Think Economic Bubbles Only Apply to Housing and Tech Stocks….Think Again!

Wine in Provence tours Talks Wine and Bubbles!

The boom and bust cycle, mass hysteria, get-rich-quick, and all the other terms that go along with economic bubbles from tulips in Holland to stock in the South Sea Company and from tech stocks to subprime housing, bubbles seem to be a consistent part of our lives. One might think that this wouldn’t apply to something as “sophisticated” as wine, with images of stuffy someiliers eschewing lofty valuations and focusing, unbiased, on the wine’s quality.

Well, think again.

Guess what? Bubbles are a human phenomenon and humans make up the wine industry from the winemaker to the purchaser, distributor, and on to the final consumer, human emotions play a role in every step of the process. And human emotions are subject to wild swings.

Case in point, the recent vintages of Bordeaux which have skyrocketd in price in the past decade thanks to increased demand from Asia which now makes up to 35% of the export market of top Bordeaux wines. But things are changing, and changing rapidly and it has many in the industry asking if we need to coin a new term: Bordeaux Bubble.

Florence Cathiard is the co-owner of Chateaux Smith Haut Lafitte—producer of the prestigious grand cru Classé of which 80 percent are exported. She tells CNBC: “I am not sure the price will be skyrocketing like in ’09 and ’10. The world is not doing so well. Last year I had to lower my prices by 41 percent. We have to be very attentive to the market”

This quote is taken from a recent article on CNBC which highlights some of the recent changes in Bordeaux pricing.

So remember, if you are thinking of paying for your child’s education by stocking away a few bottles of Château Margaux, you might want to think about diversifying into something bit more stable.