Comments on: Wine inflation http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/ A slice of lime in the soda Sun, 19 May 2013 14:44:14 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Nameless http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10227 Nameless Sun, 20 Dec 2009 23:03:54 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10227 "Wages do a better job of denoting affordability, but fail to show how wine was relatively better value compared to other items." It would be more accurate to say that premium wine failed to depreciate with respect to wages by the same amount as steel cutlery or underpants. Apparel manufacturing has been revolutionized during the last two centuries and the amount of labor that goes into one pair of underpants is, indeed, down by the factor of ten or more. And the industry is sufficiently commoditized that profit margins are fairly thin. On the other hand, premium wine industry successfully resisted commoditizing, in part because big part of "premium" is first growth status, and we aren't making any more of those. Chateau Margaux still has the same 200 acres under grapes as back in 1700. There may have been some yield improvements due to the use of pesticides and such, but overall the winery does not produce much more wine today than it did in 1700. At the same time, market for first growth wines has expanded by a factor of ten or more (just the population of the United States today is ten times larger than total population of France, England, Scotland, and English colonies in North America three hundred years ago). “Wages do a better job of denoting affordability, but fail to show how wine was relatively better value compared to other items.”

It would be more accurate to say that premium wine failed to depreciate with respect to wages by the same amount as steel cutlery or underpants.

Apparel manufacturing has been revolutionized during the last two centuries and the amount of labor that goes into one pair of underpants is, indeed, down by the factor of ten or more. And the industry is sufficiently commoditized that profit margins are fairly thin.

On the other hand, premium wine industry successfully resisted commoditizing, in part because big part of “premium” is first growth status, and we aren’t making any more of those. Chateau Margaux still has the same 200 acres under grapes as back in 1700. There may have been some yield improvements due to the use of pesticides and such, but overall the winery does not produce much more wine today than it did in 1700. At the same time, market for first growth wines has expanded by a factor of ten or more (just the population of the United States today is ten times larger than total population of France, England, Scotland, and English colonies in North America three hundred years ago).

]]> By: mjturner http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10221 mjturner Sun, 20 Dec 2009 16:23:16 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10221 It’s not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen. - it's 'average wages'. In your example we have craftsmen on 20p (old pence, so 1/12th a pound) a day, which multiply by the Economist's price adjustment of about 80, and then by my suggest 20 fold increase in real wages, and you get £133/day, which is a little high, but not in the wrong ballpark. Also, if we’re talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation. - Maybe, maybe not. If you click on the link I converted the 1909 prices using both measures. Wages do a better job of denoting affordability, but fail to show how wine was <i>relatively</i> better value compared to other items. It’s not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen.

- it’s ‘average wages’. In your example we have craftsmen on 20p (old pence, so 1/12th a pound) a day, which multiply by the Economist’s price adjustment of about 80, and then by my suggest 20 fold increase in real wages, and you get £133/day, which is a little high, but not in the wrong ballpark.

Also, if we’re talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation.

- Maybe, maybe not. If you click on the link I converted the 1909 prices using both measures. Wages do a better job of denoting affordability, but fail to show how wine was relatively better value compared to other items.

]]> By: Nameless http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10220 Nameless Sun, 20 Dec 2009 09:38:21 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10220 It's not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen. Also, if we're talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation. It’s not obvious to me that we consume twenty times more today than 18th century middle-class Englishmen.

Also, if we’re talking about relative affordability of French wines now and then, it makes more sense to use wage inflation than consumer price inflation.

]]> By: mjturner http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10219 mjturner Sun, 20 Dec 2009 08:42:20 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10219 I can't vouch for the inflation uprating, but note its an inflation adjustment, not real wages one, so assuming a 20 fold increase in real wages since Walpole's time to now brings the two figures into line. I can’t vouch for the inflation uprating, but note its an inflation adjustment, not real wages one, so assuming a 20 fold increase in real wages since Walpole’s time to now brings the two figures into line.

]]> By: Nameless http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10207 Nameless Sat, 19 Dec 2009 11:37:08 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10207 That inflation adjustment appears very suspect to me. £1,200 corresponds to 50 pence per bottle. In Walpole's times, craftsmen made, on average, 18-20 pence/day, farm workers made closer to 10. Scaling to modern day wages, that makes claret worth roughly $300..400/bottle. Port wasn't much cheaper, either: 15-20 pence per bottle. And that's, of course, to be expected - shipping the wine from Portugal before the age of steam couldn't have been cheap. Naturally, those alcoholic drinks that could be made domestically from local foodstuffs, beer and gin, were significantly cheaper: beer cost 10 pence/gallon (much of that because of taxes), gin was, apparently, even cheaper than that (you could get dead drunk on two pence). Reference: http://gpih.ucdavis.edu/files/England_1209-1914_(Clark).xls That inflation adjustment appears very suspect to me. £1,200 corresponds to 50 pence per bottle. In Walpole’s times, craftsmen made, on average, 18-20 pence/day, farm workers made closer to 10. Scaling to modern day wages, that makes claret worth roughly $300..400/bottle.

Port wasn’t much cheaper, either: 15-20 pence per bottle. And that’s, of course, to be expected – shipping the wine from Portugal before the age of steam couldn’t have been cheap.

Naturally, those alcoholic drinks that could be made domestically from local foodstuffs, beer and gin, were significantly cheaper: beer cost 10 pence/gallon (much of that because of taxes), gin was, apparently, even cheaper than that (you could get dead drunk on two pence).

Reference:
http://gpih.ucdavis.edu/files/England_12 09-1914_(Clark).xls

]]> By: mjturner http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10206 mjturner Sat, 19 Dec 2009 10:28:53 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10206 Indeed I think walpole's price comes to 5 shillings a bottle and the 1909 Berry Bros price to 6 shilllings a bottle, which presumably tells you something about the lack of sustained inflation before the 20 century? Indeed I think walpole’s price comes to 5 shillings a bottle and the 1909 Berry Bros price to 6 shilllings a bottle, which presumably tells you something about the lack of sustained inflation before the 20 century?

]]> By: mjturner http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10205 mjturner Sat, 19 Dec 2009 10:27:25 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10205 This fits in with what I found about wine prices in 1909 (http://www.matthewturner.co.uk/Blog/2009/06/changing-price-of-alcohol-part-ii.html) where Lafite was £22/bottle, so only slightly more than it was in 1780 (in real terms). The explosion in prices has presumably come in the last 40 years, perhpas last 10? This fits in with what I found about wine prices in 1909 (http://www.matthewturner.co.uk/Blog/200 9/06/changing-price-of-alcohol-part-ii.h tml) where Lafite was £22/bottle, so only slightly more than it was in 1780 (in real terms). The explosion in prices has presumably come in the last 40 years, perhpas last 10?

]]> By: thirkej http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/comment-page-1/#comment-10190 thirkej Fri, 18 Dec 2009 23:00:06 +0000 http://blogs.reuters.com/felix-salmon/2009/12/18/wine-inflation/#comment-10190 why does you site cause pop ups which say "we wish you to take part in a quick survey about this site" and then, if you answer that you have no role in buying insurance for your family, close the survey... pop up rubbish! why does you site cause pop ups which say “we wish you to take part in a quick survey about this site” and then, if you answer that you have no role in buying insurance for your family, close the survey…

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