Last month I tried to lay out the reasons why some wines cost a lot more to produce than others. However, production costs do not always account for how a particular wine is priced in the market or why people are prepared to pay more for some bottles than others.
There are several reasons why a wine might be a lot more valuable to the customer than the production cost implies. The first is flavour and the second is desirability.
The enjoyment of a bottle wine is not determined by production costs. All the things I mentioned last month such as farming methods, yield, winemaking equipment, barrel-ageing and quality of packaging do not necessarily make a wine smell or taste any better. We have all bought bottles that promise a great experience but fail to deliver in the glass.
Many consumers cannot tell the difference between a decent wine and what a connoisseur would regard as a truly great wine.
For most people, a wine that has sufficient concentration and does not have any noticeable faults is all they are looking for. Subtleties like length, complexity, balance, mouthfeel and minerality are not important. In fact some qualities like tannin and acidity that a wine enthusiast may enjoy are actually disliked by many casual wine drinkers. Great wine is an acquired taste.
Terroir is important and even with all the latest equipment and most expensive consultants, it is difficult to make a great wine from grapes that were grown in soils and climates that are unsuitable for their grape variety.
Sometimes wine producers try too hard to make wines to impress. Low yields and lots of new oak barrels can lead to wines that may do well in a competition but turn out to be too powerful and oaky to be enjoyed with a meal.
When considering desirability, we should remember that wine is a product that can improve with age in the bottle. Therefore a wine that is known or believed to improve and deliver a greater taste sensation in the future is worth more than one which is not. Potential is worth paying for.
At the top end, wines are bought for their fame and rarity value. Some of these wines, primarily famous Bordeaux and Burgundies, also have a significant investment value attached to them.
Cases of Château Lafite and Domaine de la Romanée Conti can be sold at auction for much more than was originally paid. Many of those wines are sadly now beyond the means of most connoisseurs and belong more in a portfolio than a cellar.
Wealthy wine connoisseurs, or wanabee connoisseurs, are willing and able to spend ridiculous amounts to obtain rare bottles for their collection. I remember reading articles in Wine Spectator about dotcom billionaires who suddenly developed a desire to build themselves beautiful cellars and fill them with the most famous and critically acclaimed wines on the planet. That led to a huge increase in prices.
The same is happening today due to wealthy Chinese businessmen developing a desire for wine. The top wines will now cost several thousand Euros a bottle if you can find them for sale.
Packaging, advertising and marketing can all be used to increase desirability. Consumers can be fooled by heavy-weight bottles and luxurious labels. Wine is a perfect product for psychological marketing techniques such as product-placement, celebrity endorsement, exclusivity and fake rarity to encourage people to pay much more that the wine is really worth.
For example, Cloudy Bay developed a sales strategy in the UK where they would combine advertising with restricted availability in prestigious shops like Harvey Nichols to sell the wine at two or three times the price of an equally good Kiwi Sauvignon blanc.
So how does the budding wine aficionado who does not play for PSG or work for Goldman Sachs manage to buy and drink really great wine?
The good news is that there are lots of high-quality mid-priced wines in the world and there are always new producers in less famous regions coming out with amazing wines.
The key is to learn to spot the real bargains. I do not mean what a supermarket is pretending to sell on a discount. I mean looking at regions like the Rhône, Languedoc-Roussillon, Alsace and South West France that are sometimes off the radar.
Try avoiding the most heavily advertised wines or those in ostentatious bottles. Read wine magazines and online resources to discover new producers. Buying age-worthy wines to drink in five to 10 years time is also a smart way to enjoy fine wines without breaking the bank.
By developing confidence in your own taste, learning to look for clues on the label and buying from trusted independent merchants or direct from producers, great value can be found.
Jonathan Hesford has a Postgraduate Diploma in Viticulture and Oenology and is the winemaker of Domaine Treloar in the Roussillon – www.domainetreloar.com
If you have questions on this column, email him at firstname.lastname@example.org