How two regions maintain their prices

Roger Morris looks at how two wine regions seek to self-regulate production to prevent wine gluts and deflationary prices. 

Verzy, looking out to the Montagne de Reims, Champagne
Verzy, looking out to the Montagne de Reims, Champagne

Long before there was OPEC, there was Champagne. When the oil producers from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela gathered in Baghdad in 1960 to form OPEC, the organization that controls the production and price of oil, it’s not known whether anyone was thinking about the French region that produces sparkling wine, a different kind of liquid gold. Whether they did or not, OPEC could not have chosen a better model for the word “cartel”. 

This past year, Champagne and Barolo—another famous wine region—each announced or threatened actions to stop the growth of production of their individual wines, as a means to keep prices steady as well as ensure quality. It was an illustration that, while Champagne and Barolo are each highly respected for their quality, both regions are on constant alert to prevent a glut of wine on the market that would cheapen their reputation and lower the prices of their wines.
 

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