Thorstein Veblen and Penfold’s Grange came to my mind when I read an essay in The New York Times titled “Obscene Prices, Declining Quality: Luxury Is in a Death Spiral.”
Now I’m not suggesting that the quality of the esteemed Grange is falling. For one thing, at $1000 a bottle the 2020 vintage is well and truly outside my pensioner’s price range so it is many years since I’ve tasted one. But the price of Grange has certainly risen.
I remember my brother and I selling the 1972 and 1973 vintages for $8.99.
A price rise of that dimension fits the longstanding Veblen goods principle the NYT article by longtime fashion editor Katharine K. Zarrella referred to. Derived from the economist Thorstein Veblen’s “The Theory of the Leisure Class,” written in 1899, it states that demand for luxury goods will actually increase as their prices increase, because such hikes thin the herds and make scarce goods that much more desirable.
Zarrella sees luxury is in a death spiral. “After a decade of nearly unfettered growth, the sector is bombing across the globe. Analysts point to less-affluent buyers reining in their spending and slowing demand in China.” By many measures, she writes, the luxury market is in free-fall.
And the fine wine market does not seem to be any different. The London based LIV|EX which measures price trends shows the following:
