FrankAboutFood.com

The Price Roller Coaster –
Climbing for the Top or Heading to the Big Plunge?

 

Right now there are a number of diverse forces at work on the price of wine worldwide. Prices of domestic wine continue to be soft because of the backlog of inventory caused by over production and the extended slide of the market  This condition has been created by the financial “terrorists”. The damage they have inflicted upon our society is incalculable and the odds are they will go unscathed and keep their billions.

Thus the market will be subject to all kinds of promotions that are designed to appear to make the prices stable while they are actually dropping. But rest assured there are bargains out there at all levels. There has been short-term upward pressure on European wine as the dollar weakened. But a soft market killed that. However, here comes the very big shocker and the proof positive.

The Five First Growths of Bordeaux, Margaux, Haut Brion, Lafitte, Latour and Mouton have dropped the 2001 future prices by a dramatic 37 % based on a Euro worth 92 cents. Other big names have followed. Since the big market for futures is the gullible wine buyer of the United States and the dollar is now even with the Euro, a dollar buys less French wine than before. Another price drop in France is therefore imminent to stimulate action. Thus, beware of further dropping future prices if you really think you should be a futures buyer.














Margaux Drops Futures Prices 37%
This big drop obviously tells us that there is a lot of unsold inventory of French wines sitting in warehouses around the world. This puts further pressure on prestige American wines, which compete with the high-priced French.

It has always astounded me that people that are supposedly rational in most aspects of their life fall victim to the French scheme of getting the retail consumer to finance the French wine industry. Why would people put up money for wine of unknown quality that cannot be evaluated for 2 years?  I guess when the market was riding high, serious wine related conspicuous consumption became one of the few things that separated the true high rollers from the ordinary BMW and Mercedes buyers. Or perhaps it is just the thrill of the gamble like day trading. 

All of this trickles down to every level. Look for continued great value from Australia where the currency remains soft. . Do not look for such great values from Italy.  They are an Euro country that has not over-committed as much as the French have. There will be values but not as pronounced.  

Paradoxically, as I have reiterated recently, the overall best values in red wine world-wide are from the Rhone Valley of France. Fine wines can be found in the $10 category and very fine wines can be found for around $22 especially from the Chateauneuf du Pape area. Names to look for are Guigal, Perrin, De Nerthe among many others.  

Finally, these lower prices may be the only bright light on the horizon for the wine drinker who sees his personal portfolio dropping every day. At least now you can have the fun of the hunt for wine bargains in all price ranges. With just a minimum amount of effort, you have to win. You can’t lose. That’s certainly something you can’t say right now about The Stock Market.

Searching for wine bargains may be one of the few enjoyable things left in life.