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!

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.

Attack of the Super-Cuvées

I’ve been thinking a lot recently about the different strategies winemakers use to sell their products and I find myself coming back again and again to a particularly good column by Andrew Jefford in the June 2008 issue of Decanter magazine.  Jefford demonstrates how important economic factors are in shaping what gets poured into your glass.

Bordeaux, Burgundy and Super-Cuvée

Winemakers generally find themselves working with variable quantities and qualities of fruit and the individual wines made from that fruit.  What should be done if some of the raw materials are much better than others as is typically the case?  Blend them all together?  That’s what happens sometimes, especially in the less sophisticated cooperatives in Southern Europe.  The result is often a whole that does not exceed the sum of its parts.  Historically, Jefford explains, there are two dominant approaches to the problem of wine quality to take into account variable wine quality.

The first is the Bordeaux strategy.  The best lots are blended into the grand vin — the one that sells for a high price (in good years at least).  Good wines that just don’t make the cut for the grand vin go into a second label.  Lesser wines are sold off on the bulk market or even a third label.  The system is transparent, relatively consumer friendly and the wines are as good as the vintage allows.  In The Wine Advocate’s report on 2005 Bordeaux, for example, the grand vin Latour (96+ points, 12,000 cases) costs $1125 while the second wine Les Forts de Latour (92 points, 10,000 cases) is less than $200.  A third wine, designated simply Paulliac (89 points) sells for about $60.  Something for everyone, I guess, and a pretty clear hierarchy of wines, although not every Bordeaux producer listed in Parker’s guide displays such a clear link between price and apparent quality.

Burgundy provides a second model, according to Jefford.  The top wines are released as individual vineyard-designated wines and the remaining wines are blended together in to an appellation-designated wine.  I am not an expert on Burgundies, but I have seen this in Oregon, where some wineries release a one Willamette Valley Pinot Noir along with several vineyard designated wines.  This makes the wines very interesting if you are able to taste them side-by-side, but it can otherwise be confusing.  I think it shifts a bit of power to the wine critics and specialists.  But that’s fine if the terroir really comes through and the wines are significantly different.

The third strategy, which Jefford links to the Rhône, is to create a tiny amount of a sort of super-wine that is made, more or less, to gain high scores from wine critics.  I know that wine makers always say that they don’t make wines to get high scores, but a few have privately told me that big Parker numbers are so valuable that they don’t hesitate to make some wines to try to impress wine critics like RP.  Most customers won’t have a chance to buy the Parker wine, it is true, because the production is so small, but the benefits to the winery’s reputation may extend down the line and boost prices and sales of the other wines.

Money, Taste and Power

“Let’s set aside the question of income,” Jefford writes, because he is concerned with the effect of the three systems on the quality of the wine.  The Burgundy system, with its stress on terroir, makes sense when there really is terroir, but otherwise he argues in favor of the Bordeaux plan because it produces more complete wines, wines of good “disposition,” as he puts it. Wines that are good to drink.

The Super-Cuvée strategy, he fears, makes wines that are good to taste (and rate), but not to drink because they are wines of “accumulation,” monster wines, where winemakers seek high scores by adding more and more layers of identifiable attributes to the super-wine at the expense of the quality, complexity and completeness of the wines that make up the bulk of production.

On the face of it, Jefford’s critique of super-wines and the rising power of critics associated with them is based upon taste, but as the column continues it is quickly apparent that he cannot leave the wine economics out of it, because it is at the heart of the problem. The Bordeaux model doesn’t just make better wines, he suggests, but also better incomes in the long run for all producers.  The simplicity of the single Grand vin strategy makes wines more understandable and a “perfect building block,” as he says for a reputation.  He credits Bordeaux’s use of this system in part for their consistently strong reputation and ability to attract investment and maintain strong prices.  He contrasts this with the “chaos and frenzy” of the Super-Cuvées and the “false intellectual challenge” of the many single-vineyard offerings.  Pretty strong words, I would say.

The Burgundy and super-wine strategies depend in different ways on the power of wine critics (like some of those who write for Decanter).  Wine critics validate the legitimacy of single-vineyard offerings and create super-markets for the Super-Cuvées.    It would be interesting to study what factors lead winemakers, especially New World producers, to choose one approach over another.  Perhaps it is terroir.  Perhaps it is scale, training or philosophy.  Or perhaps it is access to wine critics and the power they can have in the marketplace.  Watch this space for more research on this interesting question.

Tyranny of the 100 Point Wine Scale

Wine rating systems are like the weather — everyone complains about them but no one does anything. Paul Gregutt thinks he knows why.

Wine by the Numbers

There are many ways to rate or rank different wines and consumers are very interested in trying to understand what they mean and how to use them. That’s why my column on wine rating systems, Wine by the Numbers, is one of the most popular posts in this blog’s brief history.

Twenty-point rating systems are popular in Europe in part, I understand, because that is how papers are graded in French high schools. Here in the United States the 100 point system that Robert Parker popularized and many others use dominates in part, I suppose, because that’s how our papers were graded in school. Any simple wine scoring system is problematic, however, since a good deal of information is necessarily lost when the attributes of a multidimensional product like wine are reduced to a single number. Wine isn’t like gasoline, where the critical components can be captured, like octane, in a single number.

But there are other problems, too. Paul Gregutt (PG), wine critic for the Seattle Times and Wine Enthusiast magazine, explained the limitations of the 100 point scale and the tendency toward “grade inflation” in his recent book, Washington Wines & Wineries:

This practice of promoting wine, a multi-faceted, subjective sensory experience, simply by broadcasting numbers has gradually devalued the numbers while shrinking the original 100-point scale. At first blush, such a rating system sounds generous, allowing room for a lot of subtlety in the grading curve. But in actual practice it’s not a hundred point scale at all, nor even close.

It has become a ten point scale. Wines rated under 85 are ignored completely. Wines rated 85 to 89 must be marketed as value wines – those numbers only work for wines priced at the low end of the scale. If your wine is going to sell for $15 or more, it must hit 90 points at least. One prominent retailer even makes a point of selling (at discount) wines that have scored the “dreaded” 89. Once a wine moves up the ladder from there, it becomes increasingly rare and expensive. As a result, wines scoring 95 or above are virtually unobtainable for the average consumer.

Although the ratings are “devalued” in terms of their utility, they are also “inflated” in terms of their commercial importance. It would seem that consumers might be better served if someone would re-center the scale so that it uses more of the 100 point range and is therefore potentially (and only potentially) a more accurate guide to quality. This would obviously lower the average score, however. Who is going to be the first to break the pattern and give merely good wines average scores, 70 or 75 instead of 85 so that 85 (B+) means something?

Revising the 100-Point Scale

PG decided to try in his book on Washignton wine. Instead of rating individual wines, he rated the wineries themselves in terms of a modified 100-point scale that gives marks for style (30 points), consistency (30 points), value (30 points) and the winery’s contribution to the development and improvement of the Washington wine industry (10 points).

How did the wineries rate? Quilceda Creek, with its perfect 100 Robert Parker point Cabernet Sauvignon, also got a perfect PG score (30/30/30/10). Leonetti ranked second with 98 points (30/28/30/10). So far so good. The trouble comes further down the list where some prominent wineries get scores in the 70s, 60s, and 50s. The scores make sense when you break them down into the four factors that PG evaluates, but the raw numbers are sort of shocking when you see them for the first time or out of context. (My university students know this feeling, I suspect. It happens when they get their first college papers back after several years of high school grade inflation.)

PG writes about the reaction to his winery rating on his website in a column titled “Time to Dump my 100 Point System?

Comments from readers and reviewers have been largely positive. Some have embraced my scoring; others have simply accepted it and moved on to the book’s other assets. But within the ranks of the industry itself – wineries and distributors in particular – there has been an awkward silence.

There is little doubt that this book’s sales have been seriously impacted by 1) the decision not to include 3/4 of this state’s wineries and 2) the scoring system itself. One winery veteran, after some prompting, took the trouble to explain why his winery wouldn’t sell or promote the book, even though I had given them one my highest scores.

“Our problem with promoting your book,” the winemaker said, “is that, in spite of the wonderful written praise, we’d spend all out time explaining our B+ grade.” PG is trying to decide if he should scrap his ratings for the next edition of his book (if you have an opinion you can contact Paul through his website PaulGregutt.com).

The First Mover Disadvantage

It is hard to know what to say about this. On one hand I admit that my first reaction to PG’s winery rating scale was neutral to negative, but then with some encouragement from Karen Wade I looked at it more closely and decided that it was actually pretty useful to me as a consumer — so I guess I am the source of some of the positive feedback PG received. On the other hand, I understand that no winemaker is going to take out an ad that boasts “Rated 72 by Critics!” — even if that’s a very good and appropriate rating by the scale being used.

I think we have to admit that re-centering the 100 point scale is a hopeless task and move on. The first mover in point reform will suffer the sort of criticism that PG reports. The only way to do it would be for everyone to switch scales at once. I don’t see that happening.

So what should we do about the ratings? For my part I’m going to try to get my students, who are very much into wine ratings by the time they come to me, to use the UC Davis 20-point scale. I think it might work because (1) they aren’t used to thinking in terms of 20 points and so they will have more open minds about what scores mean and (2) I like the way it breaks down elements of sensory perception: 4 points for appearance, 6 points for smell, 8 points for taste and 2 for overall harmony, according to my copy of The Taste of Wine by Emile Peynaud. Using the Davis scale will encourage them to make up their own minds about what they see, smell and taste. That’s a good thing.

In the meantime I think Paul Gregutt’s experience suggests both why the 100 point system should die and why it probably never will. My advice to Paul: keep the analysis in your book, which is terrific, but kiss the 100-point ratings goodbye.

They Always Buy the Ten Cent Wine

Ernest and Julio Gallo built their business in the years after the repeal of Prohibition according to a strict division of labor: Julio made the wines and Ernest sold them. I don’t know if Ernest Gallo really appreciated the spiritual element of wine, but he did know that selling wine is not just about selling what is in the bottle. Selling wine, like selling anything else, is also about selling image, mystique or terroir.

The story is told of a sales call that Ernest Gallo made to a New York customer in the dark days of the depression. He offered sample glasses of two red wines – one costing five cents per bottle and the other ten cents. The buyer tasted both and pronounced, “I’ll take the ten-cent one.” The wine in the two glasses was exactly the same. Clearly, the customer wanted to buy an identity – the image of someone who wouldn’t drink that five-cent rotgut- even if he couldn’t actually taste the difference.

They always buy the ten cent wine, Ernest Gallo said.

I wonder how much things have changed since the days when Ernest Gallo made his calls? Two recent studies provoke this question.

Price and Taste

The first, which has been widely reported, is a study that was published in the Proceedings of the National Academy of Sciences that showed that test subjects displayed the Ernest Gallo effect. Their ratings of wines changed when they were given price information — even bogus price information. Identical wines received different ratings depending upon price information provided. “Expensive” wines, naturally, were rated higher than their inexpensive twins.

A second study, just released by the American Association of Wine Economists, answers the question Do more expensive wines taste better? The answer, based on a large sample of blind tastings, is that there is no correlation between price and wine evaluation (or perhaps a modestly negative one). This will be no surprise to readers of wine publications like Wine Spectator. Sure, the top wines are usually expensive, but there are also a lot of costly wines that get low ratings.

These findings will give bring great satisfaction to my friend and part-time research assistant Michael Morrell, who prides himself on drinking cheap wines, trusting his own tastes not ratings or price “signals” of quality. Michael would buy the five cent bottle every time.

But ask any wine distributor or retailer and you will find that price is the critical factor in retail wine sales. Although wine enthusiasts like to think of themselves in complicated ways — favoring red versus white, old world versus new world, merlot versus pinot noir, fruit bomb versus barrique reserve — the dirty little secret of wine retailing is that price is the key to most wine buying decisions. When push comes to shove, buyers are really looking for an $8 wine or a $10 wine and and make their purchases within a relatively narrow price range, regardless of other factors.

Evidence from the Wine Aisle

The wine aisle in your grocery store is probably organized this way. Yes, I know there is a California section and an Import section and even a jug/box wine spot, but look within each wine display and you’ll see the clear price stratification effect. The wines you have come to buy are probably on the shelf just below your natural eye level, so that you cannot help but see those special occasion wines just above them (and the higher priced wines above them on the top shelf). Cheaper wines are down below, near the floor, so that you have to stoop down to choose them.

The physical act of taking the wine from the shelf mirrors the psychological choice you make — reach up for better (more expensive) wines, stoop down for the cheaper products. The principle will be the same in upscale supermarkets and discount stores but the choices (what price wine will be at the bottom, middle and top) will differ as you might expect.

Studies suggest that people establish a wine price comfort zone (and corresponding wine shelf) and stay there, moving up a rank for special occasions and down a shelf for parties and other higher-volume purchases. A lot of factors drive this behavior, including fear. I have some $8 wine friends who are afraid to start drinking $12 wines for fear that they will be able to taste the difference — and have to upgrade their wine budgets.

One local supermarket has taken this principle to its logical extreme. It is a discount store that counts a lot of immigrants and retired people among its customers. The wine aisle is not organized as you might expect — by country of origin or wine varietal. It’s logic is simple and clear. This rack has wines that cost $3 and less. The next rack has $3 – $5 wines. And so on up to the $15+ wine rack. Large signs efficiently guide buyers directly to their target zone. Do they sell a lot of wine? You bet they do!

The relationship between the price of wine and our evaluation of it is complex. These recent studies indicate that we shouldn’t let price information influence our decisions, but marketing experience shows that most of us do.

The Martha Stewart Wine System

march-2008-cover.jpgWine Enthusiast magazine celebrates its 20th anniversary with the March 2008 issue and editor and publisher Adam Strum reflects on the changing market in “The Enthusiast Corner” column. He writes that

“I’d like to think Wine Enthusiast played an important part in helping to bring wine to the attention of the American public at large, and not just the elite, over these 20 years. Wine magazines, books and the rise of food television have all undoubtedly played a role in making America a wine drinking nation. Other factors abound: American cuisine at home and in fine dining restaurants underwent a renaissance, and wine naturally became an important part of that. News of wine’s health benefits enlarged its consumer base. But most responsible for the growth of wine is the incredible leap in terms of overall quality at the same time that wine became more affordable. How often does that happen? Name me one consumer product that can compare.”

I think he is right in all this. Wine’s vigorous growth in the United States is a complex phenomenon. Many factors have contributed to the rise in per capita consumption in the United States and other New World markets at the same time that wine drinking has fallen dramatically in the Old World. The wine media’s role may be an under-appreciated element of this phenomenon.

The Supermarket as Home Depot with Wine

My friend Patrick works the wine aisle at a local upscale supermarket and he constantly delights me with his original insights into consumer behavior. He sees cable TV’s influence everywhere, for example. People watch Trading Spaces or the home remodeling network HGTV, he says, and run out to Home Depot for wallpaper and remodeling supplies. A huge industry has been built around their media-driven passion to renovate and restore. People watch the Food Network, he says, and run to supermarkets for exotic ingredients — and the wine to go with them. Wine is scattered throughout the store, not just in the wine aisle, to make the idea of a sophisticated meal (one that would please the Barefoot Contessa) a convenient choice.

Wine, in other words, is a lifestyle product that is promoted by lifestyle media like cable TV and lifestyle magazines that encourage and enable consumers to develop adventurous, sophisticated, consumption-driven identities. I don’t mean this in a bad way, although I know it sounds pretty bad. It’s just a fact. The magazine racks at Borders are filled with lifestyle magazines. You probably read a couple of them yourself. Even serious newspapers like the Wall Street Journal and Financial Times now have thinly disguised weekend “lifestyle” sections. Don’t pretend you don’t know what I mean!

Wine Enthusiast is a particularly good lifestyle magazine — there is a reason it has lasted 20 years. One factor in its success is that globalization has helped the wine market expand, providing more choice at affordable prices. Mr. Strum writes that

“New regions such as Australia, New Zealand, Chile, South Africa and others new to a global industry muscled their way on to the world stage. Competition drove improved methods in the winery and the vineyard. Competition also drove prices down at the middle and lower tiers.

“The world wine map has been redrawn so dramatically in the past 20 years it’s almost unrecognizable. Back then, it consisted of France, Italy, Spain and, way off in the margins, California. Now you must include Oregon and Washington State, not to mention the other New World countries I mentioned above. Every state in the union now produces wine. Countries like China and India are ramping up production in numbers that boggle the western mind.”

Martha Stewart Wine

Globalization has certainly made wine more interesting and wine drinkers can appreciate the value and variety. It would be a mistake to think that the wine media are passive observers of this phenomenon, however. It is in their interest to promote the industry that they cover and to try to profit from every aspect of it. You aren’t surprised when cable television networks expand outside the box, are you? They sell advertisements on their programs along with videos of the shows, books, lectures and assorted types of lifestyle paraphernalia. Think Martha Stewart! (And yes, there really is a Martha Stewart wine – made by Gallo).

Wine critic publications do the same thing — they have adapted the Martha Stewart System to lifestyle wine. I will focus on Wine Enthusiast here because it is their anniversary, but they are not an unusual example. Wine Spectator, Decanter, Gambero Rosso and most of the others have commercialized the wine experience in the spirit of Martha Stewart.

Mr. Strum describes Wine Enthusiast’s expansion this way

“Wine Enthusiast, as a company, has evolved dramatically over the past 20 years, too. In addition to the success of our catalog and our magazine, we have created an events division that is an astonishing success. We now annually produce four Toast of the Town events to introduce American consumers to wines that are available in their markets. These walk-around tastings, held in spectacular cultural venues, offer a sample of each city’s restaurants, accompanied by tastes of the portfolios of 70 wine companies. These events help educate and expand the palate of the American consumer, and to reinforce wine’s place at the table.”

Wine Enthusiast is more than a magazine, it is a lifestyle system. It sells magazines, of course, plus wine-related products through their catalog and website, produces wine events and so on. It informs, enlightens, educates and enables. A Wine Enthusiast cable network (or YouTube.com channel) would be the next logical step.

Even the magazine is commercialized in perhaps unexpected ways. Everyone knows that wine magazines sell lots of advertisements, of course. The editors always say that they don’t let advertising dollars influence their ratings, and I actually believe them — although market forces obviously do have some influence over the wines that they choose to consider for their reviews. National magazines need to pay attention to wines that are in national distribution. And these are the wines that are featured in the ads.

Wine Enthusiast takes one more step into commercial waters, however. The magazine includes a monthly Buying Guide that provides 100-point ratings and thumbnail reviews of dozens of wines. (I actually find their reviews to be very accurate, by the way.) But just before the long list of ratings there is section where a smaller number of wines are featured, with images of their labels for easy supermarket identification. These are the wines you will remember if you scan through the magazine quickly. I have always assumed that these were featured wines, selected by the editors for their good value or wide availability.

Imagine my surprise, then, when I started reading the fine print about how Wine Enthusiast rates wines and discovered that the labels are in fact “paid promotions.” Wineries can’t write the reviews or designate their products “best buys,” but they can pay to have them highlighted in the illustrated section! I wonder if that is true of other wine magazines? I’m going to be reading the fine print a lot more closely now so that I have a better idea of what is editorial content in the wine press and what is “paid promotion.”

Martha Stewart has only recently entered the wine business (with Paul Newman close behind), but it seems to me that the Martha Stewart system of total lifestyle marketing is already here. Hmmm. I wonder if that’s a good thing?

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