What is the market value of Barolos I bought 20 years ago?
If you are asking yourself this question, you are part of the 90% of our passionate customers who question us regularly on the subject. Our reaction, at the beginning of the Celliers Intelligents adventure, in 2012, was, for lack of funds, to search one of the many websites providing wine market values (like Wine-Searcher.com) and tell our customers to rely on their informations as a reference. That was before we began intensely researching the subject … You might have heard the saying? “The more I learn, the more I realize I do not know.” Galileo who wrote this, around 1630. Today, I swear I finally understand its meaning ! What seemed so simple at first proved to be a very complex but also a very educational project.
To put all of this in context, remember that, since 1921 the Province of Quebec is involved in a monopolistic environment operated by the Société des alcools du Québec. The SAQ is responsible for collecting taxes and operating an exclusive distribution network on our territory. The sale of alcohol outside the SAQ is prohibited unless specially authorized either for the specific sale or resale of a product. Technically, there is no market in which prices are adjusted according to supply and demand. This monopoly has its advantages and inconveniences, but it also creates a lot of myths; here are two of of the most common ones.
Myth n° 1
All the wines in the United States are sold at significantly lower prices than in Quebec. Because of that, we can rely on the prices shown on retail and resale sites while adding at least 30% for specific and sales taxes. Finally, we just have to adjust it all with the current exchange rate.
False : The SAQ calculation system, with taxes and applicable fees is such that the higher the price of the wine, the less there will be a difference between the US prices shown and the ones posted in Quebec. If we can see a significant difference on wines sold under $ 20, when you get into the $ 80 range, it is not uncommon to witness cheaper Canadian dollar prices at the SAQ . We must remember that the SAQ sales prices reflect the variations in the exchange rates with the country of origin, the cost of transportation, the excise taxes, the fees to subsidize Éduc’alcool, bottle recycling, specific taxes and the GST and QST. It is not true that we are the only ones taxing alcohol in a significant way, but it is true that the amounts vary widely from area to area. Thus using the values displayed on Wine-Searcher showing in Canadian currency while adding a 30% increase is definitely not the right approach.
Myth n° 2
Any wine, stored properly in cellars, will get significantly better and augment in value over time, regardless of its origin.
False : Not much more than 500 wines from the best vintage years will improve in value (thus also in quality) over time on platforms like Liv-Ex or Wine-Searcher. The Burgundy wines, the great Bordeaux, the Super Tuscans and a few other wines are relatively safe assets that will offer you a theoretically good result when well kept. Despite the diminishing impact of their comments in Quebec, experts like Robert Parker may still have a measurable effect on market values.
We must remember that the notion of fair market value is associated with the most likely value of goods on any given date, in a market that is open to competition. In Quebec, we absolutely must consider the prices published on various websites, but only as a referential value.
With the monopoly exerted in Quebec by the SAQ, prices must be prioritized at all times as long as they meet certain premises to validate them; these premises are:
1.- The date of the last transaction needs to be comprised in the three year period previously identified and / or there must be a current displayed price associated with product availability in the search. This data needs to be both available and reliable.
2.- The vintage and the format should be part of all product-related information at any given time for the price to be valid.
In conclusion, establishing a market value for a wine is a complex operation. We must avoid the notion that the Quebec market is similar to other markets displayed on specialized sites for the simple reason that we cannot yet sell legally to an Asian resident all or part of our collection. With Alfred, we benefit from 4 years spent in research and a real-time integration with the SAQ data center. This allows us to provide the fairest value in the context of Quebec’s monopolistic environment.
The reports from the sales of fine wines from the cellar of Champlain Charest, or both the SAQ and Hotel des Encans caves de garde helped us better understand the variability in market values that happen in Quebec while factoring international trends.
One thing is obvious : before deciding to buy or sell your treasures, consider joining our club. With the help of your Alfred sommelier, you’ll be sure to get very valuable advice for a fair price.
Alfred, cellar management and valuable advice
Founder and president of Celliers Intelligents Inc.