William Kelley on the central role played by historically low interest rates in shaping contemporary Bordeaux.
Returning from St-Emilion, Michel Bettane’s valedictory warning that the world of wine is entering into “the biggest struggle for its survival since the phylloxera era” (WFW 90, p.218) weighed heavily upon me. Cocooned in Beaune, it is easy to feel comfortably isolated from the travails experienced by other regions—though even in the Côte d’Or, below the surface, not everyone is thriving. But Bordeaux really is in the grips of a crisis, as was palpable during my weeks tasting there. Some respond with fatalism, some with recriminations, some with fantasy—grand schemes for opening the Indian market or visions of luxury hotels in the Médoc to entice a yet imprecisely identified international clientele.
As Michel astutely observes, wine is facing several major headwinds, neo-prohibitionism and climate change among them. But it seems to me that the macroeconomic environment of the past two decades—and, particularly, historically low interest rates engineered by central banks—is often missing from analyses of our current predicament.
Of course, interest rates influence every aspect of economic life, so it is not surprising that they should touch the world of wine; still less that their impact should be especially evident in Bordeaux, long the world’s most mercantile wine region, with its international reach, its own bourse (La Place), and its pioneering futures offerings. But what exactly has been their role?
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Bordeaux’s albatross
In its outlines, the story is simple. Low interest rates and an abundant money supply drove investors to look for alternatives to conventional investments, and the financialization of the fine-wine market—marked by the advent of Liv-ex and wine investment funds in the mid-2000s—offered one such outlet. Bordeaux, available in tradable volumes and graded by critics’ ratings (an echo of Moody’s or Standard & Poor’s) was the natural, though not exclusive, focus of such investment.
Low interest rates are conventionally understood to stimulate present spending by reducing the reward for waiting—what Edward Chancellor calls lowering “the price of time.” In the fine-wine market, however, this logic worked differently. Capital flowed into bottles that were bought but only rarely drunk. Those bottles remained stacked in warehouses rather than in cellars.
Today, the vast volume of stock on the secondary market has become Bordeaux’s albatross. The newly released 2025 vintage looks attractively priced beside wines from other regions, yet it struggles to match the value of many excellent older vintages from the same châteaux that are still readily available. Bordeaux, in other words, finds itself competing not with Tuscany or Burgundy, but with itself.
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Drinkability, identity, history
Of course, cheap credit has also exacerbated another historically Bordelais problem: the disconnect between châteaux and their consumers. For years, négociants could comfortably absorb en primeur releases that failed to sell through to consumers, knowing that allocations would be renewed and that eventual sales—or at least the appearance of demand—would justify the position. As interest rates have risen over the past three years, that safety net has been removed. Credit has become more expensive; those imagined future sales look less certain; and the crisis has moved closer to its reckoning.
For those of us who still see wine as a cultural artifact and not a financial instrument, the terminology of economics may sit rather uneasily with one of our great pleasures. Yet the textbooks define interest as, in part, an expression of a society’s “time preference”—how much more something is worth to us in the present rather than at a later date. And is there a better barometer for that preference than the styles of the wines we drink?
The wine culture I grew up with prioritized nothing so much as deferred gratification. Open a bottle of ten-year-old Bordeaux today, and someone is still sure to pose the rhetorical question “Isn’t it too young?” Yet despite the persistence of such conventions, the past 20 years—tracking almost exactly a period of historically low interest rates—have witnessed immense efforts by winemakers to foreground immediate drinkability. Sometimes this has been for the best—it is surely a fallacy, though an enduring one, that wine must taste nasty young to taste great old. But sometimes the transformation has come at the expense of identity and history. Is this a mere coincidence? Or is it a sign that even we drinkers do not set the price of time quite so high after all?
