding and notoriety, and perhaps greed.

Because we like it so much, I have to concede that we often pay more for wine than we really should. That's a personal decision. But, it also becomes a personal decision to stop drinking or at least buying a particular wine because it was priced out of existence for me.

Yes, if you can tell the difference and want a truly great wine, it likely won't come at a low price although there are occasional exceptions. But, if you just want a good wine, go to your local wine shop or your favorite big box wine retailer. You can find wines that I am happy to drink and I am pretty discerning for less than $10 per bottle. Some wines simply cost more to make for a number of reasons, so in certain varietals and regions (AVA, AOC, DOC, etc.), you might have to up your price point to between $10 and $20. 

Now, these might not be the wines that you will lay down and experience a life-changing event with in 2041, but they are perfectly good. You will enjoy them if you pick wines in a style tha tyou like. And their prices only tend to increase roughly with inflation.