LIQUID INVESTMENTS
MICHAEL FRIDJHON: Costly tickets for the theatre of unobtainability
Where luxury and rarity overlap, control of price resides almost entirely with the producer
Not all premium wines are unobtainable, and not all unobtainable wines are premium products. It is the nexus of perceived luxury and perceived rarity which determines how wines are priced in the market — assuming reasonable quality levels have been achieved. Where luxury and rarity overlap, control of price resides almost entirely with the producer. That’s why the major players in the wine business go to so much trouble to sustain the illusion that their wine is unobtainable. For producers with deep pockets it’s an easy, though expensive, exercise: you release every year only the volume for which you have a ready market. The rest is aged in your cellars (or disposed of under another brand name for a fraction of the price). The Bordeaux trade has mastered the art of managed shortages. It’s called “En Primeur” sales and the annual circus begins in early April and runs for a few months. The trade and influential journalists are invited to taste barrel samples which purport to be a fair...
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