My favorite white wine is the Chardonnay from Busby Cellars in Somerset, California @ $12 a bottle (with a case and club discount off the $15 retail price).
This is the standard I use to compare all other white wines and I have not found another white wine I like better - at any price.
I am not a wine collector; I buy it and I drink it. But a story I saw on CBS this morning caught my attention.
A few folks have different criteria that I do and will shell out $3500 for a 1961 Lafit-Rothschild. I would be thinking “What if I bought it and didn’t even like the wine?” Heck, drinking it would feel like burning 35 hundred dollar bills in my fireplace.
But why is the 1961 Lafit-Rothschile worth $3500 while Busby’s Chardonnay sells for $12-$15? It all comes down to the “Pride-of-Ownership” Premium - in other words bragging rights. Assuming the Lafit-Rothschild is as good as the Busby Chardonnnay (I doubt it), then the Pride-of-Ownership is $3485 ($3500 less $15).
How is the Pride-of-Ownership premium determined? Like most free-market prices, it’s a function of the supply versus the demand.
This morning’s CBS Sunday show told the story of how a recent burst of counterfeit wines is starting to put a damper on the demand for collectible wines.
The story features Bill Koch (according to a Forbes 2012 article had an estimated net worth of $4 billion), the victim of counterfeit wine fraudsters. To date he has spent $25 million in legal fees trying to recover some of the money he spent buying from Rudy Kurniawan (recently described as the Bernie Madoff of the wine world) and other crooks.
In the interview, Koch explains: “I used to bring people down here (his wine cellar) and brag and say do you want to see Thomas Jefferson’s wine? Well then when I found out it was fake, now what I’m going to have to do is say come on down and see my fake Thomas Jefferson bottles.”
After his litigation (where he might fail to collect a penny) the shame of being scammed has replaced the Pride-of-Ownership Premium. Not only are the bottles worth nothing, they probably have a negative value because they raise Bill Koch’s blood pressure every time he recalls how he was cheated. Wine experts claim that buyers are getting gun shy about buying collectable wine – the result will result in the downward pressure on the Pride-of-Ownership Premium. Like all prices, supply and demand is the ultimate driver of where the price is today and where it will be tomorrow.