Walla Walla Comes of Age

Sue and I recently returned from 10 days in the Walla Walla AVA — half spent attending events sponsored by the Walla Walla Wine Alliance celebrating the AVA’s 30th birthday through a celebration of  its wines and half with the American Association of Wine Economists who met at Whitman College.

Coming of Age in Washington

As we drove back over the Cascades towards home base in Tacoma, we talked about key takeaway messages and at the top of both of our lists was the region’s coming of age. We’ve visited Walla Walla many times over the years and watched it grow and change, but without ever having a sense that it had achieved its potential.

Maybe it is because we had more time on this visit or maybe it is because we had so much access and guidance (from the Wine Alliance as well as from our growing list of winemaker friends there), but somehow this time it all came together and I will use the next few columns to tell you how and why we came to this conclusion and what it might mean.

International Recognition

A number of factors contributed to our view but as fortune would have it a single event sort of summed up the moment. We were up on a hilltop on the Oregon side of the AVA for a festive dinner at the Glass House at the Caderetta vineyard and we tasted a number of Bordeaux blend wines with the meal. (Scroll down to view the wines and menu for that dinner.) Marty Clubb of the Walla Walla pioneer winery L’Ecole No. 41 was there and we tasted his 2011 Ferguson Vineyard blend. I think we could actually see the recently developed Ferguson Vineyard over the hill from our vantage point.

The wine was great, with a real sense of place (more to come about this in future posts) and Marty told us that he was about to fly off to London because of this wine. The L’Ecole team was so happy with the Ferguson that they had entered it in the Decanter World Wine Awards and he had been summoned to London for the awards dinner.

The invitation meant that the wine had won one of the bigger prizes — not just a bronze, silver or gold. Maybe a regional trophy (best U.S. Bordeaux variety wine?) or maybe even an International Trophy (best of all the wine in this category from all over the world!). No way to tell which it was, but he was willing to fly to London to find out. How exciting!

lecole A couple of days later I was busy hitting the F5 reload key on my laptop, impatient to see the Decanter results appear on my screen. And finally at 1:01 pm there they were. L’Ecole won the International Trophy for Best Bordeaux Variety Red Wine over £15 -- the top award in what must be one of the most competitive wine categories.

Wow — I couldn’t stop smiling when I learned that. Happy for Marty and his team. And happy for Walla Walla and Washington — great recognition for their wines. And a sign of Walla Walla’s coming of age, don’t you think?

Art versus Science?

I don’t know if I was lucky or not, but I got the news when I was surrounded by my academic wine economist colleagues, who are intensely skeptical of wine competitions and rankings. I think it is possible they have collectively devoted far too much of their very considerable intellectual firepower to proving what I think is obvious — that judging wines, even using expert tasters and careful protocols, is more subjective art than objective science.

Winning a Decanter award or any other obviously doesn’t prove that one particular wine is objectively “better” (whatever that  means) than any other. But, I would argue, it is hard to deny that the excellence of the L’Ecole Ferguson stood out to the initial American tasting panel, which is how it entered in the International Trophy competition. And it obviously stood out there, too, when tasted with similar wines from other parts of the world. Not rocket science, I agree, but still worth celebrating.

Frenchtown Schoolhouse Roots

Best in the world? That’s a matter of opinion. But a sign that Walla Walla has come of age? Absolutely yes! And while LEcole is not the only Walla Walla winery set to take a place on the national and global stage, it is a very good example for us to study.  The Ferguson vineyard itself, for example, shows L’Ecole’s determination to expand production without diluting quality and, at over 40,000 cases, L’Ecole  is now large for a Washington producer (although everyone is small compared with Chateau Ste Michelle and its sister wineries, which together produce well more than half of all the wine in the state).

L’Ecole’s recently re-designed label also suggests a thoughtful approach to moving into the national spotlight.  The old label was a playful rendering of the historic schoolhouse that serves as the winery tasting room today in the tiny town of Lowden, which was known in days past as Frenchtown because of the French settlers there. The new label keeps the Frenchtown schoolhouse image, but updates it and presents the wine in an elegant way that communicates quality to a broader audience while respecting the heritage of the winery and the region.

Is the L’Ecole Ferguson’s award the whole “coming of age” story? Far from it — I’m just getting started. Stay tuned.

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Before I go: Here’s a brief video that Marty Clubb made before his London flight. I include it here because it anticipates my next column, but also because it gives you a sense of our experience talking with Marty on that high ridge overlooking the Ferguson vineyard last month. Enjoy!

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Thanks to everyone we met in Walla Walla for their help and hospitality. Special thanks guide extraordinare Sharon Ferraro and to Duane Wollmuth and Heather Bradshaw of the Walla Walla Wine Alliance. Here’s the menu from the dinner at the Cadaretta glass house. Enjoy!

menu

The Mother of All Wine Competitions

Decanter, the self-proclaimed “World’s Best Wine Magazine,” organizes the mother of all wine competitions each year. The results of the 2011 judging are out — you can read them here.

I think that the Decanter World Wine Awards is the largest and most comprehensive wine competition in the world. The press release proclaims that “This year a staggering 12,252 wines from 44 countries were tasted in the DWWA, with 8,327 medals awarded.” Staggering is right! That’s a lot of wine from a lot of places and a lot of awards, too.

Can you imagine a wine competition with more than 8000 winners (two thirds of all wines entered)? What an incredible undertaking.

Suspicious Minds

Wine economists are suspicious of wine competitions. This is partly because economists are suspicious people in the first place, always looking for the dark dismal cloud whenever they spy a silver lining. But there are other reasons, too. De gustibus non est disputadum is the economists’ motto;  everyone is entitled to her own opinion on matters of taste. The idea that anyone, even experienced judges,  could objectively rank something as inherently subjective as wine runs against an economist’s nature, so you can imagine how suspicious we are about big competitions where thousands of wines are tasted and rated.

Richard Hodgson, a winemaker and retired statistics professor, was for many years a judge at the Mother of All American Wine Competitions, the California State Fair Commercial Wine Competition. California State Fair judges evaluated more than 3000 wines from 600 wineries in 2009. It’s a huge competition, although nothing compared to the Decanter contest. Hodgson’s analysis of raw data from wine judges suggests that they are only human after all and likely to suffer the sort of tasting inconsistencies that you would expect (if you are a suspicious-minded economist).

Hodgson and his colleague G.M. “Pooch” Pucilowski, California State Fair Wine Competition manager and chief wine judge discussed their findings at the 2010 meetings of the American Association of Wine Economists in Davis, California. Here’s a summary taken from the Wine Business Monthly report on the session.

Hodgson served as a judge in the California State Fair competition, and is now on the competition’s Wine Advisory Task Force working with Pucilowski to try to improve judging quality and consistency.

With Pucilowski’s assistance, Hodgson has been evaluating the competition judges since 2005 with trials that place three samples from the same wine bottle in one flight of judged wines to see if the judges ranked each sample consistently. Hodgson, who taught statistics at Humboldt State University, said, “Fewer than 10% of judges could judge the three wines and maintain consistency in their scores.” He added, “Some of the same wines received ratings that ranged from no award to gold.” When the study, “An Examination of Judge Reliabiity at a Major U.S. Wine Competition,” was published in the JWE, it received significant media attention and created a stir among wine judges and within the wine industry.

Pucilowski, who has managed the State Fair competition 25 years and often serves as a judge in other competitions, openly admits that his competition and all wine judging events are highly subjective. To his credit, he is constantly looking at ways to improve the competition and to help judges improve their abilities.

The Value of Wine Competitions

So it seems like there is good reason to be skeptical about wine competition results. Why, then,  do winemakers enter these competitions, given that they are the people who are most likely to know when their wines are scored too high or low compared with others? Ego may have something to do with it, but the obvious answer is that there is commercial value in a gold medal and the attention it receives, although I don’t know how much a medal is really worth — probably depends upon the circumstances. I noticed, for example, that the Achaval Ferrer Malbec that was the top wine last year in Decanter’s  big comparative tasting of Argentinean Malbec did not receive a medal at DWWA. I’ll bet that’s because it wasn’t entered.  Nothing to gain for this famous (and probably sold-out) wine.

Some wine producers probably enter competitions on the theory that they might win a medal in at least one of them, which gives them bragging rights. There has been a medal on the label of every bottle of Gallo’s value-priced Barefoot wines that I’ve ever seen, for example. A medal gives the cautious bargain-buyer some assurance of quality. Three non-vintage Barefoot wines — Merlot, Pinot Grigio and Moscato — earned “commended” medals in this year’s Decanter competition.

Even Two Buck Chuck wins gold medals, according to an article in the Napa Valley Register.

The Charles Shaw 2005 California chardonnay (yes, the $1.99 “Two Buck Chuck” made by Bronco Wine Company sold at Trader Joe’s)  was judged Best Chardonnay from California at California State Fair Commercial Wine Competition.

The chardonnay received 98 points, a double gold, with accolades of Best of California and Best of Class.


Decanter’s Value

As the video above shows, Decanter (like the California State Fair competition) goes to great lengths to overcome the inherently problematic elements of wine judging. This makes sense since there is so much at stake, both for the winemakers and for Decanter itself, which puts its reputation on the line. The Decanter awards probably have more commercial value than most because the Decanter name has credibility, especially in the U.K.  Decanter sells colorful foil medals to decorate winning bottles and the decorations sell the wine, the magazine and, well, the whole enterprise.

Winning a medal is good, but perhaps the biggest prize for many wineries is winning distribution. Making good wines is often easier than getting them into consumer hands, both here in the U.S. where our fragmented three-tier system creates many obstacles, and also in Great Britain, where the big supermarket chains dominate. Scrolling through the online winner lists I notice that a lot of the wines that are received medals in the competition  aren’t currently sold in the UK. Perhaps that’s the point of entering — to get distributor attention and break into the market.

Thick and Thin

Wine competitions are fun, but I admit that I don’t take the results too seriously since they depend on so many uncontrollable factors, including which particular wines are entered and which (like the Achaval Ferrer Malbec) are held out. I do, however, find the Decanter results worth careful study because  they have some important stories to tell.

The wine world is very broad but the world wine market surprisingly thin and uneven. Looking at the award list, it is interesting to see the large number of countries (44, including India, China and Thailand) that sent wine to London for the judging. As someone who writes about the globalization of wine, it is great to see evidence of the world wine web’s continuing expansion.

But the list of entries is also relatively thin and uneven in some respects, even with more than 12,000 entries, reflecting the fact that the British market is difficult to break into and so not everyone sees value in entering Decanter’s competition.

If you search for U.S. award winners, for example, I think you will be a bit puzzled by the long list of wineries that result, both in terms of the wines that appear and those that are missing, probably because they were not entered in the competition.  There are affordable wines from large scale producers (like Gallo’s Barefoot noted above) and some expensive boutique ones, too, but much of America’s vast middle kingdom of wine, which is in many ways the country’s great strength,  is under-represented. Not interested in the award because not represented in the British market, I suspect.

The U.S. Medal Count

This perhaps accounts for the odd showing of American wines on the Award league table. Only four U.S. wines earned top awards in 2011 (many more earned Silver, Bronze and Commended medals, however). The top four are:

Vina Robles Cabernet Sauvignon Huerhuero Estate 2008 (Paso Robles, San Louis Obispo County) earned a regional trophy (second only to an international trophy in Decanter’s galaxy of awards). It was the top U.S. wine. No U.S. wine earned an international trophy.

Three wines earned gold medals: Chateau Ste. Michelle Artist Series Meritage 2007 (Columbia Valley, Washington State), Justin Justification 2008 (Paso Robles. SLO) and the Silverado Vineyards Estate Cab 2008 (Napa Valley).

Are you surprised? I’ll bet this isn’t the list you were expecting. And it is interesting that none of the American wines made the highest level of awards.

Is four a good medal count? Not compared to Argentina, which received almost 20  gold medals and nine regional trophies. Why the big difference? Perhaps the judging panels applied different standards or maybe there just aren’t as many really good wines from the U.S. these days, but I think it has something to do with the intensity of Argentina’s export drive and the importance they attach to Decanter’s international reputation compared with producers from the United States.

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I’ve been asked to chair the session on wine competitions at the annual meetings of the American Association of Wine Economists later in the month. It will be interesting to see shat new insights the panelists will provide. Watch this space for a report.

Stag’s {Stags’} (Stags) Leap

The Stags Leap District Winegrowers Association has invited us to their  V2V (Vineyard to Vintner) program later this month and we are looking forward to the event.

I have a particular interest in the Stags Leap District. My study of wine economics can be directly traced to a conversation with one of this area’s leading winemakers in his cellar many years ago. I’m looking forward to this focused opportunity to learn more about the Stags Leap District today and see what has changed since my last visit.

Money, Wine and Lawyers

The first stage of my research to prepare for the Stags Leap trip took an unexpected turn that reminded me of Warren Zevon’s song “Lawyers, Guns and Money.” Most stories of famous wine regions are about places, faces and wine. They start with places (the terroir), then move to faces (of the famous winemakers who helped establish the region’s reputation) and end with the wines themselves.

Stags Leap AVA certainly has the terroir. The district, about six miles north of Napa on the Silverado Road, is marked by a 1200 foot vertical basalt palisade that is both landmark and a source of the particular soil and microclimate that helps define the district. The growing season is longer in Stags Leap than in other parts of Napa Valley, with bud break coming two weeks earlier. The grapes ripen more slowly during their longer time on the vine, which seems to have a positive effect.

Stags Leap has it famous wine faces, too. The most notable is Warren Winiasrski of Stag’s Leap Wine Cellars. A former lecturer in Greek at the University of Chicago School of Social Thought, he was one of the early movers in Stags Leap. His second vintage, a 1973 Cabernet Sauvignon, was declared the red wine winner at the famous 1976 “Judgment of Paris” wine tasting that Steven Spurrier organized to test California wines against the French originals.  (You know about this event if you’ve read George B. Taber’s excellent book on the subject or seen the fictionalized film version, Bottle Shock.)

(Incredibly, the winning wine was made with grapes from three year old vines — infants! Unfortunately, according to my sources here, the vineyard was not in the Stags Leap District but rather farther north in Napa Valley. It established the winery’s and the region’s reputations at once.)

There is even a hallmark Stags Leap style — “perfumey fruit” according to Bruce Cass, although not every wine is made in a way that highlights this.

Lawyers, Wine and Grammar

So where do the lawyers come in? Well, the first thing I did when I started this project was to grab my copy of James Halliday’s classic Wine Atlas of California. Halliday devotes seven pages to Stags Leap places and faces and its distinctive Cabernet Sauvignon wines. But he begins his report with the most controversial part of the AVA’s history: its name and the legal battle over the the valuable intellectual property rights (IPRs) associated with it.

The area takes its name from the legend of a prodigious jump that a stag (or maybe several stags) took on the palisade while fleeing hunters. Warren Winiarski naturally included this colorful reference in the name of his winery, Stag’s Leap Wine Cellars, when he founded the operation in 1972.

But so did Carl Dounami, who started founded Stags’ Leap Winery just up the road, also in 1972.  Two wineries, two strong personalities — they battled for years over the right to the Stag’s / Stags’ Leap name. More than an apostrophe separated them, of course, although any grammarian can tell you that where the apostrophe is placed makes all the difference.

The right to label your wine with some variation of Stag’s/Stags’ Leap had obvious economic advantages and both winemakers wanted clear title to the designation. The IPR battle reemerged and intensified when the AVA was formed and its geographic lines drawn.

Clashing economic interests made the process of choosing a name and drawing AVA lines particularly contentious, according to Halliday. The compromise name — Stags Leap (no apostrophe anywhere, purely plural, nowhere possessive) settled the legal squabble, leaving the real task clear: making great wine.

Challenges Old & New

The old wine economics story of Stags Leap was about intellectual property. The new one — the one I want to explore when I visit later this month — is how the winegrowers are dealing with the current economic challenge and will respond to the future ones.

The current challenge, of course, is the continuing economic crisis, which has hit some upscale producers especially hard.

The future challenges? The future is hard to predict, but I’d suggest globalization (with its many threats and opportunities) and climate change, which would seem to be an especially scary prospect for a micro-region like Stags Leap.  But maybe I’m missing an even bigger story? I guess I’ll have to go there and find out!

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Here’s Warren Zevon performing “Lawyers, Guns and Money.”  Feel free to sing along, adding wine and grammar references as necessary. Enjoy!

Wine Spectator 100: North and South

The lists of the Top 100 wines have started to appear — just in time for holiday buying. Wine Spectator released their Top 100 last week and now Wine Enthusiast has followed suit. Other lists are showing up, too, such as Paul Gregutt’s list of the 100 best Washington wines.  Fun and informative, these lists provide wine lovers with endless opportunities to discuss, debate and of course pull corks. Gotta love ‘em.

But you’ve gotta hate ‘em, too. Top 100 lists are a mixed blessing on the supply side of the market. Although they do promote wine and wine drinking generally, they necessarily privilege some wines over others and this is always problematic given the thousands and thousands of good wines that are produced each year. Why this wine and not that one? It’s an inevitable question that matters because wines on the list get more attention than the wines that don’t for some reason make the cut.

Dancing in the Streets

Top 100 lists slice up the market in many ways and this year my email inbox has revealed a North-South divide. Here in Washington State we are very happy with the 2009 Wine Spectator league table. Nine Washington wines made the list — more than any previous year — including the #1 spot, which went to the 2005 Columbia Crest Reserve Cabernet Sauvignon (95 points, $27 dollars). Two Oregon wines were also listed, so altogether this was a banner year for the Pacific Northwest.

While they are dancing in the streets in Woodinville and Walla Walla, the mood is more sober down south in Mendoza.  Two Argentinian wines appear on the WS100, which is welcome recognition of course, but that’s down from four last year. This is really Argentina’s year to shine in the U.S. wine market, with overall sales surging by more than 40% in dollar value according to Nielsen ScanTrack data. But only half as many WS100 wines! You can’t blame members of the Argentinian industry for kinda hoping to see their success more enthusiastically celebrated in the Top 100 lists. Hmmm. Maybe next year.

A Nobel Prize for Wine?

It seems to me that these top 100 wine lists are a little bit like the Nobel Peace Prize. Highly publicized awards like the Nobel and the Top 100  end up being both reflections of excellence and opportunities for the judges to send a message (political, economic or otherwise). There are many worthy nominees for each award so the final choice is always arbitrary — and the opportunity to send a message is irresistible. Or at least I wouldn’t be able to resist it.

There are obviously many factors that go into a Top 100 wine list and a wine’s objective quality  is just one of them. This is easy to see if you take numerical ratings seriously. The WS100 #1 wine this year earned a 95 score, for example, but the #2 wine received a higher score (96) and the #8 wine’s score was even higher (99). A 100-point wine was placed in the 21st spot last year. This is a numbers game but not just a numbers game.

Don’t Cry for Argentina

Wine Spectator uses four criteria in making their list: quality (the score), value (the price), availability (the volume) and excitement (the X-factor). The Columbia Crest wines (both the Reserve that won this year and their other wines) generally do very well on the first three factors year in and year out. The X-factor this year, I believe, was the recession and the desire to inspire some excitement among American buyers by giving them a #1 wine they could find and afford. That $27 Columbia Crest wine says that American wine drinkers can enjoy truly excellent wines at relatively affordable prices. Time to start pulling those corks! A good message to send in this economic climate.

What about Argentina? Well, I understand their situation. No problem with quality, volume or availability. But I think the market excitement is already there and doesn’t need any help from the wine lists at this point (as much as the Argentinian makers would love to have it). The U.S. industry (like President Obama?) could use some encouragement right now, which may be a good enough reason to draw attention to its outstanding, good value wines like the Columbia Crest Reserve.

Note: Congratulations to Juan Manuel Muñoz Oca, the 34-year old Argentinian winemaker who made the #1 Columbia Crest Washington State wine. What a great North-South connection!

Wine Economist Top 100

This is the Wine Economist‘s 100th post.  The idea of a Wine Economist Top 100 — my 100 best blog posts — is therefore kinda ridiculous.

But my wine enthusiast friends hungrily devour Top 50 and Top 100 wine lists even though the idea that it is possible to identify and rank the Top X [fill in the number] wines is kinda ridiculous, too, although in a different way. This provokes a digression on wine rankings and a brief report on what I’ve learned so far from writing this blog.

Supply and Demand

Ranking wines from 1 to 100 is certainly not an exact science; there are literally  thousands of wines on the market, so narrowing down the list to 100 and then actually ranking them from bottom to top (with no ties) is necessarily a problematic exercise when examined closely.

Individual tastes differ significantly and consumers are not uniformly able to detect even objective qualities in wine (much less make comparable subjective judgments), so it is hard to see why so many people take these ratings so very seriously. But they do.  It’s a matter of demand and supply.

Consumers demand wine rankings.  They use Top X lists as guides to shopping (or investing) and sometimes as a means to establish status or credibility with other wine enthusiasts.  This makes top wine lists a really useful tool for wine merchants and distributors, who supply what consumers demand (and sometimes try to help the demand along a little, too).

Wine critics must feel some pressure to supply what buyers and merchants want.   The Top X lists get so much attention that any critic who fails to issue a ranking must be a little bit concerned about the effect of this action in the crowded wine opinion marketplace. If I ranked wines, which I don’t, I’d sure want to publish a Top X list of some sort if only to draw attention to my other work. Everyone has an interest in these lists, so it’s no wonder they are so popular.

Winner-Take-All

It is interesting to consider how Top X lists and the attention they receive  may have invisibly shaped the wine world. Cornell economist Robert H. Frank has written two books that are worth reading in this regard.  The Winner-Take-All Society (co-authored by Philip J. Cook, 1995) looks at what happens when market attention is focused on a few top-rated products.  The result, not surprisingly, is that everyone wants the best (or what is rated the best) and the nearly-as-good and really-quite-pleasant are left behind. Who wants to drink pretty good Chardonnay when you can get a 90+ bottle for the same price (even if you cannot really taste the difference yourself)?

The book’s subtitle tells you where the argument goes: “How more and more Americans compete for fewer and bigger prizes, encouraging economic waste, income inequality and an impoverished cultural life.” If you’ve seen Mondovino, you know what Frank and Cook are talking about.

Frank’s 1999 book Luxury Fever continues the argument, looking more deeply at the impact of a world where status, identity and satisfaction are linked to money and the purchase of top-rated products.  Frank talks about the high price that some consumers will pay for goods that are just a little bit better or harder to get.  He calls it the “charm premium.”  Unsurprisingly, he cites the “charm premium” that highly rated ultra-premium wines receive as an important example (pp. 29-30).

Elite winemakers can mine the charm premium effect by offering increasing expensive variations on their main product: regular bottling, reserve, single-vineyard and so on. Each increase in perceived quality (or decrease in general availability) produces a disproportionate increase in price.  Or at least that’s how it is supposed to work.

Some wine merchants and producers see the charm premium in a different light.  Wines that get 95+ points sell out immediately — they essentially don’t exist.  Ultra-premium wines that receive less than 90 points are hard to sell, because no one wants a merely very good wine when they can get an apparently excellent one.  (I understand that there is at least one wine store that automatically discounts any wine that is cursed with an otherwise unsellable 89-point rating.) That just leaves the 90-94 point wines and large charm premiums are sometimes paid for what must be impossibly small absolute quality differences within this range.

Wine buyers are a diverse group and so it is dangerous to generalize, but a lot of them search not just for good wine, but for the best wine (or the best wine value).  For better or worse, Top 100 lists have evolved to satisfy that demand and have therefore helped spread luxury fever and create the winner-take-all wine market segments we see today.

Lessons Learned

I’ve been writing this blog for about a year and a half and it has been a great experience — I’ve met a lot of thoughtful, interesting people and had some great wine conversations.  Because my posts are a bit longer than most — about 900 words on average — the total 100-post output is equivalent to a short book.  What have I learned from this process?  Well, I know a little more about what internet wine readers are looking for.

The most popular Wine Economist article in its 100-post history is my piece on Decanter magazine (The World’s Best Wine Magazine?), part of an occasional series on wine critics.  This post gets a lot of hits because the web is crawling with people searching for “best wine,” “best wine magazine” and “world’s best wine.”  The winner-take-all dynamic this represents shows up everywhere, even in my blog stats.

Almost as many readers are searching for the best wine value, which   explains why my posts on[Yellow Tail] Tales and Costco and Global Wine are the second and third most read articles on this blog.

Wine industry readers are worried about the future, as most of us are in this economic environment.  This helps explain why How will the Economic Crisis affect Wine? and Big Trouble Down Under: Crisis in Australian Wine receive so many hits.

Finally, many readers come here looking to unlock the mysteries of the wine buying experience.  What do the ratings mean?  Who are the most credible wine authorities?   This search leads them to posts onWine by the Numbers and Masters of Wine (and Economics), which get dozens of hits each week.

Thanks for reading The Wine Economist.  I’ll give an update on trends in reader interests and concerns in a few months, when I published the Wine Economist Top 150.

The Bottle Shock Effect

First Sideways, then Bridget Jones.  Now Bottle Shock.  How will the new film about the 1976 Paris tastings affect the wine market?

The Sideways Effect

Sideways (a 2004 film by Alexander Payne) is famous for helping to provoke a global Pinot Noir boom.  A soliloquy (see below) on the thoughtful, fragile glories of Pinot spoken by an equally thoughtful, fragile character named Miles was enough to get thousands of wine enthusiasts to set aside their usual glass of Merlot and pull the cork on a bottle of Pinot Noir.

“Um, it’s a hard grape to grow … it’s thin-skinned, temperamental, ripens early … it’s not a survivor like Cabernet, which can just grow anywhere and thrive even when it’s neglected. No, Pinot needs constant care and attention … it can only grow in these really specific, little, tucked- away corners of the world. And only the most patient and nurturing of growers can do it, really. Only somebody who really takes the time to understand Pinot’s potential can then coax it into its fullest expression.”

Movie messages matter when it comes to wine, I guess.  This conclusion was recently reinforced by the Bridget Jones effect, noted in Britain, where the film character’s tendency to drown her sorrows in glasses of Aussie Chardonnay caused the market for these wines to tank.  Apparently wine drinkers want to be thoughtful and fragile (Pinot) not pathetic (Chardonnay) and movies are where they pick up their cues. Who knew?

This makes me wonder how a new film called Bottle Shock will affect the wine market.  Bottle Shock is loosely based on Steven Spurrier’s famous 1976 Paris tasting of French and California wines, which George M. Taber wrote about so well in his book The Judgment of Paris. Napa Valley wines (Chateau Montelena Chardonnay and Stag’s Leap Cabernet Sauvignon) were top rated at the tasting and this surprising result is said to have put California wine on the map.  It is interesting to speculate if Bottle Shock will have as much influence as Sideways.

Bottle Schlock

I have my doubts.  Sideways was actually a pretty good movie (not that I am qualified to judge) whereas Bottle Shock strikes me as a less serious effort.  A fruit bomb of a movie, if you know what I mean, but not a lot of depth or complexity.  It is Merlot to Sideways‘ Pinot Noir.

Alan Rickman is funny in a sort of Terry-Thomas way as Spurrier, but the two main male characters seem to be slightly modified younger versions of the Sideways cast – one is an oversexed surfer dude with a good heart while the other is, well, fragile and thoughtful. Do you see the resemblance? The female love interest is obviously a younger version of the Sideways Maya character. Not much character development here and many of the plot elements are predictable and cartoonish.  This is not necessarily a barrier to commercial success, however.

The movie says that it is based upon a real story (the one that Taber covered for Time magazine), but it takes incredible liberties with the facts.  Most of the nouns (people, places, things) are wrong in some way although some of the numbers are correct (1976 – check – got the right year).

1976 Paris Tasting Scores

Chateau Montelena’s winemaker, Mike Grgich, is left out entirely even though he is a central figure in the true story. Warren Winiarski, the winemaker at Stag’s Leap, is nearly as invisible.  I feel sorry for others, like George Taber and Paul Draper (who made the Ridge Monte Bello), who appear only as crude caricatures. Artistic license, I suppose.

Perhaps the biggest error is the most basic: who won?  Although California wines came out on top in both red and white competitions, they also came dead last (see the actual rankings and judges’ scores at right).  In fact the bottom two Chardonnays were from California (Veedercrest and David Bruce) as were the four (out of 10) bottom Cabs (Heitz, Clos du Val, Mayacamas and Freemark Abbey).

If the Paris tasting was judged as a team competition, France versus California, rather than a rating of individual wines, I think you might reasonably conclude that the whites were a dead heat while the French won the battle for the reds, depending upon how you calculated the team scores.  As you can see here,  however, the variations among the judges was almost as  great as among the wines, so clear winners and losers are difficult to determine. Toss out a couple of judges or bring in some new ones and the rankings could change quite a bit.

The movie didn’t do anything to correct the record in this regard, but that would be asking too much of a simple film. Instead it concludes with the Spurrier character’s prediction (with 20/20 foresight) that soon we’d be drinking wines from all over the world, Australia, New Zealand, South America, South Africa and so on.  So globalization was the real winner of the competition.

The Bottle Shock Effect?

It is unclear as yet if there will be a Bottle Shock effect in the wine market of any kind, but if there is, what will it be?

One thing that we can predict is that the specific wines featured in the film will experience a boom.  This means Chateau Montelena more than any other wine because it is the focus of the film.  It is hard to say if this effect will extend to the other Paris tasting wines or to quality California wines more generally.  A local wine shop organized a tasting of recent releases of all the California wines in the 1976 competition in celebration of the film, so perhaps Bottle Shock will encourage events like this on various scales and have a broader effect.  Even so, the world of quality California wine extends far beyond the few wines that went to Paris thirty years ago.

Perhaps the best possible result would be if Bottle Shock somehow helped demystify wine, taking it out of the hands of the critics, who do so badly in the film story, and empowering ordinary people to trust their own tastes.  That would make Bottle Shock a really useful film.

But I doubt it will happen — it is hard to break away from our acquired dependency on wine critics.  We tasted the famous California wines “blind” at the Bottle Shock event I attended, for example, which naturally encourages you to think for yourself (a good thing, even if it isn’t my favorite way to taste wine).  But we were also given a set of “expert” tasting notes and challenged to smell and taste the same things the critics did, (as a way to identify wines none of us had previously tasted), which kind of defeats the purpose.

Mark Twain warned his readers to think for themselves and not to get “drunk on the smell of another man’s cork.”  It seems to me that’s the most important message of Bottle Shock.  I hope it gets through.

The Wine Spectator Award Hoax

It has been a couple of weeks now since the Wine Spectator hoax hit the news. Robin Goldstein (a.k.a. fearlesscritic.com) “blew the whistle” on Wine Spectator in a session that I happened to chair at the American Association of Wine Economists meetings in Portland. (Robin actually revealed his hoax as an unscheduled prelude to a completely different presentation at the meetings.)

The wine media quickly picked up the story and now it is everywhere. The story has generated a certain amount of embarrassment for Wine Spectator and given Robin and his new book a lot of  publicity.

What Robin did was to create a fake Italian restaurant (Osteria L’Intrepido di Milano) along with a made-up menu and wine list. Then, following directions on the Wine Spectator website, he applied for an Award of Excellence, which is the way that Wine Spectator recognizes and encourages restaurants with strong wine programs. Wine Spectator tried but was not able independently to confirm the facts about the fake restaurant; they took the application on trust as an honest entry and presented it with the appropriate award in the August 31, 2008 special restaurant issue (see page 181). You can read all about it on Robin’s website for the fake restaurant, http://osterialintrepido.wordpress.com/

Where is the Outrage?

How upset should we be to discover that Wine Spectator can be tricked into giving its wine award to a fake restaurant?  Michael Morrell, my chief cheap wine research assistant, was outraged.  Although price is the most important factor for him in choosing wine, he admits that he is also influenced by wine ratings. The award hoax undermines his trust in wine critics in general and the ratings and advice they produce.

I can understand Michael’s concern, so I consider this a very serious matter, but I don’t think the fact that Wine Spectator fell for a hoax is reason for us to doubt its integrity.  Here is my report.

The Wine Spectator Award of Excellence is given to restaurants to recognize their wine programs.  Although the actual criteria for receiving an award seem very modest to me (you can read them on page 97 of the special restaurant wine issue), it is a fact that about 30% of the new entries each year fail to meet them (the success rate is obviously higher for establishments who enter and receive an award year after year).

There are three levels of award.  3254 restaurants received the base level recommendation.  802 second tier “Best of Award” ratings were given to restaurants with more comprehensive wine lists. 73 top of the line “Grand Awards” were bestowed.  The people at Wine Spectator are proud of their award program and believe that it has encouraged restaurants to upgrade their wine programs.

Caution: Economics Content

I’m sure this is true, but I tend to view the matter in economic theory terms.  Consumers have lots of restaurant options and are uncertain which ones might have good wine choices. The restaurants know how good their wine selections are but have trouble effectively communicating this to potential customers. This is the classic economic problem of “asymmetric information” and the classic economic solution is “signaling” – where one side of a potential transaction finds a way to reveal key information to the other side to help seal the deal.

Restaurants that want to attract wine enthusiast customers need a way to “signal” them about their wine programs and the Award of Excellence is one way to do this.  Restaurants that think sending this signal is worth meeting the criteria and paying the entry fee do it and get on the list.  Others, even some that have strong  wine programs, don’t bother. They have other ways to send the message, I guess.

Wine Spectator fell for the Osteria L’Intrepido hoax because it relied upon the honesty of applicants, assuming, I suppose, that no one would go to the trouble and expense of applying without a conventional commercial purpose. This is another side of asymmetric information — Robin presumably knew his motives in setting the fake restaurant “sting” and Wine Spectator could only guess or assume.

In Vino Veritas

Truth is especially important in the wine world and, because of the problem of asymmetric information, it is particular difficult to know with confidence.  We depend upon the honesty of self-interested actors and the truthfulness of their signals. When we read wine ratings or see wine competition awards, for example, we assume that the judges and critics are tasting the same wines that we buy in the market. But it would be easy for a dishonest producer or distributor to put special wines in the bottles sent to the critics or wine award competitions. The easiest switch would be to put some of last year’s highly ranked wine in place of this year’s weak effort. Most wine critics rate products that are sent to them by makers and distributors and rely upon the honesty of the sender.  Only a few – Gaiter and Brecher at the Wall Street Journal come to mind – seek out and purchase their wines through normal retail channels.

Doctored “critic cuvee” wines are a potential hoax problem.  I am not aware of any wine publications that have been hoaxed in this manner, but I have read and heard speculation about special “award cuvee” wines being entered in competitions.  The nature of the situation makes us all vulnerable to hoaxes.

Wine Spectator fell for this hoax but it wasn’t because its editors are dishonest in giving their awards.  I think most of the criticism of Wine Spectator in this situation is a bum rap, especially since the magazine’s editors seem to be unusually careful in avoiding advertising conflicts of interest.  That’s the subject of my next post.

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