A recent email blast from a public relations firm touted their client’s debut “luxury wine.” It inspired this question: What exactly does that mean? Can a wine be defined as “luxury” without affirmation through independent reviews, market success and time? Lately, luxury has been bandied about so often in 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, provide an authentic and crafted product that comes from a recognized source, and is often scarce.”
“Using that as a definition, I would say that wine definitely falls into that categorization, whether a Napa Valley Cabernet or Burgundian Pinot Noir.”
Marketing aside, what justifies a luxury wine? It’s used to define price categories, and the range can vary depending on the source, but how does a wine deserve a luxury price position when it’s first introduced to the market? There are several traditional components that makeup a luxury product.
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 $75 price as a positioning strategy. But there should be natural barriers to present a product as luxury. Consumers can’t taste a bottle of luxury wine outside of the tasting room before they commit. Thus, they must use cues like price to infer quality and make buying decisions.
The wine industry categorizes by retail price, but those have changed over time. Today, the nuanced pricing bands might look like this: value ($4–$10), popular ($10–$15), premium ($15–20), super premium ($20–$30), ultra premium ($30–$50), luxury ($50–$100), super luxury ($100–$200) and icon ($200 or more).
However, those categories lack proper context. A $50 wine from the luxury tier is often the entry point for a Napa Valley Cabernet. Are all Napa Valley Cabernets luxuries? By itself, price can’t confer luxury status. To market a product in the luxury price segment is not the same as producing a luxury wine.
Quality is intrinsic to fine or luxury wine. It can stem from the raw materials that support the reputation of a vineyard. But at some famous shared vineyards, sheer size and array of producers often results in inconsistent quality. Quality also relates to the inputs and winemaking practices, like oak chips vs. Taransaud French oak barrels.
A winemaker’s reputation can also influence luxury positioning. Consider Michelle Rolland: aspirational wineries around the world employ him to lend prestige to their projects. However, does his involvement in dozens of wines lend quality to all of them?
How about cutting-edge technology? Optical sorters improve quality, but they’re also often employed for lower-tier wines, not just luxury-designated fruit.
Quality is an outcome, a determination driven by taste, texture and structure. The team behind Fine Minds for Fine Wine (FM4FW), a think tank exploring the notion of “fine wine,” meets annually to attempt a definition for this complex concept. This year, discussions have revolved around sensorial research through statistics. Though not a conclusion, robust interviews with trade and consumers have yielded overlap in perception of what makes a wine “fine.” Considerations: the wine must be capable of aging, be balanced, harmonious, and complex. These are traits a quality – and luxury – wine should, arguably have, too.
But Pauline Vicard, Executive Director of FM4FW, says fine wine and luxury wine are not synonymous. “Fine Wine and Luxury definitions can mean different things to different cultures, countries, and stakeholders…[they] do share a lot in common: they are most of the time at the expensive end of the price spectrum, they are not an every-day need, they are seen as ‘extra-ordinary,’ something special, they can both be related to craftmanship and the importance given to time and every single detail. But luxury wines are most of the time associated with consumption, exclusivity, indulgence & stating your position in society when Fine Wine is still more associated with art and the genuine need to express beauty, and as such, very different from luxury.” On this subject, Vicard et al recently published the third edition of “Define Fine Wine.”
Scarcity is a typical pillar of luxury. The minute quantities of Burgundy’s Domaine de la Romanée-Conti priced at $1,000 and beyond are highly allocated. The 25,000 cases produced by Opus One per year aren’t particularly scarce when compared to the 5,000 cases from competitor Dominus. Yet, the iconic Napa Valley winery’s global allocation for fine dining restaurants drives demand to extraordinary prices in the mid-$300s. The Prisoner, though with a more modest $48 cost, is on the cusp of luxury pricing. Its annual production of more than 180,000 cases represents one-third of the entire winery production on New York’s Long Island, home to more than 50 wineries. The Prisoner’s upward trajectory in both price and production, boosted by Constellation after its 2016 acquisition, underlines how strong branding can strengthen luxury positioning.
Reputation over time often underpins the luxury category. Opus One was created in 1978 by Baron Philippe de Rothschild, of Château Mouton Rothschild, and famed Napa Valley wine producer Robert Mondavi. Each house brought its heritage to the collaboration, which gave the new brand instant credibility. Heritage also applies to regions that have demonstrated longevity and consistent demand, like classified Bordeaux properties, Burgundy Grand Cru sites or Champagne. Napa’s strong regional brand equity comes from its concentration of great producers.
If you’ve met a biodynamic farmer in France, you’d probably not interpret their natural vineyard, unkempt with cover crops, to be a luxury outfit. And yet, the common American perception is that wine grapes grown without chemicals or with reduced inputs is a luxury of time or finances. Yet to the producer, eschewing 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 doesn’t seem to value sustainability as a key component to Fine Wine.”
One exception is Littorai Pinot Noir from Sonoma, California. The brand gains mileage by making biodynamics integral to its story. Ted Lemon, the owner and winemaker of Littorai, is an American pioneer for the category. He brought the French concept of terroir to Sonoma, a concept harmonious with sustainable practices, and ultimately complementary to luxury positioning.
Luxury products often convey a sense of privilege. Compared to beer, wine drinkers may be perceived as snobby. They’re served by fancy sommeliers who sniff and swirl out of specialty glassware. Of course, that’s only one facet of the wine world. Still, those on a budget may find beer prices more accessible. However, many Europeans treat wine not as a luxury, but part of daily life. They regard wine as an accompaniment to a meal, a daily pleasure. But they also see wine as necessary. What is life without those ritualistic pleasures?
In the quest to answer, “what is a luxury wine”, it’s easy to defer to a checklist replete with details and examples, though this formula imposes too much structure and proves too limiting to capture the concept. Luxury defies precise definition since it changes with time. What emerges from an accounting of these factors, however, is that it’s earned, not claimed. It requires the imprimatur of a third party, the endorsement of experts (whether de facto such as from retailers or by reputation such as from industry insiders) before the marketplace renders the final verdict.
To achieve this status, marketing and public relations routinely co-opt the term to lend credibility to their clients. Is it overused? Petroski elaborated. “No, luxury isn’t overused. Not yet. But it is mis-used. However, I think one of the anti-laws of luxury marketing noted in the famous The Luxury Strategy book, is to not market, sell, or pander to customers.”
The luxury of producing a luxury is to let the product speak for itself. It takes time. To rush the process is to subvert the concept. Let those who know wine taste. Let those who love wine drink. When a wine meets the favor of those two parties, the producer will know at the same time as the market whether they’ve cultivated a luxury wine or the pick of the day.