Opinion

Felix Salmon

There’s no global wine shortage

Felix Salmon
Nov 1, 2013 07:04 UTC

Have you heard about the global wine shortage? Of course you have: it’s been covered in pretty much every media outlet imaginable, but Roberto Ferdman’s piece for Quartz (“A global wine shortage could soon be upon us”) was one of the first, and also one of the most detailed. Still, it was the classic single-source article: it basically took one Morgan Stanley report, reproduced a bunch of the key charts, and added a clickbaity headline.

The charts, on their face, tell a pretty clear story, especially this one:

But if you look closely at the Morgan Stanley report, it starts to look less like a dispassionate analysis of supply and demand dynamics in the wine world, and more like an aggressively-argued attempt to put forward one particular investment thesis as strongly as possible. What’s more, the investment thesis is not, particularly, based on the existence of any present or future wine shortage; it’s simply trying to present the idea that demand for Australian wine exports is likely to rise, and to justify the fact that  a company called Treasury Wine Estates is the bank’s “top Australian consumer pick”. (The report was written by Morgan Stanley Australia.)

For instance, the scary chart above is actually this rather less scary chart, tweaked a little:

To create the first chart, Morgan Stanley just took the second chart, added 300 million cases to the red line, and then — this is pretty cunning — simply deleted 2013 altogether, so that the uptick at the end disappears. (The 300 million number is Morgan Stanley’s estimate of the annual demand for “non-wine uses” of wine.)

Although the first chart is scarier than the second chart, even the second chart does a little bait-and-switch, which you can only find by looking at the sourcing note at the bottom of the page. The numbers for the charts come from OIV, the Organisation Internationale de la Vigne et du Vin, including the estimate for 2012 production and consumption. But the 2013 estimate, showing a modest increase in production, is not the OIV estimate; it’s the Morgan Stanley estimate. And what Morgan Stanley doesn’t tell you is that the OIV estimate for 2013 is much higher. Here are the OIV charts:

These charts are less polished, but are actually much more useful. (They also have different units from the Morgan Stanley charts: they’re measured in million hectoliters, which is 100 million liters, while Morgan Stanley uses million unit cases, which is 9 million liters. So when Morgan Stanley says that 300 million unit cases are used for non-wine consumption, that works out at about 33 million hectoliters.)

For one thing, the OIV charts draw sensible straight lines between points, instead of turning them into elegant curves which make the trend seem continuous. The trend is not continuous: these are annual figures per vintage, and each vintage is a unique, separate event. What’s more, while the amount of wine that will be drunk and produced in 2013 is not yet entirely clear. So OIV gives a range of possibilities, while being reasonably certain that wine production is going to increase substantially this year, by somewhere between 7.1% and 10.5%. Morgan Stanley, by contrast, gives no rationale at all for the fact that it has a forecast which is much lower than OIV’s; indeed, nowhere in the Morgan Stanley report is its 2013 forecast ever even quantified.

Add it all up, and the OIV actually concludes, quite explicitly, that the production-consumption difference for wine will “be higher than the estimated industrial needs” in 2013, for the first time since 2007. In other words, far from entering a period of global wine shortage, it looks like the 2008-2012 period of shortage is actually ending.

This global wine shortage, then, just simply isn’t real. Don’t take my word for it: ask the wine trade. Stacy Finz of the San Francisco Chronicle asked a bunch of industry types about the Morgan Stanley report, and none of them took it seriously; Victoria Moore of the Telegraph conducted a similar operation in Europe, and came to much the same conclusion.

My wine-making contacts raised more than an eyebrow at the ready, steady, panic news.

“Tell them to come to the Languedoc if they are worried,” said one. “I think I can help them out.”

Another noted that it is still possible to buy hectares of good vineyard in parts of France and Spain for less than the cost of planting one. In other words, the price of some wine is still lower than its true cost of production, an indication that the balance of supply and demand is still favouring the demanders, not the suppliers.

The Morgan Stanley report paints a picture of a long-term secular downward trend in area under vine, which is running straight into a long-term secular upward trend in global demand for wine. But reality is more complicated than that: thanks to a combination of technology and global warming, an acre of vines can reliably produce more wine, and better wine, than it ever did in the 1970s. And of course if demand for wine really does start consistently exceeding supply, then there’s no reason why area under vine can’t stop going down and start going up.

But never mind all that: the Morgan Stanley report has numbers and charts, and journalists are very bad at being skeptical when faced with such things. Even Finz’s Chronicle article, which sensibly poured cold water on the report, ends with a “Wine by the numbers” box which simply reproduces all of Morgan Stanley’s flawed figures. And besides, the debunkings are never going to go viral in the way that the original “wine shortage!” articles did.

As analysts have known since long before Henry Blodget was covering Amazon, the way to make a splash is to come out with a bold, headline-worthy thesis. Morgan Stanley did exactly that with this report, and I’m sure succeeded beyond their wildest dreams. I’m sure they’ve been celebrating their PR coup all week — probably with sparkling wine of some description.

COMMENT

A splendid insight-Interestingly the link to Morgan- Stanley does not go through – Felix can you provide the reference ?- I am unable to get to the report and look at it. The fact that Frederico Castellucci affirmed your post must make you feel good!

Posted by Oddsonwine | Report as abusive

How money can buy happiness, wine edition

Felix Salmon
Oct 28, 2013 03:15 UTC

I spent the past couple of days in Berkeley, participating in a number of events at the inaugural Berkeley Ideas Festival. The highlight for me was interviewing Donald MacDonald, the architect of the new (and magnificent) Bay Bridge. But I was also asked to present a little “provocation” on the second morning, in between heavier sessions covering topics like the effect of 3D printing on the manufacturing workforce and the rise of the plutocracy.

So I thought I’d be a little servicey, and let the audience into a secret: specifically, the secret of how to buy happiness with money.

Berkeley is a fun place to give such a talk, since it’s full of the kind of people who are convinced as a matter of principle that money can’t buy happiness. (Where “money”, much of the time, is code for “San Francisco”.) And it’s also the kind of place where the idea of the hedonic treadmill — the theory which says that we all have our own set level of happiness. Good things can happen to us, which make us happy, and bad things can happen to us, which make us sad, but the effect doesn’t last very long. Even if very good things happen to us, like winning the lottery, or very bad things happen to us, like becoming quadriplegic or losing a spouse, we eventually end up back where we started. (The only reasonably sure-fire way of bringing the set point down, interestingly enough, is becoming and then staying unemployed.)

Now there are things which make us happy, briefly. You might even have heard the saying that “anybody who thinks that money can’t buy happiness, has never bought a puppy“. But every adult also knows that for all their upside, puppies also come with a downside.

So what we’re looking for here isn’t something which will lift the line forever — only spiritual gurus promise that. And it’s not something where short-term happiness ends up being paid for with long-term side-effects. Instead, what we’re looking for is something which will predictably make us happier in the short term, which will have very little in the way of negative long-term effects, and which can be repeated as often as you like. Basically, any time you want to be happier, spend some money on this, and you’ll be happier. And then it’s over, and you can go back to your life, and if you want to do it again, you can.

This is a non-trivial task, because of the way the hedonic treadmill works: you get used to stuff. Remember those lottery winners. People become habituated to nice things: while your bigger house or fancier car can indeed make you happy in the short term, you get used to it pretty quickly, and before long you just become scared to lose it. I was very happy with my living conditions when I was in college, but I’d hate to go back to them now. So if your goal is happiness, you don’t want to wind up in what I think of as the collector mindset: the feeling that whatever you have is somehow incomplete, and that buying new things is a way of temporarily filling a void. We don’t want that: we don’t want something where you’re sad when you don’t have it. We just want something where you’re happy when you do have it. And which you can buy with money.

Now most of the time, in most areas, even if money doesn’t buy happiness, it does buy quality. If you spend $100,000 on a car, it’s going to be a better car than the one rusting away on the second-hand lot which is on sale for $3,500. The positive correlation between price and quality is a basic law of capitalism — but there are exceptions. And one of the main exceptions is wine.

If you study what happens in blind tastings, you get the same result over and over and over again. You can try this at home, if you like; I’ve done that many times, with friends, and it’s a lot of fun. You can do a scientific analysis of more than 6,000 wine tastings, which found a negative correlation between price and quality. Or you can look at the wines which win medals at wine competitions, where it turns out that winning one competition gives you no greater likelihood of winning the next one, and where if you enter the same wine two or three times in the same competition, it can appear all over the place in the final results.

But here’s the trick: if you can’t buy happiness by spending more money on higher quality, then you can buy happiness by spending money taking advantage of all the reasons why people still engage in blind tastings, despite the fact that they are a very bad way to judge a wine’s quality. If you know what the wine you’re tasting is, if you know where it comes from, if you know who made it, if you’ve met the winemaker, and in general, if you know how expensive it is — then that knowledge deeply affects — nearly always to the upside — the way in which you taste and appreciate the wine in question.

Fortunately, nearly all of the time that we taste wine in the real world, we do know what we’re drinking — and we do know (at least roughly) how expensive it is. In those situations, the evidence is clear: When we know how much we spent on what we’re drinking, then the correlation between price and enjoyment is incredibly strong.

The more you spend on a wine, the more you like it. It really doesn’t matter what the wine is at all. But when you’re primed to taste a wine which you know a bit about, including the fact that you spent a significant amount of money on, then you’ll find things in that bottle which you love. You can call this Emperor’s New Clothes syndrome if you want, but I like to think that there’s something real going on. After all, what you see on the label, including what you see on the price tag, is important information which can tell you a lot about what you’re drinking. And the key to any kind of connoisseurship is informed appreciation of something beautiful.

In another session at the Berkeley conference, I interviewed Randall Grahm, the biodynamic winemaker. I love biodynamic wines, even though I think that the philosophy behind them (cosmic rays, etc) is in large part completely bonkers. And I think that a large part of the reason why biodynamic wines taste so honest and delicious is that the discipline of biodynamic winemaking forces winemakers to spend much more effort and concentration on the way they grow and harvest their grapes. Similarly, when you really pay attention to the wine that you’re drinking — something which you’re much more likely to do when you know that it’s expensive — you’re going to be able to discover beauty and nuance which you might otherwise miss.

What’s more, it stands to reason that the more we know about what we’re drinking, the more we’re going to like it. And that if you’re talking about something as complex and enigmatic as wine, the apotheosis of agricultural artistry, then there’s going to be more to find in a bottle of fine Burgundy than there is in a bottle of Blue Nun. After all, the global consensus on which wines are the very best in the world has been remarkably consistent for centuries.

Taste in wine is a real thing, which, while it does change over time, does so much less radically than does, say, taste in furniture. It’s an elusive thing, hard to pin down, and there are many reasons why it’s especially hard to isolate in the artificial environment of the blind tasting. But it does exist, and it’s undeniable that nearly everybody who buys and drinks expensive wine (say, $20 per bottle and over) gets real pleasure out of doing so. (“Real pleasure”, I should note, is a redundant phrase: all pleasure is real, no matter whether its genesis is more likely to be a label or a liquid.)

And here’s the really clever bit: even if you think that this is all just a case of the Emperor’s New Clothes, and that the whole concept of fine wine is at heart a con, the correlation between price and pleasure still holds up. As Daniel Kahneman says, it’s one thing to know your cognitive biases; it’s something else entirely to overcome them.

I, for instance, am absolutely convinced, on an intellectual level, that the whole concept of “super-premium vodka” is basically one big marketing con. Vodka doesn’t taste of anything: that’s the whole point of it. As such the distinction between a super-premium vodka and a premium vodka is entirely one of price and branding. And yet, it works! The genius of Grey Goose was that it created a whole new category above what always used to be the high end of the vodka market — and in doing so, managed to create genuine happiness among vodka drinkers who spent billions of dollars buying up the super-premium branding. But if someone asks me what kind of vodka I’d like in my martini, I still care, a bit. And if I my drink ends up being made with, say, Tito’s, I’m going to savor it more than I would if I had no idea what vodka was being used.

What’s more, you don’t need to spend hundreds of dollars on first-growth Bordeaux for this to work. You just need to spend a little bit more than you normally do — enough that you consider it to be a special bottle of wine. That’s it! When you sit down and pop it open, probably with people you love, in pleasant surroundings, everything is set for a very happy outcome.

And you can do this again and again and again. Spend money on an expensive bottle of wine, open it up, drink it, enjoy it, repeat. I’m not talking about collecting wine, here, that’s a different pathology. I’m just talking about drinking it. There’s really no downside, beyond for the money you’re spending — a single bottle of great wine, shared with a friend or two, isn’t even going to give you a hangover. You can convert money into happiness as often as you like: it never gets old.

This explains, I think, why rich people tend to be so fond of fine wine: it’s the most consistently reliable way that they can convert money into happiness. So if you have a bit of disposable income, get yourself down to your local wine shop. It’ll make you happy, I promise.

COMMENT

I love the comments from the misinformed people who think that quality is an objective measure of something like wine or vodka. Do they not see that thing WAY over there which is your point? Nope, even though you described it very clearly, they missed it. Too bad. I enjoyed the article.

Posted by tinyhands | Report as abusive

The decline of the Robert Parker empire

Felix Salmon
Dec 17, 2012 22:42 UTC

Since I’m on the subject of fallen emperors, it’s worth catching up with the latest Robert Parker news.

Decanter’s Adam Lechmere has seen an email to French wine blogger Vincent Pousson, which seems to confirm the rumors: Parker isn’t just giving up editorial control of The Wine Advocate, but also ‘command and control’ of the business as a whole. The new jefe is Soo Hoo Khoon Peng, a Singaporean wine importer who seems to have bought the franchise, Parker included, for $15 million. Of that, Parker got $10 million, with the rest going to the deal’s two brokers, who are reportedly “connected with Deutsche Bank and Goldman Sachs.”

The price here seems astonishingly low. If Parker has 50,000 subscribers paying $75 per year, that’s $3.75 million in annual print revenue alone; the company’s new revenues, from online advertising, “virtual tastings”, and a series of international wine education courses, will probably be bigger still. And the value of Parker’s brand is huge. I hope that at the very least he negotiated a seven-figure salary for himself to stay on judging the wines of Bordeaux and the Rhone — after all, without Parker, The Wine Advocate’s brand value evaporates very quickly.

That said, Parker’s influence has already been evaporating for some time, as Eric Asimov points out; Talia Baiocchi, for one, reckons that he’s had very little influence on her at all. One reason: Parker helped make first-growth Bordeaux so expensive that it’s nowadays basically impossible to afford what Brits of my father’s or grandfather’s generation would consider a basic wine education. When Parker can at a stroke raise the value of a vineyard’s annual production by millions of euros, it’s easy to see how the new owners see a huge amount of profit potential in his name.

Among Parker’s acolytes, however, his influence is still incredibly strong. Jeff Leve was shocked that I might say that an 85-point wine is sometimes better than a 95-point wine, and in the comments even goes so far as to suggest that it’s possible to do the same thing for pop music. (“Perhaps “Sgt Pepper” is the pinnacle and deserves 100 Pts, while “What goes on” bores me and is at best an average cut and might earn 80 Pts.”)

I was also recently pointed to a column by Jason Wilson, who teaches a wine class for students. The students, displaying an admirable quantity of common sense, pushed back when Wilson tried to describe wines by talking about “the sensation of licking stones”, or cow manure, or petrol. “It wasn’t the wines that my students found gross,” he writes: “it was the descriptions — the standard wine-world terms — that were turning them off.”

And yet Wilson was seemingly incapable of stopping himself from using such ridiculous terms to describe wine. He’d become so deeply Parkerized that the only way he could talk about wine was by using elaborate and silly olfactory metaphors — the kind of language that, pre-Parker, no one would ever dare attempt. (The Brits had their own silly wine language, too — as wonderfully recounted by Malcom McLaren — but it wasn’t as silly, even if it was just as intimidating.)

Parker’s influence will live on, then, whatever happens to TWA, and even if we’re seeing a diminishing marginal effect of his new ratings on wine values. Every time you pick up a label which starts talking about raspberries and vanilla, every time you see a wine graded on a linear point scale, and nearly every time you encounter any kind of blind tasting: behind it all is the influence of Parker. I sincerely hope that the whole edifice will crumble, but that’s going to take decades. But at least now we’re headed in the right direction.

COMMENT

New owner of Wine Advocate owns fine wine company in Singapore…potentail conflict of interest…

Posted by DrGourmet | Report as abusive

The Robert Parker bombshell

Felix Salmon
Dec 10, 2012 06:15 UTC

This is a bit odd. Last month, Lettie Teague had lunch with Robert Parker, and asked the questions on everybody’s mind: “Was Parker planning to retire? Did he have a replacement? Was he selling the Wine Advocate?”

Parker told Teague that he had no intention of retiring, nor of selling:

Parker said he has entertained offers to buy his newsletter over the years, including three from “hedge-fund guys,” but so far he has refused them all, in part because he would not relinquish editorial control of the newsletter.

Today, however, Teague is back, this time in the pages of the WSJ. And it seems very much that Parker has sold the Wine Advocate after all — to a shadowy group of investors in Singapore, no less. What’s more, he’s relinquishing that editorial control as well: he’s “turning over editorial oversight to his Singapore-based correspondent, Lisa Perrotti-Brown”.

Nothing about this deal makes any sense, on its face. The new owners are going to start accepting advertising — something which makes sense financially, since those 50,000 subscribers tend to be extremely well-heeled. But at the same time, they’re scrapping the print version of the newsletter,* despite the fact that (a) it’s profitable, and (b) they would surely be able to charge much higher rates for print ads than for online ads.

The new owners also have no experience either in wine or in publishing: Parker says that they’re “young visionaries” in the financial-services and IT fields, whatever that’s supposed to mean. Their vision is, to say the least, a big jump from TWA’s current incarnation:

More than four out of five Wine Advocate subscribers are American, but the new investors are planning an abbreviated Southeast Asian edition aimed at corporate clients like airlines and luxury hotels.

The newsletter also will put more emphasis Asia’s nascent wine industry. Ms. Perrotti-Brown plans to hire a new correspondent likely to be based in China.

“The correspondent will cover wines produced in China, Thailand and other Asian countries,” she said, and will help to produce tasting events, another focus of the new Wine Advocate.

Corporate clients? Chinese wine? Tasting events? These are huge new steps for TWA — and, contra Teague, much bigger steps than the decision to accept advertising. I don’t think there’s any good way of rating Chinese wines: either the scores will be low, thereby annoying the very customers they’re supposed to appeal to, or they will be high, and ruin TWA’s reputation for impartiality among its 40,000 US subscribers. There might come a day when China produces world-class wines, but that day has not yet come, and no one knows that better than Robert Parker and Lisa Perrotti-Brown.

As for tasting events, you can’t run those without having a business relationship with winemakers. Perrotti-Brown tells Teague that “no winery or wine-related business will be allowed to advertise,” but there’s not really any need for them to advertise, if they can simply underwrite a grand wine-tasting event instead. Having your wines featured at a Wine Advocate tasting event is the best marketing any winery can hope for, and they will be very willing to pay top dollar for the privilege.

Parker himself will retain the title of Chairman, and will continue to review his beloved Bordeaux and Rhone wines, but none of this seems like the action of a man who wants to preserve his legacy. Robert Parker is the Wine Advocate — and now he’s handing his baby over to a group of people he won’t even name, but who will probably eviscerate everything he stands for? He told Teague he was presented with “a plan he couldn’t refuse”, but I can’t imagine what that might be. He’s never been a profit-maximizer, but he’s managed to become rich all the same; it’s hard to see how a large check alone would have sealed the deal.

I suspect that in coming days and weeks there will be further shoes to drop; quite possibly, this deal won’t end up closing at all. But if it does, and if TWA does indeed move to Singapore, then that will only serve to accelerate the backlash against Parker’s palate which has been gathering steam for some time now. What’s bad for TWA could be very healthy for the wine industry as a whole: if it is no longer particularly beholden to one man, it can branch out into making more heterogeneous and individualistic wines. The idea that a 95-point wine is always better than an 85-point wine is an idea which deserves to die. And this deal, with luck, might just hasten its demise.

Update: Parker now tweets that he’s not scrapping the print edition after all. And if you were missing a hint of squid in your wine, here’s Adam Lechmere:

Decanter.com understands that agents acting for the critic have been approaching high-net-worth individuals in Asia since the early part of the year.
All those contacted have denied any involvement and refused to speak on record, although one told Decanter.com he was approached by ‘current and former employees of Goldman Sachs’ with a business prospectus for ‘commercialisation of the Parker brand.’

COMMENT

I believed that not only significant structural changes were to take place at TWA following the move, but also the entire evolution of the F&B scene. Each transformation could help Singapore achieve her vision of becoming the region’s gourmet capital and a world-recognized destination for dining, nightlife and entertainment. It’s just like “Gangnam Style” in the wine world, with the newly appointed Singapore-based editor-in-chief, would boost “brand Singapore”.

Recently, the two new integrated resorts are changing the tourism landscape with Michelin-starred restaurants, celebrity chefs and world-class clubs. Certainly, it would be my dream to make Singapore into a wine-hub that Asia cannot do without!
Cheers
George Wong, Wine MBA
Oenologue & Consultant
Singapore

Posted by GeorgeWong | Report as abusive

America’s minuscule high-end wine market

Felix Salmon
Sep 4, 2012 22:53 UTC

Dan Levy at Bloomberg has a big story today under the headline “America Drinking Top-End Wine Fuels Napa Deals”. It’s mostly about land and winery transactions, but this jumped out at me:

High-end California wine accounts for more than two-thirds of U.S. bottle sales above $20, according to data compiled by Nielsen Holdings NV… Purchases of California premium wine totaled $410 million in the 12 months through July 21, up 14 percent year-over-year, store-scan data from New York-based Nielsen show.

To which my reaction was simple: “That’s it?”

$410 million a year might be some kind of wonderful record high, but it’s still a minuscule figure on an absolute basis: it works out at about $3.50 per US household per year. I don’t know what the average bottle of wine costing more than $20 actually costs — let’s say it’s $25. Then the average US household buys one such bottle of wine every 7 years. Once you account for my wino friends, the median US household buys wine costing more than $20 a bottle exactly never.

Let’s look at this another way. Grey Goose imports about 3.5 million nine-liter cases of vodka into the US every year. Those cases are sold by suppliers for about $200 a pop; the suppliers sell to wholesalers, and the wholesalers sell to retailers and to clubs, bars, and restaurants. But a good rule of thumb is that the retail price is three times the supplier revenues: that’s $600 a case, or $50 a bottle. Which is about right for Grey Goose.

Now 3.5 million cases of vodka, at $600 per case, works out at $2.1 billion of vodka sold annually — and that’s just Grey Goose. Overall, the US vodka market had supplier revenues of $4.8 billion in 2010, according to the Distilled Spirits Council of the United States, which means that we as a country get through about $14.5 billion of vodka per year. If you take only the “high end premium” and “super premium” end of that, you’re still talking $7.4 billion per year.

Meanwhile, the entire national wine market, for wine costing more than $20 per bottle, is $410 million for Californian wines and about $600 million in total.

According to the NYT’s Eric Asimov, $20 is the “sweet spot” for wine — and although he concedes that $20 “is not cheap”, he also says that you won’t find a decent California cabernet for that price. Yet the fact is that most of the over-$20 wine we drink does come from California, and frankly a huge amount of it isn’t very good. (Go on a wine-tasting tour of Napa one day: the vineyards there will all pour you $25 wine all day at a quality worthy of wine costing maybe $5 or $7.)

All of which is to say that if you drink wine costing more than $20 a bottle remotely regularly — every couple of months, say — then you’re an extreme outlier in this country. And if it’s French, or Italian, or even from Washington — if it comes from anywhere at all other than California — then you’re truly a member of the abstruse-and-recondite set.

Because the entire high-end wine market in this country — the amount of money you get if you add up every bottle of wine sold in America for more than $20 over the course of a whole year — is less than one third of the size of the market in Grey Goose vodka alone. Which doesn’t taste of anything at all.

So the next time you walk into a wine store and feel intimidated by the number of bottles costing $40 or $70 or more, don’t be. If you’re merely spending a Jackson on a bottle of wine, you’re part of a tiny elite minority. Everybody else, if they’re not drinking beer, is drinking vodka — a drink designed to be as bland and tasteless as possible.

COMMENT

First of all, those of us who really understand this portion of the wine market knows that $20+ price category is disappearing from scan data…almost all of this is going DtC…over the 52 week period thatWine & Vines and ShipComplaint reported mid 2012 DtC sales were at $1.4 Billion…yes…that is with “b” amounting to 8.6% of all domestic wine sales.

Posted by MarkTNorman | Report as abusive

The avoid-brands wine strategy

Felix Salmon
Mar 26, 2012 06:04 UTC

The best bit about wine is drinking it; the worst bit about wine is buying it. You walk into a wine store, or a supermarket, and you see hundreds of different bottles, most of which you’ve never heard of. And you’re then expected to somehow pick exactly the right one, in the knowledge that if you get it wrong, both your meal and your wallet are likely to suffer the consequences. So it’s hardly surprising that most people go with what they know, and end up buying something adorned with a well-known brand.

My taste in wine has evolved enormously since I started buying it regularly when I was at university. What I like now I wouldn’t have liked then, and what I liked then I wouldn’t like now. But one thing has stayed constant: I’ve always had a gut-level prejudice against big wine brands. Once I see a wine advertised anywhere, I’m pretty much guaranteed never to buy it. The only brands I ever respect or seek out are importers — especially when it comes to French wine from outside Bordeaux, you can save yourself a lot of trouble by getting a feel for which importers are generally trustworthy and reliable when it comes to picking great wines.

My intuition about such things was always that if I bought a wine with a nationally-known brand, I was essentially paying for the branding campaign at least as much as I was paying for the wine. On top of that, I felt that a wine made in such volume could never really be the unique and wonderful living thing that I’m always looking for in a wine: that its character would have to be ironed out in the service of homogeneity and predictability.

Besides, the whole world of wine-branding is just incredibly distasteful.

And so, when I found myself having to buy a bottle of wine in a supermarket in Chesterfield, Missouri, I spent a long time walking up and down the vast selection of California wines, and much tinier selection of everything else, looking for anything which didn’t come from some huge and faceless international conglomerate. Let’s just say that the store’s (or the chain’s) wine buyer wasn’t buying with me in mind. Just like big brands like to be able to deal with as few media outlets as possible when they buy media for their advertising campaigns, so do supermarkets (with a few notable exceptions) like to deal with as few vendors as possible when they buy wine for their stores. And given the number of Americans who buy their wine wholly or solely in supermarkets, the result is that a large chunk of the country essentially lives in a world where wine is branded juice from some huge company.

At the same time, however, most of us do still have a choice as to what we buy. So long as we’re not in a supermarket or chain restaurant, there’s bound to be a little bit of character in the choices available to us. And going off-piste, as it were, is fun, even as it does carry obvious risks. As a basic rule of thumb, simply avoiding big brands works surprisingly well.

Importantly, this is true at every price point, not just at the supermarket level. A few days ago, the NYT ran an article headlined “Bulgari Family Tries to Become a Name in Wine”:

A new wine venture by two members of the Bulgari watch and jewelry dynasty, Paolo and Giovanni Bulgari, will release its first three wines this weekend…

“My father taught me how to handle stones, to hold them in my hands without looking at them to get a sense of their temperature, and then to observe how light plays off them,” he said. Wine also called for an intuitive perspective: “how it reacts to light, how the color moves in a glass.”

And as if that wasn’t gruesome enough, today brings even more egregiousness from Vinitaly:

“As soon as you say ‘Prada and brunello’, ‘Ferrari or Maserati and brunello’, it makes a very vital association, especially for consumers around the world that might not know the differences in the wine,” said Cristina Mariani-May, co-CEO of Banfi, makers of the full-body brunello red.

Happy to promote Italy’s image as a source of all types of quality goods, members of Italy’s luxury industry body Altagamma have agreed to accompany their shows and other high-profile events with Italian wines.

Banfi do indeed make brunello; they also make Riunite.

The fact is that high-end branded wine, from Tignanello to Opus One to Chateau Lafite, is generally about as good value for money as anything from Prada or Bulgari. If you’re the kind of person who would rather spend half as much money on a perfectly-fitting bespoke suit from a no-name tailor than buy something off the peg from Prada, you’re definitely the kind of person who should avoid expensive branded wines.

But, there are exceptions to this rule, or at least there’s one big exception: Iberia. In Spain, at least in my experience, I often find that the bigger the company and the brand, the more delicious and characterful the wine — and the cheaper it is, to boot. If you want a great Rioja, for instance, you can never go wrong with one of the grandest brands of them all, Lopez de Heredia, which often costs much less than Parkerized cult wines from Spanish garagistes. Similarly, there’s no good reason not to go with the big names in sherry, or port, or madeira. The big old brands know what they’re doing, know how to take their time, and are continuing to do what they’ve always done, rather than trying to follow international taste. (The same is true of Chateau Musar, in Lebanon.)

As a general rule, however, mass-produced wine will always taste mass-produced, and if you’re looking at an expensive branded wine, you’ll nearly always find something better at the same price from a lesser-known vigneron. Which doesn’t, of course, alter the fact that the branded wine will still probably be the safer choice.

COMMENT

I’d like to point out a mistake by the author. Banfi does not make Riunite, never had, never will. Banfi before they were a producer was a wine importer and they still are. Riunite is one of the many brands they import and or sell in the USA along with Travento, Walnut Crest, Bola, Choncha y toro and now Kenwood vinyards from the US. Fiat is closer to a Ferrari then Banfi is to Riunite.

Posted by JCM1975 | Report as abusive

Charts of the day, wine-heat edition

Felix Salmon
Feb 8, 2012 18:48 UTC

Last year, I blogged a paper about the way in which wineries lie about the alcohol content of their wines. Now, the same authors have a new paper out, trying to get to the bottom of exactly why wine is getting hotter.

One thing I like about this paper is that it doesn’t look directly at wine-alcohol levels, but moves back a step to the sugar content of the grapes going into the wine. If you turn high-sugar grapes into wine, one of two things has to happen: either you get sweet wine, or you get high-alcohol wine. Since taste in wine is getting dryer rather than sweeter over time, higher-sugar grapes mean hotter wine. And those grapes are definitely getting sweeter, especially when it comes to white wine. Here are the charts for California:

brix.tiff

Is there a global-warming thing going on here? After all, warmer temperatures mean sweeter fruit. But, no. Here are the temperatures of California’s wine-growing regions for the years since 1990 that sweetness has been rising quite dramatically:

gr.tiff

But we kinda knew this already. The most interesting thing in the paper, is not that hotter wine is unrelated to global warming. Instead, it’s that hotter wine is quite strongly related to price:

Sugar content of grapes at harvest was relatively high for red varieties and premium varieties, and for grapes from ultra-premium and premium regions. The same categories tended to show evidence of faster growth rates in sugar content as well… In all of the models, the analysis shows a higher propensity for growth in sugar content for premium varieties, compared with non-premium varieties… This feature and the patterns of the level of sugar content among regions and varieties could be consistent with a “Parker effect” where higher sugar content is an unintended consequence of wineries responding to market demand and seeking riper flavored, more-intense wines through longer hang times…

We found that the region with the lowest price of wine grapes (under $500 per ton) had significantly lower average degrees Brix at crush compared with all other regions… It may be profitable, in producing lower-priced wines, to opt for a higher yield of wine per ton of grapes in exchange for lower Brix.

Simplifying, you can think of vineyards in one of two ways. Either they’re a source of grapes which get sold by the ton, in which case you want to maximize the yield. That, in turn, means lower sugar content. Alternatively, they can be a source of carefully-cultivated grapes which get turned into premium wine selling for $20 per bottle and up. In that case, the quality of the grapes starts trumping their quantity. And it’s pretty clear that what winemakers want, if they’re going to sell expensive wine, is grapes with a lot of sugar. That’s their expressed preference, anyway.

All of this is consistent with what I wrote last year — that wine drinkers say that they want lower-alcohol wines, and will even go so far as to prefer to buy wines with lower alcohol numbers on the label. But when they actually taste the stuff, in general the higher the alcohol the happier they are. Especially when the wine is expensive.

COMMENT

I agree with the above comment. The alcohol level in mass market wines in general is going up without any additional benefits. With the best of Bordeaux aiming at 12% traditionally with wines delivering complexity, character and finish at 12% why do we need 14-15% ? this is fortified wine level

Posted by WinedayUk | Report as abusive

August break

Felix Salmon
Aug 4, 2011 09:44 UTC

I’m spending this week relaxing in Sweden, taking advantage of the fact that the debt ceiling got raised to drop off the grid for a bit. So here are some things I’ve run across, in no particular order; they’re all worthy of being blogged in more detail.

First, that debt-ceiling bill. Count me in with Larry Summers on this one — it’s the worst of both worlds. Not only are its austerity measures bad for the economy, but they also fail to implement a credible long-term fiscal straitjacket. It’s almost impossible to imagine something messier than this:

Remarkably for a matter so consequential the agreement that the Supercommittee will seek to reduce the deficit by $1.5 trillion comes without any agreement on what the baseline is from which the $1.5 trillion is to be subtracted. Is the $1.5 trillion from a baseline that includes or excludes the Bush tax cuts? Includes or excludes tax extenders and the annual AMT fix? These and other similar questions are unresolved at this moment.

Before the debt-ceiling debacle, we lived in a gruesome a fiscal world characterized by what you might call a permanent temporary tax system. Things like the AMT and the Bush Tax cuts were all implemented with built-in expiry dates — something almost designed to minimize the predictability of the future tax regime. It’s hard to make investments when you don’t know what future taxes are going to be, and the US has the least predictable future taxes in the world.

Now, we’ve made matters substantially worse by adding to that mix an extremely powerful and unpredictable dose of legislative mischief which is certain to come into play every time the debt ceiling is reached. No good can come of this — and no honest credit-rating agency can really have the US on triple-A when this mechanism is going to come up so frequently as a possible means by which the debt will be defaulted on.

What else?

Jeffrey Ely finds a provocative passage by Robert Parker, suggesting that the high prices of 2009 and 2010 Bordeaux might be related to market manipulation by the French. Yes, there’s strong demand from China — but no one really knows how much demand there is, and the chateaux are being extremely quiet about how much of their production they’ve actually sold at the current stratospheric levels. Says Parker:

If much of the 2009s, as well as the 2010s, are not sold through to wine consumers, who are the true marketplace since they actually drink these wines, and then tend to replenish their stock, buttressing the marketplace, then this is a bubble. Despite huge warehouses filled with reserve stocks of great vintages, prices could be set for a major adjustment, just as we have seen in the United States with the real estate market.

Of course, the thing about wine futures is that you can go long, by buying them, but there’s no way of going short. So don’t expect this bubble to burst any time soon, even if it does exist.

Then there’s Andrew Ross Sorkin, who found that one of the chief legal architects of the notorious Abacus deal is now co-chief counsel at the SEC. TED sees no problem here, but I do — while it’s entirely possible that Adam Glass is now on the side of the angels and doing his utmost to close the kind of loopholes that he used to take advantage of, he’s not saying anything and neither is the SEC, which makes it seem that they’ve got something to hide. More transparency, please! If poachers are going to become gamekeepers, they should come out into the sunlight and publicly renounce what they used to do.

I also like this short paper arguing that there comes a point at which more lending and a bigger financial sector is bad for growth, contra the arguments of bankers who always say that restrictions on their activities will hurt the broader the economy.

And Ken Rogoff is fed up with the “Great Recession” meme, saying it obscures the crucial point that we just experienced a financial crisis, and makes it seem that instead it was a large and natural cyclical phenomenon.

Finally, it’s worth revisiting this 2008 column from Charlie Gasparino. In it, he said that stock prices (the Dow was at 8,176, the S&P 500 was at 845) were depressed because markets were rightly convinced Barack Obama was going to raise taxes.

Since then, of course, there have been no tax hikes, but stocks are up about 50%, meaning anybody who bought into Gasparino’s pessimism has lost a lot of money.

I’m only saying this because Gasparino has taken to Twitter to declare that the column was right, that it somehow predicted the 1.3% GDP figure for the second quarter of 2011, and that I was a moron for criticizing the column at the time. It’s also worth noting that since the column was published, Gasparino has moved from CNBC to Fox. That’s all. I report, you decide.

COMMENT

I’m not surprised that the price of high-end Bordeaux is manipulated: it’s a textbook example of a geographically restricted, cartelized luxury market. I’m sure that Bordeaux producers appreciate the growth of wealth inequality, and are acting accordingly. It may be just the scale of the price manipulation that is different now.

The only infallible law in the global economy of luxury consumption is that the higher the price of the product, the more scope is offered for reasonably decent Chinese knockoffs.

Posted by jbernar | Report as abusive

Why is wine getting hotter?

Felix Salmon
Jun 21, 2011 23:52 UTC

I’ve long suspected that this is true, but now there’s a formal academic paper proving it:

Winemakers perceive that consumers demand wine with a stated alcohol content that is different from the actual alcohol content, and winemakers are willing to err in the direction of providing consumers with what they want. What remains to be resolved is why consumers choose to pay winemakers to lie to them.

Essentially, people like to think of themselves as sophisticates who go to art-house movies, even if in reality they’re much more likely to sit slack-jawed in front of some reality TV show. In the case of wine, they like the idea of buying something grown-up, with a relatively modest amount of alcohol; when it comes to drinking what’s inside, however, the more heat the better. So wine labels consistently show lower alcohol content than what’s inside.

This is especially true in the new world. Out of 43,908 tested new world wines, 24,561 under-reported their alcohol content, with the reds averaging 14.1% alcohol while claiming just 13.6%, and the whites averaging 13.5% while claiming to be 13.1%.

Interestingly, the smaller number of wines which either over-reported their alcohol content or got it exactly right all reported pretty much the same levels of alcohol: 13.1% or 13.2% for whites, and 13.6% or 13.7% for reds. On average, it seems, wine will just say that it’s 13% if it’s white and 13.5% if it’s red, but in reality it’s likely to be higher than that.

So wine is hot, and getting hotter. Is this a global warming phenomenon? No:

The coefficient on the heat index is approximately 0.05, suggesting that a one-degree Fahrenheit increase in the average growing season temperature everywhere in the world would cause the average alcohol content of wine to increase by 0.05 percentage points; it would take a whopping 20 degree Fahrenheit increase in the average temperature in the growing season to account for a 1 percentage point increase in the average alcohol content of wine.

Instead, it’s a style thing:

We can expect Old World (European) wines to have about 0.63 percentage points less alcohol than wine produced in the New World (the Americas, Australia, New Zealand, and South Africa)… compared with France, three countries produce somewhat lower-alcohol wine (Canada, New Zealand, and Portugal) while the rest produce higher-alcohol wine, with the effects being most pronounced for Australia (0.55 percentage points higher on average) and the United States (0.85 percentage points higher on average).

In Australia, red wine has increased in alcohol content by a whopping 1.4 percentage points over the past 18 years: it’s pretty much an entirely different drink, now, to what it was as recently as the mid-90s.

And yes, the wineries know exactly what they’re doing.

It is relatively inexpensive to measure the alcohol content of wine reasonably precisely (though some of the devices used may entail larger measurement errors), and it is necessary to do so to be informed enough to comply with tax regulations, at least in the United States. It is also an important element of quality control in winemaking. Consequently, we speculate that commercial wineries for the most part have relatively precise knowledge of the alcohol content of the wines they produce and that the substantial average errors that we observe are not made unconsciously. This speculation is based in part on informal discussions with some winemakers who have admitted that they deliberately chose to understate the alcohol content on a wine label, within the range of error permitted by the law, because they believed that it would be advantageous for marketing the wine to do so. In one instance, we were told specifically that the stated alcohol content was much closer to what consumers would expect to find in a high quality wine of the type in question.

If you want to explore the world of high-quality, low-alcohol wines, then, don’t always trust what you see on the label. And doing so is going to be much harder than it used to be. In 1992, white Bordeaux wines averaged 11.7% alcohol; since then they’ve been getting hotter at a rate of 0.35% per year, putting them at 12.5% today. And in the new world the numbers are much higher: Chilean reds, for instance, averaged 12.3% alcohol in 1992, and have been growing in alcohol at a rate of 0.82% per year since then. That means they’re now at 14.2% and rising.

How much further can this trend go? We’re beginning to see a backlash to high-alcohol wines, but I fear that the backlash is simply manifesting itself in lower numbers on the label, rather than lower alcohol levels in the bottle. Winemakers are convinced they know what consumers want — and I fear they’re entirely correct. And consumers, clearly, love to be lied to. So this is likely to continue for a while yet.

COMMENT

You should learn a little more about wine making and what ever your next subject of choice is. Wine professionals are all laughing at you.

Posted by Goddu | Report as abusive
  •