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Comment by vlovich123 | Hacker News Reader

There was a time not too long ago that Napa wineries still had free tastings and cheap bottles. As demand went up, so did prices. As demand goes down prices also go up? This seems disconnected from the supply/demand curves we learned about in econ 101.

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Econ 101 usually teaches a simplified model... Still my lower divs covered the relationships between scaling supply and costs. It really just depends on the market, sometimes you are amortizing a high capital cost over each unit sold, while other times you are paying high input costs that are directly related to your scale. Scarcity/abundance of inputs is another major factor.

Higher demand incentivizes more production, increasing supply which drives prices down. Demand increases only drive up prices if supply is constrained.

Very likely wine demand was not going up, and price increases were instead due to increasing costs and inflation.

Considering you could walk in before and now you have to plan ahead with reservations (and this is broadly true in NorCal beyond just wines), it sounds like you’re a non local making conclusions without knowing how it’s changed here.

Wine has the advantage that it keeps really well, and in some cases improves (becomes more valuable with age.)

So when demand softens it may be advantageous to hold back the excess rather than lower prices. Yes, there are cash flow issues when this approach gets out of hand, but financial interests can cover a lot of that as well.

> it keeps really well

Eh, not really true for the cheap end of the market. A lot of wine sold in supermarkets, for example, is meant to be consumed a couple of years after bottling, tops. And storage can be a significant problem.

There's a reason those were all taught to you in a classroom setting. They're generalities.

The real world works much differently.

If you run a competitive business in Capitalist America, you need to keep up with inflation, taxes, and the status quo as well.

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