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The Price is Right? What Influences Wine Prices

Vinted on June 24, 2008 binned in commentary, wine buying

How much is that bottle of wine in the window?

Not that you’d want to buy wine that’s been sitting in a window for any extended period of time, since it’s probably baked from the exposure to all of that light and temperature variation.

Anyway, I’m off to Chicago for a non-wine-related business trip. While this jaunt has nothing to do with vino, that hasn’t prevented people from asking me wine-related questions! One of those recent questions got me thinking:

“Some wines seem so expensive… are they really worth it?”

The fine folks asking me that question are just looking for some good old-fashioned knowledgeable advice. But what they don’t realize is that it’s really a trick question.

My reply is usually something along the lines of

“How much did you pay for your house? Was it worth it?”

I’m not trying to be a smart-ass (that comes naturally), I’m just trying to get them thinking differently about a wine’s price tag. Is the price right? And if it’s “right”, for whom is it right? You? Me? Everybody?

There is a very, very simple reason why expensive wines are expensive, and it has very little to do with whether or not that wine is “worth” the price vs. a comparison with a similar wine at a lower price…


Does quality impact the price? Sure, but just like a fine dining experience vs. a trip to In-N-Out Burger, there is a relative level of quality involved, which is in no way a determinant of whether or not you’ll actually like that expensive wine. But that’s not the fundamental reason.

What about production and distribution costs? Sure, they affect the price too. If a winery picks and sorts their grapes by hand, that’s going to be a lot more expensive to do than doing it all by machine. In those cases, the winery is certainly going to pass on the additional cost to you, and in return you’d expect that the wine is going to taste better than one where the machines missed a few snakes and lizards during the sorting process… But that’s not the fundamental reason, either.

And as for the critics? Unfortunately, there is no denying the impact of critis like Robert Parker, who has followers lining up behind him so blindly that they will buy wine simply on the score that he gives it, not taking into account their own dis/likes. So the herd mentality has an impact as well, since a good Parker rating can easily send a wine’s price over $30 / bottle. But it’s not the fundamental reason.

Look at it this way: If your house is in a great area and built by a respected builder, then likely people would be willing to pay more for your house than another house nearby that doesn’t have those things going for it.

Similarly, the reason that a Harlan Estates red can cost up to $900 USD / bottle is really because of one thing: People will pay that much for it.

A little bit of supply & demand, for sure, but fundamentally the market has decided that $900 is a fair price. Just like the market decides, over time, what your pad is worth. Somewhere, people are consistently paying that much to get in on the cache factor of owning some Harlan.

God bless ‘em. If you’re one of those people, let me know how that bottle tastes. But please, don’t tell me if you think it was “worth” the $900 (or not)!

Cheers!

(images: amcati.com, klwines.com)

This World is Full of Crashing (Wine) Bores

Vinted on June 18, 2008 binned in commentary


Arthur Przebinda (of redwinebuzz.com) has an opinion piece published today in the L.A. TimesBlowback section. It’s well worth a few minutes of your busy time to read.

In his well-written rebuttal of Joel Stein’s amusing but ultimately misguided take on “wine snobbery”, Arthur contends that the language of serious oenophiles is not meant to be pedantic, and is actually no different in principal than that of a dedicated sports fan (or a passionate follower of any field):

“…the knowledge informed wine enthusiasts possess is no less meaningful, less interesting nor more ‘snobbish’ or difficult than the performance statistics in the head of a sports fan or the technical information rattled off by car aficionados.”

In other words, it’s just geek talk. And geek talk does not necessarily a snob make…

By the way, I don’t use the term geek pejoratively – in fact, I prefer to use the term “wine geek” to describe my own passion for wine (as do most of my wine industry buddies).

I love the company of wine geeks, just as I love the company of people who know way, way too much about the wood combinations of MTD basses. Because talking about wine, for me, is the apex of fun.

While I would rather leap off a 4 story building with my arms and legs bound and an anvil tied to my head than discuss fantasy baseball, you might love discussing fantasy baseball with your pals. I certainly wouldn’t ridicule you for doing it – and I’d expect you to show the same respect to us wine geeks.

I think where Arthur has this right, and where Stein is way off the mark, is that wine talk itself does not equate to snobbishness. As the famous Micahel Broadbent put it in Winetasting:

“If there is such a thing as a wine snob, he or she will have all the atributes of any other sort of snob: affectation and pretentiousness covering up the lack of everything that makes a person worthy of serious attention.”

Kind of like when Stein starts off an article with “When wine drinkers tell me they taste notes of cherries, tobacco and rose petals, usually all I can detect is a whole lot of jackass.”

Far worse than a snob in any case is a bore. The seriously smart Mr. Broadbent was onto this in a big way – also from Winetasting:

“A great expert can be a bore, particularly if speaking out of context, being repetitive, pedantic, opinionated… or merely intoing in a tedious, grinding, long-winded way. The wine bore is the person who speaks about wine when no one is inclined to listen, or to the exclusion of all else.”

Sounds right on the money to me, as it can easily be applied to any field of geek interest. Like wine, or fantasy baseball.

As Brit-pop music icon Morrissey sang, This World is Full of Crashing Bores. Wine bores. Fantasy Baseball bores.

And L.A. Times reporting bores.

Cheers!

(images: ewinetasting.com, viva-hater @ flickr.com, informationleafblower.com)

¿Cuál es la gran cosa con España? (Iberian Wines and You)

Vinted on May 28, 2008 binned in commentary

What’s up with Spain, anyway?

And for that matter, Portugal?

I mean… que pasa, dude??!?

Few wine regions are currently as exciting and vibrant as Spain and Portugal. Not too long ago, they were producing wines of specious quality, suffering from a similar Old World wine funk that once engulfed the (now impressive) wine regions like Chianti of Italy.

But now? Now the Iberian peninsula is kicking out quality wines all over the price-point spectrum. I’ve had killer Vinho Verde and Cava that have made me do a triple-head-take cartoon-style to verify that they really were that cheap. And don’t get me started on the screamin’ Priorats, aged Madeiras, and vintage Ports that I’ve tasted. Yowza!

Case in point – just so you don’t have to take only the Dude’s word for it:

“Spain continues to overperform… the number of truly fine Spanish wines continues to increase, with at least as much excitement at the lower end of the quality scale as at the higher end… Portuguese winemakers have now woken up to the tremendous potential that their country offers, making it a hotbed of innovation.” – Tom Stevenson, The Sotheby’s Wine Encyclopedia

BUT… with all of that Iberian awesomeness… why the heck do I find it so hard to consistently recommend good Iberian wines at a decent price point?

I posed that question to the wine blogging world’s resident Iberian wine experts, Gabriella and Ryan Opaz of Catavino.net, when I took part in their 2+1 Iberian wine survey. I’ve reprinted their answer here, as I think it sheds some very interesting light on the marketing situation facing Iberian winemakers and wine distributors today (thanks, guys!). Enjoy…

Mi pregunta: Why are good Iberian wines so damn hard to find in the States? Spain & Portugal are poised to take the wine world by storm in terms of value for money, but most people’s experience with them comes down to seeing a $45 Priorat in their local wine shop and passing it on by, or picking up a $10 Rioja that is plonk and never touching Spanish wine again. Ironically, most of their wines offer incredible quality for the price, except the ones we get here. What’s up with *that*?

Joe, we wish the answer was easier to give. Truth is, there are a lot of Iberian wines available, although we believe the rush to exploit them has been slowed down by the strength of the Euro. Up until this year, everyone wanted a new Iberian wine for their portfolio and were willing to spend a lot of money to obtain them. Today, however, that same money doesn’t go as far. Coupled with this, people are afraid to see Iberian wine as more than “good value”. Many of our best value wines are spreading across the States and selling well, but in the end, it’s time to spend a bit more in order to diversify the availability.

Many of our best value wines are spreading across the States and selling well, but in the end, it’s time to spend a bit more in order to diversify the availability.

Then, there is the country specific problem, i.e. nationalism. Spain will never have the ability to market itself as a brand, no matter how much Wines of Spain tries and fails. There are too many distinct cultures and political divisions throughout Spain for this to work. Thus, Spain will always end up having fragmented marketing campaigns that will never fully co-operate to achieve good, unified branding.

Portugal, on the other hand, is set to overtake Spain, because at least they can have a “brand Portugal”, but sadly, a lot of their brand equity is tied up in the Port houses, and it’s not easy to convince them that they should help the smaller appellations. Additionally, Portugal has a confusing system of Appellations, where you have the highest “quality wine” category (DOC) falling below the wines of the “lower” regional wine category (VR). We don’t think it hurts the retail sector, per se, but it does hurt the in country’s organization and how it presents itself. The final factor that that weakens “brand Portugal”, is the overwhelming presence of the Vinho Verde, Douro and Alentejo regions. Until the smaller regions gain a little spotlight, these main three big guys will always overshadow the smaller ones.

Spain will always end up having fragmented marketing campaigns that will never fully co-operate to achieve good, unified branding.

Think of it this way. French wine is considered good, with wines of quality coming from Bordeaux, CDP, Burgundy, etc. Here, Rioja wine is great, which happens to be from Spain. Port wine is historic, but that is from the English (seriously people have told me this). Vinho Verde is fresh and vibrant. Cava is the “other sparkling wine”. Clearly, we’re fragmented. Portugal and Spain both need to be known for great wine. As you say, people see the $45 Priorat, and only associate it with the region, but never the country.

You can read the entire article over at Catavino.net.

For more on Spanish wines, you can check out The New Spain by John Radford.

Cheers!

(images: catavino.net, about.com, wine.pt)

Who Cares What We Think? (The Influence of the Internet in the World of Wine)

Vinted on May 21, 2008 binned in commentary, wine blogging, wine buying

So, really – who cares what I think?

Maybe not too many wine consumers.

According to a new Pew Internet study report, the Internet has a small influence on consumers’ buying decisions when compared to offline channels (like recommendations from salespeople, friends, etc.). That includes Internet sites like, oh, for example, 1WineDude.com.

Hmm… maybe I should be putting a little more time & effort into my off-line consulting

Anyway, according to the Pew report (which, to be fair, measured on-line impact on purchases of music, housing, and cell phones only):

“No more than one-tenth of buyers… said that online information had a major impact on their purchasing decision.”

Well… crap!…

And here I’ve been trying to steer wine consumers right and not realizing the whole time that nobody is listening (er – I mean, reading).

What’s also interesting (assuming you still might care what I think at this point) in the Pew report is the gap between those who actively contribute to the on-line dialog (by submitting reviews, for example), and those that simply consume the information:

“The large gaps between contributors and readers are understandable; not all consumers
are interested in lending their voice and many may be content to free ride on the efforts of
others. However, with the growth of broadband adoption at home and the buzz about
online participation in a Web 2.0 world, widespread activity in this arena might be
expected. Yet the data in this report do not show this; there is clearly a distance between the numbers of those who contribute and those who lurk.”

I can’t say I’m too surprised by that finding. In my experience, especially with people of my g-g-g-g-generation, I’ve found that there is a need to consume information via the Internet, but very little drive to create that information themselves.

Case in point: my friends will tease me about the number of websites that I maintain (official number: too many), and in the same conversation will ask me why I’ve not updated one of the websites in the past 3 days.

They want to consume – they just feel that it’s someone else’s place to author that content. Is this “The Architecture of Non-Participation?”

Deep down I’m a skeptical guy – which in my twisted in mind is being patriotic (hey, the U.S. was founded by a bunch of skeptics!) – but I gotta admit, deep down I am also feeling like wine is different.

I know, I know – wishful thinking, right?

But hear me out (if you still care what I think, that is): Buying wine is different than buying music or a cell phone, because wine is meant to be shared. By its nature it’s a social beast, to be enjoyed with others. It’s one of the few goods we can buy that actually becomes an event unto itself. A cell phone can be nifty but it’s probably not going to be a lubricant for life. And try sharing your cell phone with someone else without going totally insane.

If you take a look at social networking websites like the Open Wine Consortium, Corkd.com, and CellarTracker.com, you will find lots of wine consumers willing to share their views, reviews, and recommendations. I would find it hard to believe that those interactions don’t influence the wine buying decisions of consumers somehow.

And wouldn’t it be great if, instead of wine distribution monopolies, stuffy media mags, and 2 or 3 critics dictating nearly all of our wine purchasing choices, we actually influenced each other and helped each other out based on our own experiences of wines that we thought actually tasted great?

But then again, who cares what I think?


Cheers!

(images: thoomp.com, allposters.com, imagechef.com)

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