The buying and selling of wine has two long traditions behind it: on the one hand, it is a rough-and-tumble game of selling as much mediocre wine and sheer plonk as possible to a customer base that looks first and only at price; on the other hand, it has for a century been an elitist business in which price is determined by supply and demand of the most hyped-up wines in the world.
These days, however, while the volume sales continue to tilt one way or the other in half-percentage points, the upscale wine market has gone through boom and bust periods right along with the economy in general.
Prior to 2008 California cult wines like Screaming Eagle Cabernet Sauvignon were selling for hundreds of dollars a bottle and the rarest of red Burgundies, like Romanee-Conti, sold for thousands, very often to people who had no intention of ever drinking them. The futures market, through which you pay for wines at a set price before they actually come into the market, seemed a good bet back then.
But the crash of 2008 put the wine market into turmoil, saved only by the opening of a Chinese market for fine wines that has rocked sales at auction for prestigious Bordeaux and Burgundy sold to China's new millionaires. Then, in the past year, top Chinese officials directed such lavish excesses to be reigned in, so things began to get shaky in the fine wine market. The auction market went up and down in 2011 and 2012, but U.S. sales to consumers last year hit a new high of 360.1 million nine-liter cases for a value of $34.6 billion.
What to make of all this turmoil in 2014? First of all, those sky-high U.S. sales figures, as with the wine sales figures of all countries, is not based on premium bottles ($10 and above) but on cheap wines selling $5 to $10 a bottle, with chardonnay still the most popular varietal. And while sales may in fact rise in 2014 in the U.S., with 100 million Americans drinking the stuff, those sales are unlikely to be on the backs of $25 merlots and $100 cabernets. Even so, the U.S. is still behind Ireland, Canada and Iceland in per capita consumption.
In France and Italy, wine consumption has dropped precipitously among young drinkers. In 1980, 51 percent of the French drank wine every day; in 2010 it was only 17 percent and 38 percent never drink wine at all. Italians' wine consumption per capita has dropped by 50 percent.
It came as a laughable surprise, then, when a recent article in London's Guardian newspaper asserted there was now an actual scarcity of wine in the world, especially since the Chinese and Indians have entered the buyer's market.
"There is no scarcity but with global consumption rising, supplies will be tighter," says Scott Shellady, CEO of Bradford Capital Management, who advises on wine investments for clients. "All commodity markets have had to deal with China in their marketing plans. With more and more Chinese traveling and being introduced to Western products, supplies will be affected. It's the same with beef and grain. While our hybrids and production capabilities have been growing at an arithmetic pace, the demand side of the equation has been growing at a geometric pace. Asia will have to be dealt with when it comes to Western production."
Still, Shellady says he would steer clear of the Chinese wine market for the time being because there is so much faking and forgery of wines occurring there -- mainly with the very top of the line wines from Bordeaux and Burgundy but also popular wines from Italy and Spain. "I was in Beijing recently," a producer of a Grand Cru Burgundy told me, "and I was amazed to see that my wines were being counterfeited, but I was shocked to see how widespread it was."
As for the auction market right now, it's very much caveat emptor because of the increase in forged wines. Just last month wine seller Rudy Kurniawan, who in 2006 sold $24.7 worth of wine at an Acker, Merrall & Condit auction, was found guilty by a federal jury of selling counterfeit wines and defrauding a finance company -- the first in U.S, such case in U.S. history. He may serve up to 100 years in jail.
"Everyone's being much more careful in the auction market," says Peter D. Meltzer, auction columnist for Wine Spectator and author of Keys to the Cellar: Strategies and Secrets of Wine Collecting. "The auction houses will be more diligent and the buyers will ask more questions as to where the wines have been all their lives. But overall I think the market will be calmer and prices won't rise dramatically, largely because there was something of a glut with the 2009 and 2010 vintages."
For the average wine drinker, however, I see far more good wine available at stable prices than ever in 2014. With so much competition now offered by quality South American wineries, especially Argentina, Chile, and, now, Uruguay, producers in Spain, Italy, Australia and New Zealand will be forced to keep prices down. France has already driven prices down for export wines below the grand cru rankings.
Also look for quality wines to come in from Portugal and eastern European countries like Greece, even Serbia, and, finally, good South African wines priced to sell. For everyday wines, 2014 will be a buyer's market.