Over priced wines

[Wayno]

I then got sidetracked with my ideological dislike for people trying to make a quick buck without "paying their dues". That probably was a bit of a side issue.

Excused.

[Jules]

I agree that some wines are way overpriced, I worked at a VC's in WA around 2000/01 and at that time it felt like having the words Margaret River on the label was a license to charge 20% more than wines from elsewhere and of comparable quality.

However when it comes to a quite a few small production wines that charge $70+ a bottle, often they have a built a cellar door/mailing list following before they were noticed by bottleshops (big chains and independents) and are then stocked on a must have basis, a sort of 'social cachet' if you like.

They may also have an overseas following. Back in the late 90's/early 00's, the $A was week against the $US, and the pound. If you sold a bottle of Grange in the US for $400 then it was worth $800 in $A terms. This can make the smaller producers wine's that go mainly for export, Clarendon Hills is probably the most glaring example, quite expensive here. It is what is commonly called export parity pricing, ie the price a product can sell for overseas determines the price you have to pay to stop it going there.

Export is also quite attractive for many smaller producers because Australia's ridiculously draconian wine taxation rules, mean that in real terms many producers can sell overseas at lower prices than here, but still earn as much in real terms. Don't believe me? Compare the difference in price between NZ wines over there, and over here (and often that doesn't even take into account the favourable currency spread $A/$NZ).

Although some are just high because the prices need to be to justify the infrastructure investment, or the producer has unrealistic expectations. If this is the case they will soon drop prices, or go broke.

[Mahmoud Ali]

I suspect that many rare, limited production and so-called wines "cult" wines are priced arbitrarily, not according to cost. I happen to remember a vineyard manager telling me about a winemaker and his partner discussing the pricing of a new wine at cellar door. The winemaker and his winery were justifiably famous and his wines excellent and expensive.

This took place in 2001 and the wine in question had no track record, it was the very first bottling and only available at cellar door. The winemaker and his partner were at the dining table discusing the pricing of the wine. The partner though it should be priced at about A$30 as it was a brand new wine. In the end the winemaker priced it at A$50. The wine sold out.

It just goes to show that cost is not necessarily the determining factor in pricing wines from reputable wineries. Its what the market will bear, and good reviews and reputation will certainly help.

Cheers....................Mahmoud.

[Davo]

Seems the right place to whack in this link about US$100 bottles of wine:-

http://www.coffaro.com/BrendansTruth.html

[Craig(NZ)]

Davo

Intersting article but way way too simplistic. How many goods and services are priced simply on a cost plus model? Very very few. Of all the fmcg products ive dealt to over the years i cant think of many. Rest assured the luxury goods markets would be even further from that model

His model also doesn't seem to deal with ROI. It doesnt consider the payback required for 4-5 years of cost and no return upon setting up a vineyard???

Perhaps winemakers should make the wine??

However his science aside he does make a good point even if it is a concept that everyone on the face of the planet surely must already be aware of

[lordson]

it really is the same with everything

its not how much something is worth, its how much people are willing to pay for it

[Craig(NZ)]

its not how much something is worth, its how much people are willing to pay for it

yip that about sums it up

[lordson]

i was reading that and also wondered to myself

whats so special about expensive wines

i read these two articles:

http://scaryreasoner.wordpress.com/2008 ... ne-trials/

http://wineisneat.com/nytresponse.html

and wanted to ask you guys, as i can't really experiment for myself, what is the percievable difference between a $12 bottle of wine and a $70 or is the difference even percievable?

is it like that first guy said, a Veblen effect? I for one have been suckered by that thinking, the most expensive, the better its gotta be

anybody here done a blinded taste test? for example, tasted some Rawson's retreat and then some Bin, and actually noticed a difference?

[Daniel Jess]

I do a blind tasting every couple of weeks, usually for wine judging.. actually, you might be interested to have a look at some wine judging sites (might need to google them as I don't know the addresses off-hand) and see what criteria judges use in comparing premium and high-cost wines to less expensive wines and see what they say.

"Quality" is usually the key word.. so research different opinions on what makes a 'quality wine' to help you understand better.

These are some trends in the wine sales industry in Australia that I've noticed since the 90's, which sadly aren't great for consumers, but them's the breaks I guess. Assuming all the wine is of a good enough quality for it's wholesale price-point:

- if a wine has very small production, we put the price up
- if a wine is a reserve, price goes up
- if a wine is from a well known winemaker, price up
- if a wine has won awards, they put the price uo
- but, if a wine has a more expensive marketing campaign, often the price is lower!