I have been in a digital desert for the last week, dealing with computer problems compounded by a stretch of travel without a laptop. Please excuse the brief WineZag siesta and take a quick few steps back with me to follow up on a previous WineZag post on runaway Bordeaux prices getting in the way of reasonable access to the wines that enthusiasts can and want to appreciate. I intended to share Charlie Olken’s, from the Connoisseur’s Guide to California Wines, dispute with some of my reasoning concurrent with the timing of its appearance in a comment area over at Vinography as he expressed a fundamental disagreement with my assessment of unnatural price escalation.
It is worth noting that in that conversation with Charlie, I expanded on the facts presented in the post with one more illustrative statement:
Why would a bottle of Le Pin or a bottle of Valandraud escalate the 
way they have? Is that natural? Isn’t a relatively famous wine critic responsible for that wine to be priced out of context with its supply and comparative quality? Is that not unnatural?
There is enough agreement that a collection of drivers including favorable reviews and ratings, limited production, expanding and developing consumer markets, distribution system idiosyncrasies, legislation, acreage cost, luxurious investment in physical winery structures, debt, etc. contribute to price escalation in a way that is sometimes not commensurate with improvements to product quality. Obviously, and regrettably, enough consumers support the trend either because money is not an issue, they appreciate the wine and refuse to let choking prices deter them, or they want off the bus but have not yet mapped alternative paths to quality wine experiences.
Scoring by major wine media is only one contributing example of price and market making. As expected from one critic’s corner (whose candor and consistency I respect, following him for more than twenty years), Olken asserted the root cause of skyrocketing prices falls firmly at consumers’ feet, and that even a hint at the most blatant examples of a wine critic blowing two specific wines’ prices out of the stratosphere is misplaced blame:
Blaming Robert Parker for price escalation is like blaming Alan Greenspan for the price escalation in housing or the stock market bubble. The laws of supply and demand are only partially influenced by one critic, and then only for a few products. Available dollars chase desirable products. Wine became more desirable world-wide as the world economy grew faster than the wine supply, and the upper-middle class, of which you are a member, unless you are so wealthy that money does not matter, also grew. When the dollars chasing a given commodity grow faster than the supply of that commodity, prices go up. No one has a “right” to drink Le Pin or DRC–although I certainly wish I did. Adam, your expose of price escalation is interesting. The stock market plummeted by 50%. How did the prices for those wines fare? Oil dropped by 60%. How did the prices for those wines fare? We cannot turn back the forces of the market, even with the Internet, and frankly, as wine gets increasingly
Blaming Robert Parker for price escalation is like blaming Alan Greenspan for the price escalation in housing or the stock market bubble. The laws of supply and demand are only partially influenced by one critic, and then only for a few products. Available dollars chase desirable products. Wine became more desirable world-wide as the world economy grew faster than the wine supply, and the upper-middle class, of which you are a member, unless you are so wealthy that money does not matter, also grew. When the dollars chasing a given commodity grow faster than the supply of that commodity, prices go up. No one has a “right” to drink Le Pin or DRC–although I certainly wish I did. Adam, your expose of price escalation is interesting. The stock market plummeted by 50%. How did the prices for those wines fare? Oil dropped by 60%. How did the prices for those wines fare? We cannot turn back the forces of the market, even with the Internet, and frankly, as wine gets increasingly 
able to be shipped, the demand for the best wines is going to continue to rise.Charlie makes some good points. Consumers have not made things easy on themselves. Yet while the consumer market for wine expanded, so did the supply. There are now 6000 bonded wineries in the US which is triple the number since 1998. Importers around the world have brought more wine to the global market place than in earlier days. And, characteristics of a bubble wine economy where supply and price outpace sustainable demand are now in evidence. Today, some growers are lamenting softness in the bulk market and there is evidence of problems in the distribution and direct to consumer channels in reaction to the broader economic woes. Retailers are dumping old vintages to clear shelves and stay relevant with new release inventory.
I am glad to have taken the opportunity to add Charlie’s points of view here. And as a final point of clarity, here is additional perspective and clarification that I offered Charlie and other interested Vingography followers:
If there is any confusion that a specific wine critic was likened to a particular Chairman of the Federal Reserve, I regret the inference. I better clarify a few points and expand on some others.
I only referred to two wines, Le Pin and Valandraud, because their *ultra* ridiculous price points were driven higher than the *merely* ridiculous price points of their peer group as a direct result of over the top Parker reviews. I raise this as only one example of supply and demand being unnaturally impacted by the inclination of a third party (critic preference instead of legislator politic) that made a wine impractical to acquire for many that would like to try it. So we agree on your point that critics can play a larger role in unnatural price escalation and demand creation for a *few* products, but definitely not all. It takes three to tango; seller, tastemaker, and buyer.
Last point of clarification, I am not so wealthy that money does not matter. I grew up in an immigrant family in Brooklyn, so I don’t even understand what it might feel like to have the automatic “right” to experience something luxurious. I only clarify all this so you can understand the essence of my point.
I love great wine. I was fortunate to start out with a special tasting group in NY 25 years ago made up of guys with palates and wine awareness that anyone I have since met with a passion or business interest in wine would aspire to. For $20-$25 bucks on the third Thursday of every month 15 of us would gather in a NY cellar and taste 12 of the best and hardest to find wines carefully selected and assembled in peer groups, blind. We did it to learn, enjoy, feed our love of wine, and inform our buying. We compared Bordeaux, top California Cabs, Super Tuscans, top red and white Burgundies, verticals of first growths, single vineyard Cote Roties and Hermitage, luxury CDPs, Washington State wines when there were only a few, killer domestic Pinot, Merlot, Zinfandel, Chardonnay, etc. All for around $25 a guy. That was how I was introduced to wine. Those were the wines that taught me to love wine, the ones I bought, cut my teeth on, and developed an inclination for. I could afford them all and got hooked on wine for all the right reasons. It enriched my life forever.
I don’t buy those wines anymore, out of pure sensibility. I can drink well for less. I still buy houses. I do buy oil. I do buy technology. I am over sneering at the laundry list of forces that combined to take those wines off my table due to unnatural price escalation. I have found alternatives to regular consumption of those wines. I live in a better house than I did 25 years ago, drive a nicer car, burn more oil, wear nicer clothes, eat at better restaurants….yet had to find wines of lesser pedigree as years passed. There is something really unnaturally wrong with that in my eyes.
If there really was a true consumer wine advocate active today, there would be equal effort and weight
I won’t argue your forecast that demand for ridiculously priced wine will hold to its hockey stick growth curve forever. I was in the technology and housing media businesses for 20 years and no matter what was going on in other sectors outside ours, all of us inside housing and tech could only see blue skies and irrational exuberance lasting forever. I learned the hard way not to forecast on the back of strong markets. I also won’t try to make a case that demand for overpriced top quality wine could slip via consumer backlash; you come by your market forecast as honestly as we did in the frothy housing and tech markets.
given to fair value assessment as there is to color, nose, attack, mouth feel, and finish. If Parker said three years in a row that Le Pin in the current vintage drinks no better than the rest of the 92 point wines in this report that sell for 1/100th its price and I think it is a foolish consumer that would buy Le Pin at the current offering price, do you think the price for Le Pin would stay at $4,000-$5,000 per bottle because of natural demand? Consumers have not been their own best advocates here, but neither has anyone with enough clout and influence to make and move markets.