Devil's Advocate 2 - A Taste For Luxury

Louis Vuitton Moët Hennessy - LVMH - has just added Joseph Phelps to its wine portfolio. What are the implications for the prices of its wines?

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Robert Joseph - the Devil's Advocate
Robert Joseph - the Devil's Advocate

There are many more or less complex definitions of luxury, but I like to think of the term as referring to anything that is inessential and has the prestige, image and reputation that enables a product or service to command a significantly higher price than its competitors.

Other people like to suggest that luxuries have to be rare and/or hard to obtain, but I respectfully disagree. Christian Dior and Guerlain perfumes are unquestionably luxuries, but they can be purchased in almost any Duty Free shop or department store. 

Anything by Givenchy, Tiffany, Bulgari, Fendi, Kenzo is a luxury too. 

So are Hublot, Tag Heuer and Chauvet watches. And Loewe and Louis Vuitton bags.

And Veuve Clicquot, Cloudy Bay, Whispering Angel.

All these wine brands belong to LVMH. As, now, does Joseph Phelps Vineyards in Napa.

Today, Joseph Phelps is one of the most respected names in California. Founded in 1973, it has 172ha of vineyards, is included in the recent 'classification' of 51 California wineries with the greatest impact on the UK market, and its top red Bordeaux blend, Insignia regularly gets scores in the mid 90s from critics globally. With an average US price tag of $280, that wine certainly qualifies as a luxury. Whether it qualifies as the level of luxury LVMH would wish for over the long term is open to question. And the same applies to its 'value for money' $40 Sauvignon Blanc.

Nearly $300 is a lot of money for a 75cl bottle of red wine. But let's set Insignia in the context of California wine. A 2021 Wine Searcher list of the 10 priciest Napa Valley Cabernets had wines selling for between $800 and $4,200 per bottle:
 

 

This would appear to offer some scope for Joseph Phelps to charge rather more for its top wines in the future. Since 2017, LVMH has had a 60% stake in Colgin Cellars whose Colgin IX Estate Cabernet Sauvignon commands prices of over $600. 

Joseph Phelps also has a history of selling some of the priciest wines in Napa. From 1975-1991, it produced Cabernet Sauvignon from the Eisele Vineyard which was then taken over by the Araujo family who produced iconic wines there until the Francois Pinault Artemis group bought the plot in 2013. Old vintages of Joseph Phelps Eisele and recent Artemis vintages currently sell for $500. Even without access to that famous piece of land, it is easy to imagine that LVMH might aspire to selling a Joseph Phelps wine at this kind of price.

Interestingly, however, the French giant's other Napa investment, Newton Vineyard, which it acquired in 2001, still sells its best reds for around $200. Some luxuries, of course, are pricier than others...

 

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