19 November 2018

The question of Santorini prices

It is no big secret that the island of Santorini produces quintessential, terroir - driven, wines. It is also no big secret that the prices are climbing fast. In a previous post, I wrote my concerns about this and stated that ‘the increase in price of the grapes from 0.85€/kg in 2010 to 5€/kg in 2018, together with the rise in the number of producers on the island from 13 in 2010 to more than 20 in 2018, have thrust the prices of Santorini wines to dangerous heights’. Nevertheless, I thought it would be intriguing and useful to have key wine people, from around the world, comment on this issue and, more specifically, answer the question of whether Santorini wines have reached their price plateau or whether these can be expected to climb even higher

I posed the same question to Mark Andrew MW and Stefan Neumann MS from the UK, Kelli White from the USA, Will Predhomme from Canada, Paz Levinson from France and Christophe Heynen from Belgium. My personal views are summarized at the end of the article. 

Mark Andrew MW (Noble Rot magazine and restaurant and Keeling Andrew & Co co-founder, Master of Wine based in UK)

The price of Santorini's wines or, more specifically, the rate of price increases in the last few vintages is a concern. Of course, the economic realities of the island mean that wine production was unsustainable at the previously low prices, so from that perspective higher prices are a positive development, but it is the speed with which this has happened that worries me.

The best examples are undoubtedly premium wines that deserve to be taken seriously on the international stage, but there is a danger that prices are moving faster than the reputation is being built, and that will make it difficult to sell the wines to competitive export markets, if the situation continues. The insatiable market from tourism to the island probably means the producers aren't too concerned about this, but if they want to see prices continue to rise then there is still a lot of work to do - both in terms of communicating the message of the island's unique terroir to an international audience, and in pushing quality of the wines to the next level

Santorini prices are now firmly in the fine wine category, comparing to white Burgundy (entry level wines at Bourgogne Blanc prices and the higher cuvées matching many village and 1er Crus), serious German Riesling and other top whites around the world. That isn't a problem for the best examples, which are entitled to compete at that level, but there is plenty of mediocre Santorini wine that looks overpriced when compared to what is available to customers in markets like London, Paris and New York. 

Stephan Neumann MS (Director of Wine - Dinner by Heston Blumenthal, Master Sommelier based in UK)

I see the dry versions of Santorini as the No.1 alternative to Burgundy and, personally speaking, the non-oaked versions should reflect that in the more affordable price too. Are the wines becoming overpriced? For the moment I would say no, yet as demand rises, the prices are only going in one directions and that's not down. There is still very good value found and I think it is still very competitive and attractive for buyers. If young, I like to explain Santorini wine to my guests as a supercharged Austrian Riesling, (great freshness with a vibrant citrusy driven core);  if they are mature, they can quite easily be compared to white Bordeaux and show real longevity, as such.  

I wouldn't say the sky is the limit but certainly there is room for more pricey examples. I strongly believe that Santorini is in a rather unique position, as other countries or regions may have a similar background for indigenous grape varieties, unique soils and history, but no other is as unique as Santorini. The combination of an ancient volcanic island, with thousands of years of wine making, paired with a few pristine indigenous grape varieties, on a small island like this, gives you every argument to charge more for your wine. On another note, the purity of the majority of the wines and the hands-off approach of several winemakers is also following the trend/fashion where people are more keen on 'nature' made wines, rather than artificially made ones. To say it in a nutshell: Santorini has got everything that would justify a rise of the prices on the international market for some of their wines and frankly they should be raised, maybe from 2020 (I still want to buy some next year for cellaring )

Christophe Heynen (Owner of Gustoworld importing company based in Brussel. Master of Wine student Stage 3) 

I'd say there are two sides to the story: The first is that wines from Santorini have become a well-known "brand" to "open-minded" wine amateurs, as well as WSET and MW professionals around the world. These people recognize the uniqueness of the style and the particular position which the wines can hold on the international market, and the "high" prices which they can commend. In our market, current prices are those of a village Burgundy (15-25 €), or if taken in the very broad sense of  similar "style", those of Chablis. On the basis of quality, I would argue that even at 1er Cru level prices (30-40 €), these professionals would still purchase Assyrtiko, but would limit themselves to the top ones. The risk is, as in other high demand appellations, some producers will profit from the demand to produce just not enough quality, and the international image will be impacted. So there is a risk, if the prices go up, and the quality isn't, at least, really maintained.  

Furthermore, and unfortunately, Santorini Assyrtiko is not seen as a "refuge"-"traditional" value wine for international trade (think high price, high margin, good rotation from demand), and this will be a huge challenge. While Burgundy and Chablis are increasing prices, demand remains high, as the perceived "value" of the wine remains. This is not the case with Assyrtiko, besides, there are many appellations and styles battling in that range which are more "fashionable" (German Riesling, Austrian Gruner etc). I think it would be important for Santorini wines not to fall into the "special, interesting, but not worth it category".

Secondly, the "upscale" wine consumer (who regularly purchases 1er Cru level wines), with the exception of one exposed to the wine in Santorini/Greece while on vacation, will have had very limited access to this style of wine. As such, raising prices will make the wines even more "niche", and limit further consumption. International exposure is still too limited for the wines to be more well-known to traditional markets such as ours. I'd argue that there are still far too few "international" importers, like us, who carry Santorini Assyrtiko (we don't have any), and regular "cavistes/wineshops" do not feature Santorini Assyrtiko (or in a dusty corner – with very limited knowledge of those who sell the wine) – the same holds for other high-end Greek wines. As a result, these consumers do not take Greek wines seriously enough, as they have limited exposure to the top wines. Greek wines are associated with Greek restaurants, and only very occasionally with "world quality" wines. For them, if prices for Santorini Assyrtiko are raised from the mid-premium of 15-20 € (retail) to 25-30 € (almost double price), the competition from around the world becomes more intense, and the product even more niche. With those higher prices, rotation will be even slower, and the products risk falling out of the portfolios altogether. 

Will Predhomme (Managing Director, Predhomme Inc. based in Canada)

Seven years ago I could pour the Assyrtikos from Gaia & Domaine Sigalas 'by the glass' in Canada and offer exceptional value and an amazing story; now the same wines are double and triple those prices, which place them firmly in the premium market. Part of me says "you've priced yourself out of the accessibility market and that's going to require a culture shift in your market" while the other part of me says "yes, this is one of the great wines of the world, it should be competitively priced, based on global indexes, and the quality of the wine is worth it". I guess the next question is what value is proposed and built along with these increases - it's arguably easier to start with a high-priced wine and offer it for less (albeit at the sacrifice of the brand if not done right), though to jump from accessible to iconic will require some time and the right investments and telling of the story while maintaining and growing the quality. It's also a question of success - the Greek wine brand is getting stronger and recognized internationally - a Herculean feature to have completed in such a short period of time, so to push for Icon status is the next logical step - thankfully these wines have all the stuffing to get it done, but do the drivers of the market?

There is a finite amount of land that can produce these wines and the quality is apparent, though I believe supply and demand and global access to markets will be a main hurdle to reinvent with this new positioning. As a consumer, I will ask (as well as anyone else) - what value proposition is being offered with these increases - is there marked improvement in the wine, the overall experience, the brand, the lifestyles of those who are producing and the ancillary supporters/businesses; is it sustainable and worth it? I think it's a bit too early to tell as the shift has just begun, though the market will dictate whether these wines are being purchased and drunk or stored until the market equilibrium comes into effect.

Comparing the wines of Santorini to other emerging premium market wines; Austria, South Africa, Oregon, etc. - there's a decided uptick in prices across the board - this seems to mimic the global demand and equal high-quality being produced in these areas. I think they're all looking to the benchmark premium areas - Bordeaux and Burgundy - and asking "why can't we do as well as them and manage the market; we still offer great value when compared to..." and this statement isn't untrue. I do see the comparative value in the wines of Santorini, specifically older-vine and well-made Assyrtiko based on flavour, texture, & ageability. It's unfair to compare it to great white Burgundy (aged examples often are), although the experience on occasion can be similar, though what should not be compared as the true value along with the wines is the brand of Santorini and exploring what that truly means. I do think that story needs to be told much more and invested in globally if the prices are going to increase more.

I haven't heard much on the 'why is Santorini increasing in price' other than observing that it has, which has turned off a number of my sommelier/wine director colleagues which is leading to less and less support in the hospitality/trade industries, which are still a crucial part of the base of this category. The trade support and investment is something that needs to be addressed sooner rather than later as Santorini runs the risk of losing its base supporters - if you lose these individuals you could find yourselves without access to your best storytellers. In the end I wish I had purchased more of these and kept them as I suspect the prices will not come down and they're just delicious to drink. 

Kelli White (Senior Staff Writer at GuildSomm, based in USA)

I'm really not sure if there is, or should be, a ceiling on how high Santorini prices its wines. While I fully understand that these are regularly among the most expensive wines from Greece, they still represent a significant value. In my opinion, the best wines of Santorini are among some of the finest white wines on earth. They are individualistic, express terroir, and both dry and sweet styles age well. If you add to that the beauty of their setting, their remote location, the practically unmatched age of their root systems, and their unique trellising system - the wines seem even more valuable

And the truth is, very little of this wine is actually made, and rarity is often a bigger instigator than quality, when it comes to setting high prices. Frankly, I want the prices to rise; I understand how much competition the vineyards face from luxury real estate developments and I want them to be able to resist that pressure, even expand if possible.

Paz Levinson (Executive Head Sommelier Group PIC, Best Sommelier of America's 2015, ASI, based in France)

When I arrived in France, 5 years ago, I started working with Santorini wines. France was still very closed to foreign wines, but every time I had clients taste these wines they were so surprised and delighted that it was easy. There are so many things to tell about Santorini; just by mentioning the name makes people travel and see paradise in front of their eyes. Plus, they never thought that wine like this was produced on the island (especially clients that have never visited Santorini). It was always quite an expensive wine to buy. In France, Paris, pricing is a very delicate issue and there are lots of limitations for foreign wines, in the sense that people are getting open and curious about other wines of the world but they still don't expect to pay a lot for them. So it's not easy, especially when I tried to work with wines like Nykteri. I think this style of wine has so many possibilities to match with French cuisine that I continue to look for ways to include it on our list. But with the prices that a Nykteri can reach it has become more difficult. At the same time we know that high prices in Santorini help stop the uprooting of the vineyard and make the extremely low yields of Assyrtiko with the kouloura system more profitable, but it's getting hard to integrate many of the wines from the island in the wine menus and the pairings. 

I know it can be a limitation of the French market, which is the hardest market for foreign wines, but still it makes it even harder with high prices. 
How high in terms of price can Santorini climb? Hope that the wines stay in a level that helps the producer, but that allows us to include them on the list and makes people taste the wines. Are the wines becoming overpriced or not? I don't think the wines are overpriced, but this don't mean the prices can get higher and higher because even at present it is difficult to position the wines on the wine list and to sell them at the prices Santorini demands. 

Yiannis view in a nutshell. Santorini, as most regions in Greece, is an area in transition. My view is that there are just two options for the island, the producers and the wines. Either go 100% premium, be honest with the quality and produce only terrific terroir - driven wines; in which case, prices could be increased cautiously, provided that a strong and solid message is put across. Or produce good to very good wines, some blends perhaps, some of this and that, which would be a lower category Santorini wine, with prices considerably lower than those of the first category.   

Photo by John Moeses Bauan on Unsplash

Comments
Submitted on 11/22/2018 - 14:04 by Gregory Kontos, DipWSET
Γιάννη συγχαρητήρια για το εξαιρετικό άρθρο σου.
Submitted on 11/21/2018 - 15:15 by Ralph Urban - Griechenland-Weine.de
I really like this open discussion here from these experts. My 5 pence: Honestly the wines should not be driven so much by the price of the grape only, but also by quality aspects. As there are a bunch of newcomers, who first of all need to earn to receive a reputation as well as many wines in the "midfield" they are clearly overpriced already and this cannot be justified by the grape price. As long as wineries willing to pay for the grapes in and even outside of the island, it cannot change. Better is no build up the pressure to the farmers to stop the increase asap, as otherwise I fear we will see more and more grapes coming from elsewhere reaching the island and will compromise the quality. Price can be high, if the quality is justifying it, but if the grpae price is on such a level as now, this is contraproductive at the end of the road. I cannot justify such high prices to my high-end customers in Germany if the price continue to raise in this absoluely too fast way. Santorini will finally kicked out one day.
Submitted on 11/21/2018 - 11:48 by Patrick
Spot on. Great initiative inviting voices for winemakers to read it themselves
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