Why $35 wines are worth more than $100 wines

What's better than a $100 wine -- a $100 wine for $35, right?

Maybe ... but that perception is a problem that wineries which have been pricing their wines fairly all along are facing now.

Call it "wine market compression." Other than a few perennial big names like the Bordeaux first-growths, most high-end wines aren't selling. In fact, I'm writing this a little late, because the true collapse in the market for $100 wines happened in 2008; the market may be recovering slightly.

But the market isn't recovering enough to make two vintages go away, so many of those 2005 and 2006 wines once priced at $100 are quietly filtering out through the discount market. Sites like Wines Til Sold Out, Wine Spies, Wine Woot and others have emerged to sell $100 wines for $35.

The idea behind all of them is similar: deals are offered for a brief time, so you have to buy now or lose your chance. The markdowns from original prices are staggering.

So which would you rather have: a wine originally $80 for $37.99 (with free shipping on four bottles) or a $35 bottle ordered direct from the winery -- for $35?

The former, right? Anybody would rather have $80 worth of goods.

The question you have to ask yourself is, are you really getting $80 worth of goods? Or was the wine overpriced in the first place?

I got into this discussion during a lunch roundtable at Bien Nacido Vineyards, where I tasted a number of superb Chardonnays and Pinot Noirs from different producers, all priced between $30 and $45.

For the uninitiated, $35-40 is a reasonable cost-of-production-based price for a premium wine made from grapes from a well-known vineyard. Yes, Fred Franzia can get you a bottle of wine for $2, but he doesn't use hand harvesting, a sorting table, etc. For most wines, prices above $40 have what car dealers refer to on the sticker price as "ADP": additional dealer profit.

For years I have enjoyed the California wines in this price range more than any other. They're often great versions of out-of-favor varietals like Syrah, or winemaker pet projects from pricey vineyards. The best Zinfandels in the state usually cost about $35 because Zin fans won't pay more, and high-end buyers aren't that interested in Zin.

Cabernet Sauvignon is not more expensive to produce than other grapes; it costs more because people pay more for it. Pinot Noir had a big price run-up after "Sideways," but the truth is it doesn't intrinsically cost much more to produce than other wines. You have to hand harvest it, it needs gentle treatment, but that can all be done for under $50 -- even at DRC. Prices above that are all about land costs, debt load, ADP, and sometimes the winery owner's ego.

It's hard to blame winery owners who took advantage of the wine gold rush and jacked up their prices. Sometimes it's the Napa Neighbor Effect -- hey, he's charging more than me! But often it's just good business. If you were willing to pay me $50 to read this blog post (oh please), I'd be a fool to not take it.

But this is where we are now: folks who didn't follow the gold rush, and charged reasonable prices for their wines all along, are now being squeezed from above as pricier wines fall from the heavens.

"It's the piecemeal value effect: I'm going to buy this $50 wine for $30, so why should I buy your $30 wine?" said Costa de Oro winemaker Gary Burk.

So I ask you, gentle reader, to think about those wines on the deal-a-day Internet websites this way. If that was really a $100 wine, wouldn't it have sold for $100? Wouldn't sommeliers have championed it? Wouldn't wine stores have recommended it more strongly to their customers?

I'm NOT suggesting these deal-a-day wines are bad wines; not at all. Many of them are very good wines.

What I am saying is that the market has ruled on their actual value. I would say that it's what the deal-a-day site is charging, but unless the wine actually sells out (sometimes they don't; these businesses often pull a wine off the site if it's not selling fast enough) its actual value is still somewhat less than what you paid.

And maybe, just maybe, a wine that has been selling all along for the same $35-$40 price is actually worth more.

*****

I tasted some knockout wines at Bien Nacido, but the one that impressed me most was a varietal I don't generally like, Roussanne. Often, especially but not exclusively in California, I find Roussanne to be fat and waxy, and it's just not my cuppa wine.

But this is:

Qupe Bien Nacido Hillside Estate Santa Maria Valley Roussanne 2007 ($40)
When you first stick your nose in it, the waxiness jumps at you; it's like smelling a melted candle. But it's a candle scented with cantaloupe, honeycomb and flowers. On the palate, you initially get dry honeycomb, followed by green papaya and clay. It's hard to put a descriptor on the citrus note: Meyer lemon peel? But it kept changing on me. This wine had great complexity without weight; it's just 12.5% alcohol. Moreover, it's the deer's favorite. Bien Nacido Vineyards owner Nicholas Miller told me that the deer in the area will jump several fences and bypass lots of great Pinot Noir and Chardonnay to nibble on this one block of Roussanne. You really couldn't ask for a better endorsement, albeit from a different species. 97 points
Buy it here