demand is one of the most fundamental concepts of economics and is
the backbone of a market economy. Demand refers to how much
(quantity) of a product or service is desired by buyers.
The quantity demanded is the amount of a product people are willing
to buy at a certain price; the relationship between price and
quantity demanded is known as the demand relationship. Supply
represents how much the market can offer.
The quantity supplied refers to the amount of a certain good
producers are willing or able to supply when receiving a certain
price. The correlation between price and how much of a good or
service is supplied to the market is known as the supply
relationship. Price, therefore, is a reflection of supply and
The concept of supply and demand is fundamental to fine wine
investment. Fine wine is an improving asset, because of the
combination of a winery producing a limited quantity each vintage
and the consumption increasing as it ages and matures, thus creating
the inverse supply curve that drives prices of fine wine upwards.
"While it is hard to find totally accurate records and therefore
data, it is fair to say that the prices for the very best wines have
risen by an average 15 per cent a year over the past 25 years"
suggests Joss Fowler, a Fine Wine Manager at London merchant Berry
Bros & Rudd.
"That includes quiet periods – for example, from 1998
to 2002 – being more than balanced out by the busy ones, like