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 Festivals Uncorked

jancis

Jancis Robinson and Wine Economist Mike Veseth at the IPNC. Wine Festivals draw celebrity wine critics, who taste, talk, sign books, pose for photos and lend credibility to the event.

Wine festivals have become big business. So big that the Wall Street Journal publishes a guide to upcoming festivals in each Friday’s edition. Click here to see their online August festival listing.There are lots of different wine events, but I’m not talking about charity wine walkabouts here, where you make a small donation, get a few drink tickets and visit tables where random bottles of donated wine are poured. The modern wine festival is a lot more focused and sophisticated and designed to engage wine enthusiasts on a different level.

International Pinot Noir Celebration

The International Pinot Noir Celebration (IPNC) in McMinnville, Oregon is a good example of the state of the art in wine festivals today. Sue and I attended the grand tasting last Sunday (a chance to sample dozens of Pinot Noir in a beautiful but hot outdoor setting), but the real deal for serious Pinot lovers is the full three day festival. For a fee of about $900 per person (not including lodging) you spend your days in tastings, seminars and vineyard tours and your nights under the stars at grand dinners.

The festival attracted winemakers from Oregon, California, Washington, Canada, France, Austria, Australia and New Zealand — quite an international lineup in a recession year.

I’m told that about 400 people attend the big festival — many of them come back year after year — and I would guess that another 300 or so came to the grand tasting on Sunday, so the festival’s total budget must approach a  half-million dollars. More than enough to pay the expenses of wine critics and celebrities (like Jancis Robinson above).

What’s In It For Me?

It is interesting to consider what brings all these people together? Yes, yes, I know that it must ultimately be about buying and selling wine, but that doesn’t fully explain it. No wine typically changes hands at events like this and there are probably more cost effective ways to market wine, from the supplier standpoint, and cheaper ways for consumers to fill their glasses, too. So what’s really going on?

One reason winemakers travel so far to attend these festivals is to communicate with other producers and to taste and compare their wines. Although I still don’t fully understand it, I have observed a subtle kind of dialogue when winemakers taste together. Information about taste, technique and status are all transmitted in the glass. Professors go to conferences and communicate by reading papers. Winemakers go to festivals and taste each others’ wines. It is easy to see who has the more sensible approach to intra-industry communication.

I suspect that there was a lot of producer dialogue at the Pinot festival because the wines that we tasted did not have much in common except the genetic pedigree of the grapes used to make them. Although the world wine market is moving to a lingua franca based upon grape varietal labeling (Chardonnay not Chablis, Pinot Noir not Burgundy) it is very clear that wines made from Pinot Noir grapes can have extraordinarily different textures, flavors and aromas. depending upon who makes them, how and where.

The Old World naming system (based on place not varietal) sure has its merits in the wineglass where terroir is actually experienced — too bad it works so poorly in the cluttered supermarket aisle when wines are bought and sold.

I met more than one winemaker who told me basically that she came to Oregon to prove something — to prove that good Pinot Noir could be made in X  where X = Oregon, Austria, California, Australia — fill in the place — only Burgundy has nothing to prove.

Hemispheric Exchange

A good deal of business gets done whenever producers come together, as you might expect. Partnerships, consulting services, distribution agreements and so forth are frequently arranged.  The McCrone vineyard wines made by Ken Wright Cellars and Ata Rangi are a good case study of the sort of  connections that probably could only happen in face-to-face meetings at a wine festival.

Don and Carole McCrone

Don and Carole McCrone

Don McCrone is a distinguished retired politics professor turned distinguished active winegrower. His vineyard outside of Carlton, Oregon  produces amazing fruit, which winemaker Ken Wright turns into a wonderful single-vineyard bottling. Don and Carole McCrone met the  winemakers from New Zealand’s famous Ata Rangi winery at IPNC a few years ago and were encouraged by them (while tasting each others’ wines, no doubt) to scout out vineyard properties in Martinborough.

Now the McCrones spend half of the year in each hemisphere supplying grapes to both Ken Wright and Ata Rangi for “McCrone Vineyard” wines. Are there any other winegrowers with vineyard designated wines in both hemispheres? It is an extreme example of the sort of cross-fertilization that can happen behind the scenes at major wine festivals.

Relationships not Transactions

I think that the most important function of wine festivals is to establish and build relationships. I always say that wine is good, but wine and a story is better. Wine and a relationship (even a superficial one with the grower, the winemaker, or other wine enthusiasts) is best of all. Doug Tunnell, winemaker at Oregon’s Brick House, explained to me that he brings his wines to IPNC every year to maintain contact with the people who attend. I got the impression that it isn’t so much about selling wine as honoring  relationships.  I think elite makers recognize that investing in relationships with customers (and with wine critics and journalists and all the others who attend these events) pays dividends down the road. Winemaking and relationship-building both require a long-term perspective.

The fact that many people come back to IPNC year after year suggests that they value the relationships, too, both with the producers and with each other. I have written that wine always tastes best when it is shared with others who enjoy and appreciate it. This may be especially true with festivals like IPNC, which tend to attract participants who are especially focused on a particular wine or region.

What I Think I Have Learned

So here is what I think I have learned from my fieldwork at wine festivals so far, both at IPNC and elsewhere, on both sides of the table, both pouring and receiving wine.

Wine festivals aren’t really about the wine, they are about the people, the conversations and the relationships. The role of the wine is to bring the people together and to give them something to share in a way that is impossible to recreate electronically.

Wine, or really the sharing of wine,  is a personal  relational experience in an otherwise increasingly impersonal transactional world.  That people seem to appreciate this sort of experience (and seek it out, even at high monetary cost and even in a deep recession) suggests something about its scarcity, don’t you think?

Decanter’s Wine Power List

Decanter, the self-proclaimed “World’s Best Wine Magazine,” takes its rankings very seriously. Wine rankings, of course,  and, in the July 2009 issue, Power rankings. Who are the most powerful people in the world of wine and what does the power list tell us? Let’s see if we can find the message in this bottle.

The Power List

The names on the power list are very interesting but the story that they tell about wine today is perhaps more important. Here are the first ten (top ten) people on the list.

  1. Richard Sands, USA, Chairman, Constellation Brands
  2. Robert Parker, USA, wine critic
  3. Mariann Fischer Boel, Denmark, EU Commissioner for Agriculture
  4. Mel Dick, USA, Southern Wine & Spirits (wine distributor)
  5. Annette Alvarez-Peters, USA, Costco wine director
  6. Dan Jago, UK, Tesco wine director
  7. Jean-Christophe Deslarzes, Canada, President of Alcan Packaging
  8. Jancis Robinson, UK, wine critic, author and journalist
  9. Nicolas Sarkozy, France, President of France
  10. Pierre Pringuet, France, Pernod Ricard

Since Decanter is a British magazine with very small US distribution you might be surprised that three of the top ten positions (and both of the top spots) are held my Americans, but don’t be. Constellation Brands is the largest wine company in the world and accounts for one out of eight bottles of wine sold in the UK. And Robert Parker is best known for his ratings of French wine, not Napa bottlings, which is important to British buyers and merchants. The presence of Sands and Parker at the top of the list does not reflect any sort of US-centrism, just the realities of the global marketplace. It really is a global list. Or at least, like those famous New Yorker cover illustrations, the globe as seen from London.

I won’t list the second ten names (out of 50 in total), but the I think they illustrate the global reach of the wine market today: America, China, Chile, Australia, Spain and so on. Even India, an emerging wine market, makes the top 50 ranking.

The list is complete and up-to-date (Gary Vaynerchuck, the US internet wine guru, shows up at number #40), but there are some interesting gaps. Fred Franzia, the godfather of Two Buck Chuck, is nowhere to be found, for example, despite his obvious influence on the US market, while Judy Leissner of Grace Vineyard in China, who perhaps represents the future of Chinese fine wine, makes the “Ones to Watch” list.

No wine economists make the list, alas. Greg Jones, the respected Southern Oregon University wine climatologist, is the only professor (#33). Maybe next year …

The Story

It is fun to see who makes the list and who doesn’t (why Jancis and not Oz?), but the ranking is more interesting if you strip out the personalities and consider what market forces they represent. Herewith my version of this  story.

The world of wine is very unsettled. Although wine is one of the most fragmented global industries (much less concentrated than beer or spirits, for example), size matters more and more as consolidation continues. [Hence the power of Constellation Brands, Pernod Ricard and Southern Wine & Spirits.] Reputation matters, of course [Parker and Robinson], but the world is changing and everything is up for grabs from how and where wine is sold [Costco and Tesco] to how the bottle is sealed [Alcan].

Although change is generally associated with New World wine, this is no longer the case. The biggest threats to “business as usual” for Old World wine come from inside the European Union itself. On one hand, the new EU wine regime [Mariann Fischer Boel] will pressure Old World wine to compete with the New World head-on and without continuing EU support. On the other hand we have an unexpected prohibitionist movement [symbolized by Sarkozy] that seeks to regulate wine like the Americans do (even as some parts of America are changing) — as a dangerous controlled substance. It is thus imperative for Old World wine to master the tricks of the New World industry — tricks that Constellation and Southern and Costco symbolize.

These changes take place, of course  within the context of the expanding global market, global climate change and a continuing global economic crisis (that’s where a wine economist would have been a useful inclusion).

I won’t pretend that the Decanter Power List is a scientific ranking (Decanter doesn’t claim this in any case), but it is an interesting peek into how wine insiders view their industry. I’ll be curious to see how the names and the story lines change when the next Power List appears.

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.

No Wine Before Its Time

“We will sell no wine before its time.” That was the slogan of a famous Paul Masson winery advertising campaign. (See note at the end of this post.)  But a lot of wine is sold before it has reached its peak.

What Time is It?

And that’s a problem for both consumers and producers.  Immature wine is sort of like the flat-pack furniture they sell at Ikea — all the pieces are there, it is up to the consumer to take them home and complete assembly. Wine buyers are supposed to take immature but age-worthy wine home, stash it under the stairs or in a climate-controlled wine storage appliance, and remember to bring it out when the time is right.

(By the way, if you have any of the pry-top Paul Masson carafes pictured here aging under the stairs … well, you might not want to wait any longer to pop the lid …)

Unfortunately there are a lot of differences between fine wine and a flat-pack  antique finish Ikea Aspelund bedside table.  I suspect that most people knock together their Ikea products soon after purchase, so they know pretty quickly if all the pieces fit.  Disappointment, if there is any, is soon realized and resolved.

Wine is a different situation completely.  You can’t tell if a bottle of wine is sound (uncorked, untainted) just be looking at it. Every type of closure system has its flaws, as George Taber has explained. So aging wine is a kind of crap shoot.  Even a professional can’t be sure that the wine cellar is full of good wine getting better or bad wine fading to oblivion.  Each bottle is a mystery until opened.

Now maybe you know all about aging wine, but I’m really an amateur and I have no confidence in my ability to store wine properly and pull it from the cellar at its peak.  I am not at all sure that I can tell when “it’s time.”  More often than not I find that I have waited too long to open those “special bottles.”

Not that this always matters: most wine produced in the world today isn’t really designed with cellar aging in mind.

Time is Money

Why do wineries sell immature wine and leave it to amateurs like me to age it?  Why don’t they store it properly and release it at or near its peak?  The answer, of course, is that time is money.  Few wineries can completely ignore the economic cost of holding their wines in bottle or barrel until they are mature.  The incentive to market what I have called Chateau Cash Flow is very strong.

The result is that most wineries intentionally produce wines that are ready to drink when still quite young.  I find nothing wrong with this when done well.  Others sell their wine before its time and cross their fingers — hoping (often in vain) that consumers will delay consumption until the wine has more fully matured.

One consequence of this practice is the frequent disappointment consumers experience with fine wines, especially  in restaurants.  Some restaurants can afford to age rare and unusual wines and serve them at their peak.  Most, however, find it necessary to sell them quickly, to produce that cash flow, with sometimes unfortunate results.  It isn’t that these wines are bad, it is only that they are expensive (because of restaurant mark-ups) and often disappointing (because they years away from full maturity).

The cost of money is often the root of the problem — wineries and restaurants find it too expensive to properly age fine wines.  Money is nearly free today, however — if you can get it.  It is the limited availability of credit that is the current constraint.  I suspect that we will see lots of product pushed into the wine value chain, using cash flow to compensate for the lack of available credit.  This fact promises opportunity for the few and likely disappointment for the many.

Open That Bottle Night

Amateurs like me tend to be too patient (imagine that!) and let fine wine sit in the cellar too long.  How can we avoid the curse of letting our best wines creep over the hill? Dorothy J. Gaiter and John Brecher, the wine critics at the Wall Street Journal, have an answer.  For the last ten years they have been promoting Open That Bottle Night (it’s on Saturday 28 February this year).

OTBN is an excuse to break out those special bottles and drink them before they fade away.  It isn’t a systematic solution to the problem of time and money, but it is a reasonable personal response. I encourage my readers to celebrate OTBN this year.  Wineries may sell wine before its time — and many of us may drink them either way too soon or well past their prime — but there is no reason not to try to break this pattern.

———

Here is one of the original Paul Masson “sell no wine” commercials, featuring celebrity spokesman Orson Wells.


Here is an out-take, with an obviously inebriated Wells reading the lines.

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.

Wine Critics and their Discontents

The Principal-Agent Problem

You might think that the job of wine critic would be heavenly – traveling the world, tasting wines and talking and writing about them.  What could be better?  But there are downsides and trade-offs to the job.  One is that your credibility depends upon objectivity – if your ratings are thought to be biased, your advice is correspondingly discounted.  But, on the other hand, you need income to work as a critic or to publish magazines and websites and the most obvious source of income is the wine industry itself.  How can we trust wine critics when the potential conflicts of interest are so obvious?

This situation is not at all unlike that faced by candidates for political office, who receive money from “special interests” but still need to serve (and appear to serve) the general interest. It isn’t impossible to walk this tightrope, but it isn’t always easy either.  You probably can think of many politicians who have done it successfully and a few who fell off.

In economics we see this as an example of the principal-agent problem.  You understand the principal-agent problem if you’ve ever wondered if the cab driver was really taking the shortest route back to the hotel.  Although cab driver and rider have entered into a mutually advantageous contract, interests are not fully aligned and the fact of asymmetric information means you may not be sure that you are getting a fair deal.

Wine enthusiasts (the principals) hire critics (the agents) to give us objective advice, but we know that the critics may have their own interests as well as ours in mind.  How can we trust them to place our interests above their own?

It seems to me that all the wine critics I have surveyed confront this problem openly and honestly, although they arrive at different strategies to deal with the problem.  All the examples I will cite below are effective, in my view,  so I have come away from this little study well satisfied, but the fact that they are so different can create some confusion for wine enthusiasts who fail to read the fine print.

Parker and Vaynerchuck

Robert Parker’s solution to the problem of potential economic conflict of interest at the Wine Advocate is simply to refuse all advertising and to charge his principals fees for web access, hard copy subscriptions, books and so forth.  Who does Parker work for?  He works for us.  It is pretty hard to criticize this model, although interestingly he is probably the most criticized wine critic.  People don’t complain about economic conflict of interest, however, but rather that Parker’s particular idea of wine favors particular styles of wine and particular producers.

Gary Vaynerchuck at Wine Library TV takes a different approach.  His family owns a major wine retailer in New Jersey, so in fact he has a very direct financial interest in the sales of some of the wine he reviews.  Rather than trying to build a firewall between the wine critic business and the wine retailer business, however, he tries to be completely transparent about it and to accentuate his personal credibility as an objective reviewer.  Unexpectedly, this seems to work.  Reputation matters. Accepting the conflict of interest and being open about it is a risky strategy, but Gary pulls it off.

There was one case of a potential conflict of interest a few months ago that shows that he is not unaware of the risks.  The top wine in a particular tasting turned out to be a proprietary label of Gary’s store.  Apparently Gary didn’t know this when the tasting was recorded and when he found out he immediately took the video down from the internet so that he could not gain financially from his honest appraisal of the wines. We only know about it now because of his online apology and explanation.  I think this case shows just how very important it is to wine critics to maintain their reputations as honest objective agents.


Worth a Thousand Words

I’ve been studying how wine magazines handle reviews and the images that sometimes appear with them because it seems to me that a review that is shown along with a photo of the bottle or label is a lot more memorable than the plain text, so the choice of which wines to favor with an image is important..  Some of the magazines use these images to generate advertising revenue, others do not.  This is potentially confusing for readers who may mix up editorial content (the review) with paid advertising (the label image).

Britain’s Decanter magazine keeps its paid advertising and editorial wine ratings reasonably separated.  The top rated four- and five-star wines are featured with bottle photographs while the rest (three stars and below) have simple text listings. It is clear that the photos reflect editorial evaluation. Advertising pages bookend each set of ratings, but they are labeled “Decanter Promotion” so it is pretty clear that the wineries have paid for the space.

Wine & Spirits magazine has a different system (clearly explained in each issue).  After it has rated a group of wines it invites the wineries to purchase feature space in the form of wine label images that are included with the relevant reviews.  You might assume that the editors picked the wines to receive more attention this way, but you are wrong — stop assuming!  The label images are product placements and I appreciate Wine & Spirits’ honesty in revealing it.

Wine Enthusiast has a similar policy according to the explanation I found on page 182 of the September 2008 issue.  All the rated wines appear in long unadorned columns of reviews, but some wines also show up along with label images in the colorful pages that precede the main review text.  Some of these are top-rated wines, but others are not.  Like Wine & Spirits, producers are invited to buy image space in this section of the magazine, but only after the wines have been rated so that it is clear that they are buying the image space not the review — a good policy.

Wine Spectator doesn’t sell image space.  There are highlighted pages of wine reviews with labels at the front of the ratings sections, but these are editorial endorsements rather than paid placements.  Otherwise all the listings get equal treatment in the magazine.

Mixed Messages

If you see a bottle or label image alongside a review in Wine Spectator or Decanter, it means that the editors recommend the wine.  Label/review combinations in Wine Enthusiast and Wine & Spirits are product placements. Each publication is very clear about this to protect its reputation – and I believe them when they say that their reviews are not influenced by advertising.  But the fact that there is more than one system means that readers of Wine Enthusiast and Wine & Spirits and other magazines with similar practices may sometimes confuse paid product placement with editorial endorsement.

Solution?  I think all the critics cited above are honest agents and they have the right to choose different strategies to protect their reputations while generating needed revenues.  The burden falls on us, the wine buying “principals,” to understand what sort of “contract” we have with our critic “agents” so that we know when we are viewing paid product placements.

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