Desnobbing wine

By Felix Salmon
January 20, 2011
David Kesmodel reports that US consumers finally seem to be waking up to the fact that there's no correlation between price and quality when it comes to wine:

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David Kesmodel reports that US consumers finally seem to be waking up to the fact that there’s no correlation between price and quality when it comes to wine:

The economic downturn was toughest for the U.S. wineries that sell wines for $20 a bottle and up. After switching to less-expensive wines in the downturn, many consumers are staying at those lower prices because they liked what they found, industry executives and analysts say.

Actually, there are two parallel things going on here. The first is that wine in the $9 to $12 range tastes just as good as wine in the $20 to $30 range. The second is that US wine over $20 is massively overpriced.

Kesmodel’s article quotes three individual winemakers. Two are in Napa; the first sells wine at $100 a bottle, while the second sells wine between $28 and $55. The third is in Washington, and sells wine at about $50 a pop.

At these levels, wine is not an everyday pleasure — not unless you’re solidly in the ranks of the rich. Instead it’s a tool for snobbery and one-upmanship, and a way of selling wine to people who choose wine based on exactly two numbers: its rating out of 100, and its price in dollars. In both cases, it is understood, higher means better.

It’s not hard to shatter these illusions, though. Once people move from $50 US wines to $11 French wines and actually prefer the latter to the former, then it’s all over for the Americans.

Much of the California wine business is based on the idea that California wines compete only with each other; in the upside-down world of Veblen goods, they often compete on price not by being cheaper than their competitors but rather by being more expensive.

It’s also true, however, that people who downgrade from luxury goods to better-but-cheaper mass-market alternatives very rarely trade back up again. Once you trade in your Vertu for an iPhone, you’re unlikely switch back.

And that seems to be what has happened in the wine world. If American wine drinkers are losing their snobbery, that’s great news for anybody who wants to see a vibrant culture of wine drinking in the US. But it’s very bad news for high-end wineries selling their juice at upwards of $50 a bottle.

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