Who's To Blame for Expensive Wine?
The trouble with Robert Parker's point system.
Cleopatra supposedly crushed an astronomically expensive pearl in a glass of wine and drank it just to prove how rich Egypt was. These days, depending on the wine, you can leave the pearl out and still drink something like Egypt's GDP. The most sought-after wines are getting remarkably expensive. Some 2005 red Burgundies are selling for double and even triple the prices they commanded in other recent, highly regarded vintages. The 2003 versions of E. Guigal's fabled single-vineyard Côte-Rôties have been offered at $800 per bottle, nearly quadruple what the firm's 2000s and 2001s are selling for and a third more than its equally lauded 1999s are currently fetching. Prices for the 2000 Bordeaux First Growths and their Right Bank equivalents have about doubled in just the last two and a half years, several 2003s have done likewise, and prices for the still-unreleased 2005s are already vertiginous. Lots of lesser (though still excellent) Bordeauxs have also seen substantial price increases. Ditto top Barolos, Barbarescos, and Châteauneuf-du-Papes. The hits—to the wallet—just keep on coming.
Why the dramatic run-up? It's chiefly a function of supply and demand—as newly enriched Americans, Russians, and Asians are embracing oenophilia, the increased demand is pushing prices for the most desired wines skyward (with an assist, in the U.S. market anyway, from the weak dollar). But while the overall trend is irreversible, prices are also getting a fairly big pop from speculators and trophy hunters. These groups have different motives—speculators buy wine for investment purposes; trophy hunters want bragging rights—but they have at least two things in common: They are making the fine-wine market a lot frothier than it might otherwise be, and their purchases are almost entirely dictated by the scores doled out by Robert Parker and a few other critics. Parker, who pioneered the 100-point rating scale, has long railed against using wine for either investment or show-and-tell purposes. Yet, through no fault of his, the 100-point system is now the engine driving these very activities. Is it time for him to deep-six the points?
Despite its glaring illogic, the 100-point system endures because it has made selling and buying wines very easy. Merchants don't have to peddle their wares—the scores do it for them. Likewise, consumers can simply shop by the numbers. Points have become such an entrenched facet of the wine business that to call attention to the many flaws inherent in this approach to wine criticism, or to note the homogenization of wine styles that it has caused in some regions, or to point out that it is actually possible to find good wines without relying on scores, is just whistling past the checkout counter. And if the wine-buying public is satisfied with the 100-point scale—and evidently it is—that's all that matters.
However, even the most ardent defenders of numerical ratings must be a little distressed at what they are seeing these days. The current issue of International Wine Cellar reports that Laurence Feraud of Domaine du Pégaü has decided to halt production of her celebrated Cuvée da Capo Châteauneuf-du-Pape because she can longer stomach the hype surrounding the wine—hype that can be attributed entirely to points. Parker awarded 100 points to the 1998 and 2000 versions of the Capo; he unofficially gave 100+ to the 2003 (the plus was likely meant to be tongue-in-cheek; nonetheless, the off-the-charts rating produced a Spinal Tap moment among some of his more literal-minded devotees). But the trio of perfect scores has yielded only grief for Feraud. "Her experience dealing with obsessive trophy-hunters chasing her 2003 Capo has clearly weirded her out," IWC reported. Feraud told the newsletter: "I had people who I've done business with for years … saying the most incredibly mean things when they couldn't get more."
Such point-driven unpleasantness is merely one byproduct of the billionaire boom. Another one, with more far-reaching consequences, is the surge in wine investing. The fine-wine market is now seen as a legitimate and very attractive place to park one's money—an alternative asset class, to use Wall Street parlance. The wine world now has its own benchmark index, the Liv-Ex 100, which is administered by the London International Vintners Exchange. Business is good: The index finished 2006 up nearly 50 percent, an impressive performance that seems certain to bring millions in additional investment money pouring into the market this year. Also in 2006, the Liv-Ex 100 was added to Bloomberg's list of financial indices, which is perhaps the clearest indication of wine's newfound status as an investment vehicle.
The Liv-Ex 100 is composed of 100 top wines and is 91 percent weighted to Bordeaux; the balance are Rhones, Burgundies, Champagnes, and Italian wines. Managing director James Miles says that Liv-Ex determines a wine's investment-grade status almost entirely on the basis of Parker points, and the index includes only wines that have earned at least 95 points. "He is the Standard & Poor's or Moody's of the wine market," says Miles. "Liv-Ex is effectively benchmarked around Parker." He says it is no different for wine investment funds; their portfolios are largely built on Parker points. That's no surprise: Over the last 25 years or so, wines with high scores from Parker, particularly Bordeauxs, have tended to produce the fattest returns, so investors are naturally putting their chips on the highest-scoring wines—and the demand ups the prices. According to Miles, there are now three major wine investment funds registered in the U.K. He says the largest, Vintage Wine Fund, has just under $80 million under management and that the three funds combined have pumped a total of nearly $100 million into the market over the last three years, which, as fine wine goes, is a not-insubstantial sum. (By way of comparison, total wine auction sales worldwide last year amounted to $240.5 million.) Miles thinks the stampede for investment-grade wines has only just begun. "An astonishing amount of wealth has been created in the last three years," he says, "and fine wine is a warrant on wealth creation."
Fine wine is a warrant on wealth creation—the idea ought to freeze the taste buds of any wine lover. Certainly, it is antithetical to everything Parker has preached. He has always scorned the idea of using wine as an investment vehicle; in The Emperor of Wine, her excellent biography of Parker, Elin McCoy reports that he spurned repeated invitations to appear on Wall $treet Week because he knew that host Louis Rukeyser wanted to talk about how to make a buck off of wine. It surely gives him no joy to see his scores used as credit ratings.
Of course, Parker isn't the only critic using the 100-point scale, and his influence has waned in several important regions, notably Burgundy. His huge scores for certain Australian wines have had little effect on the market, and even in Bordeaux, Parker's authority isn't as absolute as it once was. But as the critic who conceived the 100-point system, Parker has a special obligation to recognize that it's now serving some very regrettable purposes, and given his reputation and his success, he is uniquely positioned to do something about it.
What might he do? He could stop issuing ratings entirely—or just drop them for Bordeaux, where they have the greatest impact. In other regions, he might consider forgoing scores on wines produced in particularly small quantities, such as the Cuvée da Capo. Alternatively, he might switch from points to letter grades. Because these correlate to a range of scores, they are slightly more defensible than single-number ratings, which suggest a level of precision that simply doesn't exist when it comes to evaluating wines. Equally important, single-number ratings—particularly numbers between 95 and 100—lend themselves to speculation and trophy hunting in a way that a range of scores, or its alphabetic equivalent, probably would not.
None of these changes would reverse the overall trend—fine wine is becoming a luxury good, and that cork can't be put back in the bottle. However, they might make a difference at the margins. When I asked James Miles what would happen to Liv-Ex if Parker stopped issuing scores, he was unequivocal: "It would definitely cause us some problems if he did that." No offense to Miles, who seems very likeable, but that ought to be reason enough for Parker to stop rating the Latours and Ausones—wines that, anyway, are now well beyond the reach of the ordinary consumers whose interests he has always claimed to champion. Doing this would, at the very least, carry enormous symbolic weight: What better way of reproaching speculators and trophy hunters than to deprive them of the all-important number? And who knows: Scrapping some ratings might even convince retailers and consumers that ratings can be dispensed with entirely. True, asking wine lovers to imagine a world without the 100-point scale is like asking them to imagine a world without the Gregorian calendar or the QWERTY keyboard. Thanks mainly to Parker, a generation of oenophiles has been nurtured on the point system; if he were to now start weaning the public of its dependence on scores, it might be his greatest contribution yet.
Photograph of wine on the Slate home page courtesy Digital Vision.