Everyone has thought this, but I think most of us have never heard a satisfying explanation for why it must necessarily be so, when really no other wine market operates that way.
Especially now, when new producers at this level come into the market with their first release priced at the maximum price point they think they can attain. Not too long ago, ambitious high end wine projects would come into the market at prices well below the highest price they could get, there would be long wait lists, high secondary market prices, people coveting their spots on the list and clawing to snap up their slowly growing allocations, and a buzz of excitement in the wine community about the brand.
In those examples, I can understand the slow build of the pricing, and the sense that their mailing list customers felt privileged to have gotten bottles of a wine whose pricing and value is rising. Once the pricing completed its inevitable climb up to FMV, I think many customers who had been along for the ride were still happy being there and paying full price for the wines. (Though I wouldn’t be surprised if more customers of a wine like Harlan which continued the climb on past FMV dropped off.)
But if your first release is a $300 cab and a $135 chardonnay, I don’t understand as much why that price point can never ever go lower. Or, maybe a more accurate way to put it is, I don’t understand why that price point can never go lower if the wine isn’t actually a vanity project and the customers aren’t trophy and prestige hunters.
I’m only an annual buyer of two premium Napa cab wineries, and they are ones with price points currently in the $100s who started in the overdelivering model I described rather than the maximum luxury price point model. If hypothetically in some future vintage, one of those producers came to its customers and said:
"With the way market forces and consumer demand is for premium Napa cabernet right now, the best thing for our winery and for our customers is that we are going to reset our release pricing at 15% lower for the new release, and then we will see where we go from there in future vintages based on costs, demand and the market.
We realize that our loyal customers may feel frustrated that they paid a higher price for last year’s vintage, but we will keep delivering wines of the same and ever-better quality to you in this vintage and into the future, and we hope that you realize that our adjusted pricing here is in the best interests of both you and the winery. We thank you for your understanding."
I would be very happy about that and not slighted/bitter in the least. I would probably order even more bottles from that vintage.
But maybe that is because those wineries are not the vanity projects of owners with 8+ figure net worth and their wines are not trophy flipping wines with luxury tasting studio experiences and all that. I’m buying them to get wines I enjoy drinking at prices that I can accept paying for the experience, not so I can show off to friends that I’m on the list or to put them in glass display cabinets.
Not Napa cab, but I’ve been buying Sea Smoke and Kosta Browne annually since their earliest years. If those wineries dropped prices next year, I’d be thrilled, and I would buy more wine from them.
Maybe my question at the end of the excessive rambling his this: if your business model and your customer base is such that you can’t ever be seen to reduce prices in order to reflect supply and demand, does that mean you and your customers might actually fit the negative stereotype of the luxury Napa cab brand?