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What is the meaning of super-expensive Cabernet Sauvignon?

23 comments

I’m amazed by how many Cabernets that cost triple digits I’m seeing lately. Once upon a time, a $300 Cab would have been an older one, with a decade of bottle age to justify its price. Or it might have been a currant release listed on the pages of an expensive restaurant’s wine list, marked up four times its retail price.

But in the last year, I’ve reviewed 156 Cabs and Bordeaux blends that cost $100 or more. That’s more than twice the total number of classified growth Bordeaux (not all of which retail for more than $100 US). And, as you’d expect, nearly all of these costly Cabs come from Napa Valley.

How are we to account for this breathtaking inflation in the price of Cabernet? One possible reason is that proprietors, with their fingers endlessly probing the retail winds, sense a new inclination on the part of the wealthy to spend money. This could be a canary-in-the-coal mine sign of the end of the recession–at least, at the upper end of the income bracket.

However, another theory is far simpler: proprietors have no more clue where the economy’s headed than you or I do, but they do have enough hubris to charge these prices. There’s a herd mentality at the upper end of the boutique winery class that mirrors that of the lower and middle classes of wine. If Fred Franzia establishes a benchmark price for Cabernet (or Pinot Grigio, or whatever), the brands that compete with him are forced to match it, or concede defeat. This is what goes on everyday in the wholesale wars. If Clos du Bois sets a price on a mid-tier Chardonnay, everybody who competes with Clos du Bois has to decide whether or not to meet it or even better it by a buck.

You might think this take-no-prisoners battle doesn’t occur in the rarified, dignified ranks of high-end wineries, but it does. When Screaming Eagle raised their price to $750 a few years ago, all those wineries who feel they compete with Screaming Eagle had to raise their prices. If they didn’t, they believed (correctly or not) that the market would perceive them as inferior to Screaming Eagle–or not caring enough to compete hard with them. In professional sports, the worst reputation an athlete can get is as a guy who doesn’t fight. That’s why Kobe Bryant is such a superstar. No matter what’s happening on the court, the guy is battling it out.

I called this pricing behavior “hubris” just now, but that may be a little unfair. No one would accuse Kobe of having hubris. Pride, yes. Competitiveness, yes. An utter belief in his ability, yes–that’s confidence. And the belief that, as a leader, he’s got to set an example for his teammates, and for his fans. Looked at that way, the behavior of the high-end Caberent houses in raising prices may be more a function of their belief in themselves and in the quality of their wines, than of any egotistical attention getting.

And let there be no mistake, the great majority of these $100-plus wines are very great in quality. A few outliers scored in the mediocre range, but mostly, these are wines that deserve their scores. Of course, the anti-Napa crowd will carp and complain that they’re all the same, a bunch of overripe, overoaked, high alcohol wines that “pall” after the first sip. That’s the standard gripe: the first sip is delicious, but you can’t finish a second glass, because the wines “tire the palate.”

Which is nonsense, of course. Most people I know would happily drain entire cases of these wines, if they could, which they can’t, because they can’t afford them. Anyhow, I think the reason prices are arching upward is a combination of my two theories: proprietors do sense an easing of tight money among the one (or two, or three) percent, who never were as hurt by the recession as the rest of us. And they do believe in the quality of their product. (I should also mention that these high-end Cabs are extraordinarily expensive to produce, when you consider the vineyard work, the price of new French oak, employee costs and the prices they have to pay to the new class of traveling consultants. Every high-end Cabernet seems to require a retinue of associated famous-name consulting viticulturalists and winemakers.)

Where these prices go in the future, though, is anyone’s guess. A year from now, will there be more or fewer $100-plus Cabs than the 156 I’ve reviewed in the last 365 days? I’ll let you know.

  1. I might venture to use the word hubris in some instances. . . like Blackbird Vineyards. Michael Polenske is a nice enough guy, but when he seemingly jacked their per bottle price from $90 (a special occasion wine for sure) to $125 in a single vintage for no reason other than to make more money, I had to wonder of his justification. The only change that I could see was that Oprah had declared Blackbird her “favorite winery.” I don’t see any authors adding $35 to the price of a hardback book just because Oprah put them on her book club list. Blackbird effectively priced themselves out of my cellar with that move. I’ll buy Juslyn instead @ $110, thanks.

  2. GrapesRGreat: My problem with Blackbird is that they make so many different wines that, over multiple vintages, quality seems erratic.

  3. 07 Staglin Cabernet Sauvignon…. if they are good bring them on…oh and 07 Linked Vineyards Cabernet. Shameless plugs and Linked is one of those new Cabernets. Have you had it Steve?
    \
    Cheers

  4. Steve — What percentage of the California $100+ wines you have tasted are very small production (say, less than 5,000 cases)? My sense is that the majority of CA wines in this category are very small production, probably significantly less than 5,000 cases (w/ notable exceptions like Mondavi Reserve, Opus One, etc.).

    It’s a good point that, for all the complaining about escalating prices, Bordeaux prices don’t on their face seem to be out of line when compared to CA cab prices. On the other hand, most of the high dollar classified growths are pretty high production wines.

  5. Wineguys,

    I received a recommendation and Jessica Link’s business card for Linked Vineyards during my last visit to Robert Young Estate. I was going to order a bottle but they will not ship to Ohio. . . sounds like they are worth it?

  6. Steve, can you think of many great Napa cabs that have help pricing under $100 (Neal, Karl Lawrence, Ladera, Culler, Lewelling)??? Those are the ones people should be seeking out.

  7. Damon: There are lots and lots of great under $100 Cabs, too many to mention. I’d suggest you go to Wine Enthusiast’s free, searchable database and see for yourself. http://www.winemag.com.

  8. Mike, I think the vast majority of the $100-plus wines are produced in small quantities, say a few hundred to a few thousand cases. Nowhere near the huge production of the First Growths.

  9. Staglin 07 magnificent. I gave it 96 points last year and would love to try it again today. Gave the 2007 Linked 90 points — a very good Cab, but not absolute top tier, IMHO.

  10. Vic Motto says:

    Overpriced wines are a very important part of the success of the industry. They’re overpriced (and overwrought) to make them rare and almost unobtainable. Only a limited number can achieve this. Certain wealthy consumers seek this prestige and willingly pay for it. We enthusiastically embrace it because it makes $75 seem reasonable and $45 a bargain. Reaching this status was one of the great industry accomplishments in the 90′s.

  11. doug wilder says:

    Steve,

    Ditto on Linked.

  12. Jack Korpi says:

    Those kind of prices make you appreciate how much better value you get from Barolo, Brunello, Bolgheri, and even Chateauneuf du Pape and Burgundy! And unlike the palate-numbing Napa offerings, they make food taste even better.

  13. Great words! The sad thing is the group that can afford said wines is getting smaller and smaller. Also sad are the ones that truly have a passion and understand these wines that can no longer afford to buy/taste them. Also sad are the wealthy that buy them simply to impress others.
    I do think that there is another contributing factor that should be mentioned and that is the resale of some of these $100+ wines that would get resold on the “Grey Market”. When the winery raises their prices it squeezes out this middle person. Good or bad is for each individual to decide?

  14. Ryan Flinn says:

    On the flip side, I feel like I see many more older Napa cabs for great prices being offered on sites such as Invino, WTSO, etc. It’s great to be able to try a quality Napa wine, aged appropriately for 10-20 years, for $50 or less.

    Also, what Jack Korpi said about Italian wines.

  15. Brian, you raise some interesting points. 1. it may be that some of these producers are looking overseas, particularly in places like China, Russia, Singapore, for buyers. That’s where the money is going. 2. The wealthy always have bought wine to impress others. Yes it’s sad, but a part of the human ego. 3. So true about the grey or aftermarket. How many of these wines are bought, just to flip on eBay or wherever?

  16. I would say the meaning of these wines is the importance of credentials. Credentials are far more important than the taste of the wine. You want to charge more than $100 for that wine, it better be a Cab and from Napa Valley. A Parker endorsement is important as is a winemaker who he has annointed. Those are the big four. And they are about all the buyer is interested in knowing and maybe all that they can really comprehend…besides the $100 price. Far be it for them to realize that the only wines in the world that is actually worth that price is the best of Pinot Noir.

  17. Morton: Do you believe a Galloni endorsement will be as important as one from Parker?

  18. Steve, interesting article. As a producer of Napa Cab I think about this all the time. Price is a function of many factors – cost of farming/production, cost of land, scale, history, provenance, market acceptance, artistry, etc. Several things to keep in mind. Napa is 1/8th the size of Bordeaux. Most top Napa wines are less than 1,000 cases (vs. 25K to 40K for 1st Growths) and are given many more human touch points than their Bordeaux counterparts. I.e. a vine in Napa sees about 12 to 16 human interactions a year, vs. 6 to 8 in Bordeaux. Land cost is +/-$250K per acre, and top producers are constantly pushing the envelop on advancing winemaking techniques. Regardless of what wines you prefer, Napa is a leader in pushing worldwide quality, and this does not happen by accident. Granted, not all the wines released at +$100/btl are justified, but the ones that do have earned it. Time and the consumer will sort all this out.

  19. No, definitely not. The Wine Advocate is all about Parker. Galloni brings no credentials. I’m sure he will retain some followers, but it will be the mindless who only want a number.

  20. you guys left out china, this is what’s driving my pricing up, they are buying all they can get their hands on, especially napa cab, which i source off the spot market and happily put it into containers to the east ! there goes our oversupply problem ! if you can’t make it today then you are a thief or you don’t belong in the wine business in the first place

  21. What really is the difference between a $40 wine and a $100 wine? How many people in a blind tasting could correctly identify the wines by price. I would venture to say none. I don’t know what it is but I believe there is a price point above which wines as a group do not get any better. High prices are a function of marketing and perception. Taste the $100 wines if you have the chance and then by less expensive wines that are just as good or better.

  22. There are many factors that go into price – as a Sonoma producer, I agree with most of the comments and observations made by my Napa counterpart – farming and producing great small lot wines (under 1000 cs/lot) is costly.

    However, there is also a perception in the industry that I believe is exploited: high price = superior quality. There are some really great finds out there produced by lesser known winemakers and brands that are within reach of most consumers and far less than $100 / bottle. It takes time to find them and for some, a willingness to park the ego at the door and buy them because it’s about the wine, and not the snob (look at me) factor that some believe is their criteria for buying expensive wines of perceived high quality.

  23. “Napa is a leader in pushing worldwide quality” For real? Talk about big egos. Napa has become a play land for the wealthy. The pricing for many of these $100+ CA Cabs pays for outlandishly lavish wineries and tasting rooms, guest cottages and marketing budgets. It’s also a believe there is a lot of imported inflation. Steve points out “When Screaming Eagle raised their price to $750 a few years ago, all those wineries who feel they compete with Screaming Eagle had to raise their prices. If they didn’t, they believed (correctly or not) that the market would perceive them as inferior to Screaming Eagle”. I believe the root cause is when Bordx raised their prices. CA wanted to send a message to world that they could compete with Bordx. It was a major mistake. Holding prices would have meant CA begins the value play and much more attractive to the consumer.

    I agree that this price inflation might be the “canary in a coalmine” but I’ve always believed that the retail wine is a following indicator in the market and is the last realm of recovery. In essence, if you see me driving a new car, then the economy is back on solid ground.

    From where I sit, the market for $100+ CA wines has all but dried up unless you are willing to make pennies on the dollar (thank you WTSO and other flash sellers). And, quite frankly, most experienced wine drinkers don’t find the value in them. Most have turned to Spain, Italy and France where true values can be found in Cornas, Cigales, Rioja, Maremma, Languedoc, Jura, and Langhe. As a retailer I trust very few CA wines above $100 and even find QC’s price a little astonishing. Most of these wines do not have a long enough history nor do we have a clue how they will hold up. Remember the great ’97 vintage that was supposed to last decades? Where are those wines now? Just my two cents.

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