A man giving a speech

Is Fine Wine too cheap? The Big Debate – Part Two

There are two types of cheap wine out there, according to Pauline Vicard, CEO of ARENI. “The ones that are cheap because of their low price, and the ones that are cheap because of their short-term vision.”

And this cheapness is not, she said, sustainable.

Vicard fired the first shots in what was a lively debate. Held at 67 PallMall in London in mid-November 2021, and moderated by Richard Bampfield MW, the topic was “Is Fine Wine Too Cheap?” The debaters included Vicard alongside George Lacey, Head of UK Sales of Sotheby’s Wines. On the other side, arguing that fine wine isn’t too cheap at all, was Thomas Parker MW, the wine buyer for Farr Vintners, and Stephen Duckett, the owner and managing director of Hundred Hills Vineyards in Oxfordshire.

Both too cheap and too expensive are distortions

One issue in the debate was the participants didn’t agree on the definition of ‘fine wine’ in advance, and for some it meant investment-grade wine, while for others it meant artisanal wine. Vicard was among those speaking about artisanal wine, which she believes is being sold too cheaply.

“Vinea Transaction estimates that in the South of France, the cost of production is 23% higher for a winery doing long ageing prior to release, and 30% higher if one farms organically,” she said.

Meaning, that wineries who are investing in sustainability, are not getting the price premium they need to make their long-term vision worthwhile. “If one is producing a cheap fine wine,” Vicard went on, “it’s most likely either because they can’t do the maths, or because they are compromising on their long-term vision of quality.”

For Parker MW, there are many wines that are indeed too cheap. “You can find bottles, even with the tax system in the UK, for under £5 a bottle,” he said.

But Parker MW suggested that in some cases fine wine was so expensive, it was detrimental to its own cause. “An article from The Wine Economist tells us that the cost of production on average from Brunello di Montalcino is €9 a bottle can and can go up to €15 a bottle,” but which can sell for €200 a bottle. “It’s hard to justify that difference between cost of production and sale price. That’s where I start to see a problem in whether fine wine can, indeed, be too expensive.”

When wine becomes extremely expensive, he went on, it can drive up the cost of land. “Burgundy has this significant problem now that its wines have become too expensive and domaines that have been in families for generations now have to be sold to businesses that don’t have to deal with Napoleonic laws.”

George Lacey dismissed the idea that a difference in price was a problem. “We live within a free capitalist market,” he said. “Whether this is right or wrong is not the point, it’s simply the system in which those who are consuming fine wine exist.” He noted that the value of anything is simply the price someone is willing to pay for it. “So if someone is willing to pay £1,000 on the secondary market for a wine, then who are we to say that value shouldn’t have been ascribed?”

The secondary market

Lacey said that he found the argument about whether fine wine was too cheap or not interesting in the context of the secondary market. “Look at Salon or Leroy,” where it’s almost impossible to get an allocation on the primary market. Those who can, can instantly sell the wine for a profit on the secondary market, “and that money is not going back to the pocket of the artist who made it”.

“If we are supporting a system where we have a primary market releasing a wine at a particular price that is essentially the price minus the distribution margin,” but where the seller on the secondary market makes a high profit, “then your wine is too cheap”.

But, he added, more people can access wine than ever before. “On the other side, you have fine wine that’s less accessible than it has ever been.”

Read the opening statement to the Big Wine Debate HERE

Catch up and watch the entire debate HERE