I moved to Sweden at the beginning of this century, but I continued buying Australian wine, so that I can directly compare the most recent 20 years with the previous 20. Interestingly, in this post we get to see something really quite different in terms of price, compared to last time. Wine buying is not as simple as you think!
Trying to get Australian wine in Sweden is obviously far more difficult than getting it in Australia. There is certainly a selection available, but it is relatively limited. So, at times I have also bought wine in other European Union (EU) countries, to supplement the supply. The best source has been the United Kingdom, for historical reasons; and it is still the biggest European importer of bulk and bottled Australian wine to this day (see Top bulk wine suppliers to the UK, 2019 v 2020). So, I have a reasonable number of wines to study.
Indeed, the first graph below shows that I have purchased in Europe 570 Australian wines, from 154 wineries, compared to 581 wines (from 118 wineries) back in Australia; so, I have kept pace. As you can see, I first started getting wines from the UK in 2007 (hence the peak that year), and stopped in 2018. I started getting wines from elsewhere in 2008, either on holiday travel or by delivery; my last purchase from Germany was in 2018. I also got some wines on eBay, from 2011 onwards. The big peak in 2016 involved getting a few mixed dozens that became available locally.
Overall, 30% of the Australian wines were not purchased in Sweden. Obviously, I was targeting selected wines that were not available locally. So, it is not surprising that I paid more for those wines than for the local wines — an average of 216 SEK versus 169 SEK (ie. 25% more). The currency exchange rate has varied a lot over the past 20 years, but at the moment US$ 1 ≈ 8½ crowns, so we are talking about wines in the vicinity of US$ 20, here. Some of the price difference is also due to transport costs.*
In my last post, for my analysis I used those 453 wines that had both vintage dates and prices in my (hand-scrawled) records — most of the wines were the current vintage release, so that the vintage year is closely related to the purchase year. This time, there are 522 such wines in my (much more neat) spreadsheet. These are plotted in the second graph. The horizontal axis shows the vintage year of the wine, while the vertical axis indicates the Swedish crown price at the time of purchase. Each point represents one wine, with the pink points being those purchased outside Sweden. The latter non-Sweden wines were converted to SEK (from £ or €) using the exchange rate at the time of purchase.
Clearly, this graph does not illustrate an increase in wine price through time. Indeed, the exponential price model that I illustrated in the previous post (and which is common in economics) accounts for only 2% of the variation in price — this means that the average purchase price remained pretty constant across the 20 years.
This is not to say that the actual wines remained constant in price, since there is an expected increase in price due to inflation. Even non-necessity goods, like wine, do not remain constant. This increase is shown as the red line in the graph. The inflation data that I used comes from Sweden Inflation Rate 1960-2020. I started with an average wine price of 150 SEK for the 1997 vintage, and increased this each year by the annual inflation rate. The inflation data show a roughly linear increase in price over the two decades, amounting to 30%.
So, what is going on here? It seems to me that this is likely to be an example of an issue recently discussed by Huon Hooke (Price limits with wine):
The truth is, we all have our price-limits, whether or not we stick to a strict budget. But it’s always puzzled me that some people’s price limit for wine never seems to increase.
I’ve known people who have been buying AUD $15 wine for decades. And they grizzle that it’s getting hard to find decent AUD $15 wine. Well, stop being a tight-wad, is my response, usually muttered under my breath. There is this thing called inflation. You don’t expect your other living expenses to stay the same for years, do you? So why wine?Well, it seems to me that I have been caught out doing exactly this. I should be willing to pay 30% more for my Australian wine than I did 20 years ago, and yet I have not increased my wine "price limit" one iota. I am still targeting the same price range as when I moved to Sweden at the turn of the century. Mind you, I am still finding good quality wine in that price range (US$ 15-25), so I may not change my behavior any time soon. Moreover, I am a retiree, so I am unlikely to increase my expenditure any time before winning the lottery.
We have been told that Price affects the way people experience wine. That is, given exactly the same wine, but labeled with two different prices, we will mostly prefer the apparently more expensive wine. This being so, I keep away from the US$ 10 wines, because I don't want my brain to think that my wine is awful; but on the other hand, I also keep away from the US$ 50 wines, because I decline to pay that much for flavored alcohol.
As noted above, the vintage year is closely related to the purchase year for the wines, except in those cases where I specifically bought back vintages. To check whether this has an effect on my analysis, the third graph plots the wine prices (vertically) along with the date of purchase (horizontally). This graph includes all 570 wines, rather than just the 522 plotted in the graph above.
This graph shows little alternative information, except that there are nine wines purchased in 2016 that exceed 400 SEK — these are part of a collection of back vintages bought from the UK, plus one on eBay.
Conclusion
For the first two decades of my Australian-wine purchasing activities, the bottle prices went up exponentially, while for the next two decades they remained constant. I do not conclude from this that wine prices stopped increasing. Instead, I later adjusted my behavior in order to maintain my wine-price limit. For example, my analysis of the data in the previous post indicates that I was paying an average of 184 SEK per wine bottle at the end of the first 20 years, but my analysis in this post indicates that I paid an average of only 169 SEK across the second 20 years (8% less). What a cheapskate!
It is, of course, somewhat more difficult to maintain this rate these days.
* One method for getting wine from the UK involved my wife attending EU meetings in London, which she did as part of her job. I would get some wines sent to her hotel, and she brought them back to Sweden in her luggage, thus saving on the (often quite serious) transport costs. This would net me six bottles every couple of months. This all stopped when the UK first announced Brexit, and the EU meetings were immediately moved to Amsterdam. The UK is still struggling to implement Brexit (including having asked for time extensions), but the EU has been ready for more than 2 years!
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