In March 1998, in the Bordeaux region of France, it was uncommonly hot. That was followed by a cold wet April and May, an erratic June, a cool overcast July, and an epic August heat wave. Fifteen years later, some horrible person paid $41,500 for a case of the fermented grapes that resulted.
That is the record-high price paid at auction in London last week for a case of 1998 Chateau Petrus, among the finest vintages from perhaps the finest wine producer in the world. Or that’s what they say, anyway. I drink a lot of wine, and sometimes even pay a lot of money for the privilege, but as is the case for nearly all humans on earth, Chateau Petrus is out of my price range.
Among the plutocrat class, particularly in emerging Asian nations, the big name first-growth Bordeaux wines have an appeal that is out of whack with any fundamental analysis of the quality of wine. Compared to the very best Californian or Australian or Italian red wines, great Bordeaux may be different, but it isn’t necessarily any better — and certainly not 20 times or 30 times better, as the recent auction price for the ’98 Petrus would suggest. (Or at least that is what I gather from reading wine critics with better palates and bigger budgets than my own).
But the biggest-name Bordeaux houses — Petrus, Lafite-Rotschild, Latour and a couple others — have a history and brand name appeal that transcend boundaries. Suppose you’re trying to impress someone, say a businessperson you’re looking to make a deal with, or a woman you’re trying to seduce. They may not know a Barolo from a Barbaresco, no matter how delicious the Italian red might be. But they are more likely to know that the Chateau Latour label should really, really impress them.
Now with a lot of other luxury goods where the name brand matters, a rising global wealth translates into more production. The luxury conglomerate LVMH is ready and willing to make as many $1,000 Louis Vuitton handbags and $5,000 Tag Heuer watches as the market will bear.
But wine is different. They’re not making any more land in Bordeaux. Yes, more efficient agriculture has increased crop yields in the region over the last generation — there are 900 million bottles of Bordeaux produced each year, up from 500 million in the late 1960s. But the universe of global ultra-wealthy has increased a lot faster than that, and the big-name producers whose bottles attract four-figure price tags account for less than 5 percent of total production.
Which means that instead of being channeled into increased production of Chateau Petrus, increased demand for the juice is channeled into ever-higher prices, as at last week’s auction. If it seems like the price tag of the first-growth Bordeaux is disconnected from any rational analysis of its quality or the enjoyment that the buyer will get from it, well, that’s because that is exactly the case.
There are a number of other goods that fit the same pattern: Apartments overlooking Central Park, houses in London’s Mayfair neighborhood, artwork by Damian Hirst. Supply is more or less fixed. Demand rises so long as the number of people among the global ultra-wealthy keeps rising, and so long as those peoples’ tastes don’t shift.
On one level it’s harmless. If people with billions of dollars want to overpay for creepy dead-shark-centeric artwork, or a bottle of Petrus, that’s fine. The latter even creates some benefits for ordinary shmoes; the astronomical price paid for first-growth Bordeaux surely incentivizes vineyards around the world to try to step up their game to claim a piece of the lucre, making wine-drinkers with more modest budgets better off.
But morally, it’s a different equation. If you are about to drink a $3,500 bottle of wine, you have to think for just a minute about this option instead: Drink a $100 bottle of wine that is about as good, but from a less renowned chateau. And deploy the other $3,400 to pay for malaria-preventing mosquito nets in Africa that, by one charity’s calculations, would be enough money to save about 1.5 human lives.
If you lack the moral imagination to figure that out, well, you’re really kind of a monster.