What is luxury wine?
A recent explosion of emails from a public relations company touted its client’s first “luxury wine”. This inspired this question: what does this mean exactly? Can a wine be defined as “luxury” without assertion by independent critics, market success and time? In recent times, luxury has been mentioned so often in the marketing lexicon that the word seems to have lost its meaning.
“Luxury as we know it is something that goes beyond a pricing strategy,” says Dan Petroski, who arguably makes a luxury cabernet for Larkmead in Napa. “It is something that is unique and singular in its efforts to provide quality and consistency over time, to provide an authentic and artisanal product that comes from a recognized source and which is often rare.”
“Using that as a definition, I would say the wine definitely falls into this category, whether it’s a Napa Valley Cabernet or a Burgundy Pinot Noir.”
Beyond marketing, what justifies a luxury wine? It is used to define price categories, and the range may vary depending on the provenance, but how does a wine deserve a luxury price position when it is first introduced to the market? There are several traditional components that make up a luxury product.
Price. The “luxury wine” in the email blast was released by a duo of new winemakers with fruit from an unremarkable site, though lavished, the text explained, with new oak. The producers used its price of $ 75 as a positioning strategy. But there must be natural barriers to presenting a product as luxury. Consumers cannot taste a bottle of luxury wine outside of the tasting room before committing. So, they have to use cues like price to infer quality and make purchasing decisions.
The wine industry categorizes by retail price, but these have changed over time. Today, nuanced price ranges can look like this: value ($ 4-10), popular ($ 10-15), premium ($ 15-20), super premium ($ 20-30), ultra premium ( $ 30 to $ 50), luxury ($ 50 to $ 100), super luxury ($ 100 to $ 200), and icon ($ 200 or more).
However, these categories lack the proper context. A $ 50 luxury-level wine is often the entry point for a Napa Valley Cabernet. Are all Napa Valley Cabernets a luxury? By itself, the price cannot confer luxury status. Marketing a product in the luxury price segment is not the same as producing a luxury wine.
Quality. Quality is intrinsic to fine or luxury wine. It can come from the raw materials which make the reputation of a vineyard. But in some famous common vineyards, the size and diversity of producers often results in uneven quality. Quality also concerns inputs and winemaking practices, such as oak chips vs. French oak barrels from Taransaud.
The reputation of a winegrower can also influence the positioning of luxury. Consider Michelle Rolland: ambitious wineries around the world use her to give prestige to their projects. However, does its involvement in dozens of wines give them quality?
What about advanced technology? Optical sorters improve quality, but they are also often used for lower tier wines, not just luxury fruit.
Quality is a result, a determination carried by taste, texture and structure. The team behind Fine Minds for Fine Wine (FM4FW), a think tank exploring the notion of “good wine,” meets annually to try to define this complex concept. This year, the discussions revolved around sensory research through statistics. While not a conclusion, extensive interviews with trade and consumers have resulted in an overlap in the perception of what makes a wine “good”. Considerations: the wine must be able to age, be balanced, harmonious and complex. These are characteristics that a quality – and luxury – wine should undoubtedly have too.
But Pauline Vicard, executive director of FM4FW, says good wine and luxury wine are not synonymous. “The definitions of fine wines and luxury can mean different things depending on cultures, countries and stakeholders…[they] share a lot in common: they are mostly on the expensive end of the price spectrum, they are not a daily need, they are considered “extraordinary”, something special, they can both be related to craftsmanship and the importance given to time and every detail. But luxury wines are most of the time associated with drinking, exclusivity, indulgence and asserting your position in society while Fine Wine is even more associated with art and a real need to express beauty, and as such, very different from luxury. In this regard, Vicard et al. recently published the third edition of “Define Fine Wine”.
Scarcity. Rarity is a typical pillar of luxury. The minute quantities of Domaine de la Romanée-Conti de Bourgogne priced at $ 1,000 and beyond are heavily allocated. The 25,000 boxes produced by Opus One per year are not particularly rare compared to the 5,000 boxes of competitor Dominus. Yet the iconic Napa Valley vineyard’s global allocation for gourmet restaurants is pushing demand at extraordinary prices to the mid-$ 300 mark. The Prisoner, although with a more modest cost of $ 48, is on the cusp of luxury prices. Its annual production of more than 180,000 cases represents one-third of all wine production from Long Island to New York, which is home to more than 50 wineries. The upward trajectory of the Prisoner in terms of price and production, boosted by Constellation after its acquisition in 2016, underlines how a strong brand image can strengthen the positioning of luxury.
Patrimony. The reputation over time often underlies the luxury category. Opus One was created in 1978 by Baron Philippe de Rothschild of Château Mouton Rothschild and renowned Napa Valley wine producer Robert Mondavi. Each house brought their heritage to the collaboration, which gave the new brand instant credibility. The heritage also applies to regions which have demonstrated longevity and constant demand, such as classified properties in Bordeaux, Grand Cru sites in Burgundy or Champagne. Napa’s strong regional brand value comes from its concentration of major producers.
Agricultural Practices: Sustainable, Organic, Biodynamic. If you’ve met a biodynamic farmer in France, you probably wouldn’t interpret their natural, poorly maintained vineyard with cover crops as luxury attire. And yet, the common American perception is that wine grapes grown without chemicals or with reduced inputs are a luxury of time or money. Yet for the producer, avoiding chemicals may be less of an affordable luxury than a cornerstone of winemaking. Organic and sustainable labeled wines often cannot charge more per bottle, despite their labor-intensive methods. In support of this phenomenon, FN4FW research found that despite climate change, “the global consumer does not seem to view sustainability as a key component of fine wine.”
One exception is the Littorai Pinot Noir from Sonoma, California. The brand is gaining ground by integrating biodynamics into its history. Ted Lemon, owner and winemaker of Littorai, is an American pioneer in the category. He brought the French concept of terroir to Sonoma, a harmonious concept with sustainable practices, and ultimately complementary to the positioning of luxury.
Prestige. Luxury goods often convey a sense of privilege. When compared to beer, wine drinkers can be seen as a snob. They are served by fine sommeliers who sniff and swirl specialty glassware. Of course, this is only one side of the wine world. Still, those on a budget may find beer prices more affordable. However, many Europeans see wine not as a luxury, but as a part of everyday life. They consider wine as an accompaniment to meals, a daily pleasure. But they also see wine as necessary. What is life without these ritual pleasures?
In the quest for the answer “what is a luxury wine”, it is easy to rely on a checklist filled with details and examples, even if this formula imposes too much structure and is too restrictive to grasp the concept. Luxury defies any precise definition because it evolves over time. What emerges from accounting for these factors, however, is that it’s earned, not claimed. This requires a third-party imprimatur, expert approval (whether de facto like retailers or reputable like industry insiders) before the market delivers the final verdict.
To achieve this status, marketing and public relations regularly co-opt the term to give credibility to their clients. Is he being abused? Petroski elaborated. “No, luxury is not overused. Not yet. But it is misused. However, I think one of the anti-laws of luxury marketing noted in the famous book The Luxury Strategy is to not market, sell or flatter customers.
The luxury of producing a luxury is letting the product speak for itself. It takes time. To speed up the process is to subvert the concept. Give those who know wine a taste. Let those who love wine drink. When a wine meets the favors of these two parties, the producer will know along with the market whether he has grown a luxury wine or the pick of the day.