The Price Isn't Necessarily Right (January 1, 2008)
First the bad news. When the dust has settled on the Beijing Olympics, wine prices for the world's icon wines will rise significantly. Romanée-Conti, Pétrus, First Growth Bordeaux and Château d'Yquem will be out of range for all but the mega-rich. This pressure on supply will affect prices for the second tier of fine wines and have a trickle-down effect.
Why? Because the wealthy Chinese will see how Western businessmen entertain in Beijing's hotels and restaurants, and millionaires like to have what other millionaires have: namely, the world's great wines. There is only a limited supply of each vintage of the wines named above, which will mean their prices will go up.
Now the good news. Regions that hitherto supplied the market with wallet-friendly but eminently drinkable wines will fill the gap with more elegant and slightly more costly versions of wines they already sell.
This "eureka" moment came to me while I was tasting the 2005 and 2006 wines of Casa Lapostolle from Chile in a Toronto restaurant recently. Chile has been sending us wines in the $10 to $15 price range that cannot be matched anywhere in the world for their bold fruit flavours.
The country has a bizarre geography. It runs to the west of the Andes mountains like the spinal column of South America, 4,270 kilometers long (slightly less than the distance between Toronto and Regina), and yet it only averages 177 kilometers wide. Chile grows roughly 5 per cent of the world's wine production. The wine growing regions are located in thirteen river valleys from the Elqui Valley in the warm north to the Malleco Valley in the cool south. The range of temperatures and soils allow Chile to grow and fully ripen every desirable wine grape from Syrah to Pinot Noir, Chardonnay to Riesling, as well as their own signature variety, Carmenère. Added to this, the country has never experienced phylloxera. To plant a new vine all they have to do is bury a cane and, when it takes root, cut it free from the mother vine.
The climate is such that Chile could if the winery executives had the will be the first wine country to go totally organic. In 2006, 2,443 hectares were certified, or in the process of being certified, as organic. In 2007 this figure rose by 30 per cent. In the coming years organic wines, I predict, will be a major part of environmentally conscious consumers' cellars.
If Chile is a grape grower's paradise, why, you might ask, is its production not much larger? Today there are some 114,000 hectares under vine, which is equivalent to the entire Bordeaux appellation. The problem is that traditionally Chilean vineyards were planted on flat land to take advantage of the run-off water from the Andres, which was channeled into the vineyards. It is only in the last thirty years that the vintners began to plant the foothill slopes and use drip irrigation.
The improved irrigation techniques, coupled with more scientific vineyard management, have meant better quality wines. So Chile is poised to make really good wines in the $15 to $25 price range, which would put them in the same price/quality league as New Zealand. Currently Chile has been enjoying sales the way Australia did five years ago. According to Liquor Control Board of Ontario figures, sales of Chilean wine for the first time are contributing more revenue growth than Australia. In the LCBO's last fiscal period, sales of Chilean wines were up by $4.6 million or 20.4%. In dollar terms, that's up from $22.7 million to $27.3 million (year to date). Watch your liquor store shelves. You'll see a lot more Chilean wines in the coming year and they'll begin to replace other New World favourites in your heart and on your palate.