Neal's commentary was based on a mathematical analysis of his own records for 450 wines that he had tasted between 1969 and 1979 (What can I still afford to drink? AAWE Working Paper 254). I wrote a blog post about this, plotting his data as graphs (The outrageous prices of modern high-quality wines).
Well, The Good Old Days (last century) for me were not quite the same as for Neal (or Eric). We all have our price limit, and that applies to flavored alcohol, just as much as anything else. In Australia back then, we did not drink much "foreign" wine, because we could not afford it (as I noted in Tasting great wines?). So, if I am going to look at the wines I bought way back when, then the data will pertain to Australian wines, not American or European. (A note on a couple of the actual wines is at the bottom of this post.)
This is not to say that I drank no imported wines, because my records for 1982-2001 show 76 such wines, from 61 wineries. However, the Australian wines total 581, from 118 wineries, which is a much better sample size. So, the data discussed below refer only to the local wines. Here, I will look at the wines from the first 20 years of my time as a wine drinker (see Some personal anecdotes), and I will discuss the most recent 20 years in the next post.
Of these early wines, 453 have both vintage dates and prices in my (hand-scrawled) records; and these are plotted in the first graph below. The horizontal axis shows the vintage year of the wine, while the vertical axis indicates the Australian dollar price at the time of purchase, with each point representing one wine.
Most of the wines after 1979 were the current vintage release, so that the vintage year is closely related to the purchase year. These are shown by blue points in the graph (one per wine). The green points are all back vintages that were still available, if you were prepared to spend some time scavenging in the liquor stores. In most cases, I purchased only one bottle of each wine, on the principle that tasting a wider range of wines was more interesting and educational, rather than focusing on a few favorites.
There are several features of the graph that we could focus on here. First, the post-1979 wines increase in value exponentially, as found by most previous commentators on wine prices. This is illustrated by the black line in the graph. This regression line accounts for nearly 50% of the variation in price, which is really quite strong, in the field of economics.
Some of this increase may, of course, be due to increased vinous ambition on my part, or even an increase in my salary, leading to me purchasing better and better wines. However, I do not think that these are large effects, as I have always kept a pretty tight reign on the price that I am prepared to pay (the affordability limit, as it is called).
So, what we are looking at here is mostly an increase in the price of Australian wines over a 20-year period. Even wine of reasonable quality became much less affordable during those 20 years, just as has been observed by Neal Hulkower and Eric Asimov for high-quality non-Australian wines.
A second point, then, would be to look at the expected increase in price due to inflation. We do not expect our living expenses to remain constant over the years, and the same applies to wine, even though it is one of the non-necessity goods. The inflation data that I have used comes from Australian Inflation Rates: 1949 to 2020. I started with the regression estimate of the average wine price for 1979, and increased this price each year by the annual inflation rate. The result is shown as the red line in the graph.
Note that the wine prices kept pace with inflation for the first decade of the data; but from the early 1990s onward the prices increasingly outstrip inflation. The inflation price increased roughly linearly with time, while the actual wine prices went up exponentially. Early on, there is thus little difference between the two, but not later on. So, maybe this provides a neat definition of The Good Old Days for my generation — when wine price increases kept pace with inflation but not more.
A third thing we could look at is the difference in price when I bought the same wine at different times, often several years apart. My records show 25 such occasions; and these are plotted in the second graph. Here, the first purchase price is shown horizontally and the second price vertically, with each point representing one wine. The pink line shows equality between the two prices.
Not unexpectedly, in most cases the wine cost more the second time, although occasionally bargains could be found. More interestingly, though, the prices here also increase exponentially, as illustrated by the black line in the graph. This regression line accounts for 70% of the variation in price. So, it will cost you dearly, the longer you leave it to purchase your bottle of wine.
Conclusion
Wine prices increased exponentially in Australia between 1980 and 2000, while inflation increased wine prices only linearly. Therefore, wine became increasingly unaffordable during that time.
In spite of this, wine itself became much more popular among a broader range of people, at the expense of the standard cliché image of Australians swilling beer. One cannot really begrudge this — the standard of the wine increased enormously, along with the price. Cheap fortified and sparkling wines were the fare of my parents' generation, but not of mine (The evolution of Australian wine). The Good Old Days for me were better than for my parents (winewise, that is).
The first top-of-the-line bottle I ever bought was the Penfolds 1972 Grange Hermitage (as it was then called). This particular wine was released relatively cheaply. The 1971 vintage was much-lauded (Penfolds Grange — Best vintages, prices, history), and the 1972 was thereby over-shadowed. At the same time, Penfolds needed some cash flow, so they under-priced the 1972. This was still available (if you knew where to look) in 1983 for a mere A$25, which would be A$90 today allowing for inflation. The current Penfolds Grange Bin 95 retails for ten times this amount, of course. The 1972 can still be had for A$1,000, or so.
The first wine I bought from the year of my birth was the Saltram 1958 Bin 20 Claret (Museum Release). This is a wine most of you have never heard of; but you can still read about it, because it was one of the better wines from a legendary winemaker (Peter Lehmann’s Barossa Valley masterpieces). I paid A$30 back in 1990, which would be A$65 today — an auction bottle sold in 2008 for A$289 (Langton's Top 500 List 2008).
I agree with you David. Similar situation arises in Argentina. So what would be interesting is putting the focus in several clue items to analyse order to establish more conclusions about this phenomenon. One of them is the "extra costs" generated by "marketing issues" like more expensive bottles, more expensive labels and aoo of that related with sales promotion. Not to talk about the cost of the sales channel like fleets, taxes, and not to mention the scandalous price surcharged at the restaurants.
ReplyDeleteIn conclusion there are so many people into the boat but most of them do not row. In the old times (I´m 61 ) those extra charges did not exist.
Yes, there are many charges now that were not made explicit earlier on. It is not, however, easy to estimate them. However, if prices have gone up exponentially, then that money is going into someone's pocket. All the wine drinkers can do is look at the prices they once paid, and compare them to modern advertised prices.
Delete