×
2690 Broadway
Boulder, CO 80304
Mon-Sat: 10AM - 9PM
Sun: 11AM - 8PM
303-443-6761

The Allocation Game is Out of Control

The damage caused by skyrocketing pricing for exclusive allocations may be irrevocable.

It’s still hard to believe. For the first time in my more than 30-year career in fine wine, I turned down an allocation of top Burgundy wines from a leading importer.

One of the wines in the importer’s offer used to cost me around $750 a bottle. And that was just a few vintages ago.

But when the email arrived the other day in my inbox, I was nonplussed by the new pricing. That same bottle would now cost me $4,300 per bottle. Yes, forty-three-hundred dollars — for one bottle. That’s nearly a 600 percent increase.

Even though I have a number of clients who are still willing to pay prices like that (plus my retail markup, obviously), I couldn’t — in good conscience — accept it.

The prices are rising due to the “allocation game.” This is where importers use their access leverage to gouge prices. It’s out of control. And I believe that the damage to our industry caused by skyrocketing pricing for exclusive wines may be irrevocable.

More than 10 years ago, I started the Boulder Burgundy Festival expressly for the purpose of making these wines more accessible.

With pricing that ranged from $75 to $500 per event, there was space for everyone, from the young wine professional who’s trying to learn more about Burgundy to the veteran collector.

But with pricing like the offer I received recently, there’s no doubt that these wines will be available only for a small demographic otherwise known as the Billionaires Only Club.

The social challenges of the last 24 months have prompted many in the greater wine community to advocate for more inclusion and equity in our industry. But with prices like this, some purveyors of fine wine seem to be moving in exactly the opposite direction.

Yes, it’s true that the value of certain wines — especially from Burgundy — have climbed rapidly in recent years because of global demand.

When wealthy collectors in other parts of the world are willing to pay astronomic sums for these lots, it’s only natural that the prices will be driven upward across the globe.

Any time you have something that’s exclusive and produced only in limited quantities, there’s always going to be problem when there’s not enough of it. That’s called the Law of Supply and Demand.

But there’s also a disconnect in our industry between highly allocated products and other wines that shouldn’t be as exclusive.

Or should I say, there’s a disingenuous connection between wines that only billionaires can afford and lower-cost (yet still iconic and expensive) wines that importers insist you buy in order to receive your more coveted allocation.

For many purveyors, it comes down to: If you want your allocation, you will be required to buy wines that you don’t particularly want or need.

In other lines of work, you might call it something else. But unfortunately, it’s become all too commonplace in our industry today.

It’s sending a ricochet throughout our industry. And it’s doing more harm than good to the market and to the consumer in the long term.

Just as restaurants are trying to get back on their feet, the last thing they need to hear is that they can no longer afford the wines that they and their guests had come to expect on their lists.

Across the U.S., restaurateurs are dealing with an acute work force shortage. The extreme pricing for certain wines — wines they need to lure big spenders back — is making their recovery all the more challenging.

And in the long run, it’s turning off an important demographic that the industry needs to survive: Young people.

Just think if 20-somethings and 30-somethings were no longer able to afford any Burgundy wines (something that, in effect, is already happening).

Where are the 50-something and 60-something collectors going to be 20 years from now?

Young people are increasingly turning to beer, cider, and even cannabis as their preferred category for aesthetic experimentation. If pricing trends continue in this manner, there won’t be anyone left to buy and drink these wines in America.

Just at a time when we are trying to bring a more diverse group of people into our field, we’re also pricing them out.

The allocation game is clearly out of control. If we don’t reel it in now, we will all be sorry.  

Author: Brett Zimmerman, Master Sommelier and Owner of Boulder Wine Merchant in Boulder, Colorado, and Founder of the Boulder Burgundy Festival.