Wine inflation

By Felix Salmon
December 18, 2009
The Economist has a brief history of the wine industry:

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The Economist has a brief history of the wine industry:

Sir Robert Walpole, Britain’s first prime minister, used navy ships to smuggle his favourite wines from France. The most expensive one he bought was old burgundy, but that—as now—was available only in tiny quantities. So he relied largely on claret, buying four hogsheads of 24 dozen bottles of Margaux and one hogshead of Lafite every three months. In a single year his wine bill amounted to over £1,200 (£100,000 today).

By my calculation, that works out at about $28 per bottle — for wines which would cost you about $500 per bottle today. No wonder the English drank their claret in such great quantities!

(HT: Daniel Lippman)

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8 comments so far

why does you site cause pop ups which say “we wish you to take part in a quick survey about this site” and then, if you answer that you have no role in buying insurance for your family, close the survey…

pop up rubbish!

Posted by thirkej | Report as abusive

This fits in with what I found about wine prices in 1909 (http://www.matthewturner.co.uk/Blog/200 9/06/changing-price-of-alcohol-part-ii.h tml) where Lafite was £22/bottle, so only slightly more than it was in 1780 (in real terms). The explosion in prices has presumably come in the last 40 years, perhpas last 10?

Posted by mjturner | Report as abusive

Indeed I think walpole’s price comes to 5 shillings a bottle and the 1909 Berry Bros price to 6 shilllings a bottle, which presumably tells you something about the lack of sustained inflation before the 20 century?

Posted by mjturner | Report as abusive

That inflation adjustment appears very suspect to me. £1,200 corresponds to 50 pence per bottle. In Walpole’s times, craftsmen made, on average, 18-20 pence/day, farm workers made closer to 10. Scaling to modern day wages, that makes claret worth roughly $300..400/bottle.

Port wasn’t much cheaper, either: 15-20 pence per bottle. And that’s, of course, to be expected – shipping the wine from Portugal before the age of steam couldn’t have been cheap.

Naturally, those alcoholic drinks that could be made domestically from local foodstuffs, beer and gin, were significantly cheaper: beer cost 10 pence/gallon (much of that because of taxes), gin was, apparently, even cheaper than that (you could get dead drunk on two pence).

Reference:
http://gpih.ucdavis.edu/files/England_12 09-1914_(Clark).xls

Posted by Nameless | Report as abusive

I can’t vouch for the inflation uprating, but note its an inflation adjustment, not real wages one, so assuming a 20 fold increase in real wages since Walpole’s time to now brings the two figures into line.

Posted by mjturner | Report as abusive

It’s not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen.

Also, if we’re talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation.

Posted by Nameless | Report as abusive

It’s not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen.

- it’s ‘average wages’. In your example we have craftsmen on 20p (old pence, so 1/12th a pound) a day, which multiply by the Economist’s price adjustment of about 80, and then by my suggest 20 fold increase in real wages, and you get £133/day, which is a little high, but not in the wrong ballpark.

Also, if we’re talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation.

- Maybe, maybe not. If you click on the link I converted the 1909 prices using both measures. Wages do a better job of denoting affordability, but fail to show how wine was relatively better value compared to other items.

Posted by mjturner | Report as abusive

“Wages do a better job of denoting affordability, but fail to show how wine was relatively better value compared to other items.”

It would be more accurate to say that premium wine failed to depreciate with respect to wages by the same amount as steel cutlery or underpants.

Apparel manufacturing has been revolutionized during the last two centuries and the amount of labor that goes into one pair of underpants is, indeed, down by the factor of ten or more. And the industry is sufficiently commoditized that profit margins are fairly thin.

On the other hand, premium wine industry successfully resisted commoditizing, in part because big part of “premium” is first growth status, and we aren’t making any more of those. Chateau Margaux still has the same 200 acres under grapes as back in 1700. There may have been some yield improvements due to the use of pesticides and such, but overall the winery does not produce much more wine today than it did in 1700. At the same time, market for first growth wines has expanded by a factor of ten or more (just the population of the United States today is ten times larger than total population of France, England, Scotland, and English colonies in North America three hundred years ago).

Posted by Nameless | Report as abusive
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