The Scrooge Report: Holiday Wine Gifts

No wonder economics is called the “dismal science” — sometimes our rigorous analysis threatens to spoil everyone’s fun.

Take holiday gift-giving, for example. The conventional wisdom is that “it is better to give than to receive” and while there is some merit in this if everyone gives (so that everyone receives), I think you can probably see the collective action problem here. Only an economist (or maybe an excitable child) would point out that, strictly from a material accumulation point of view, there are real advantages in being on the receiving end!

A Badly Flawed Process

But it gets worse because some economists suggest that it may be better not to bother with gifts at all. Don’t give gifts, give cash. Or, better yet, keep the cash and spend it on yourself. Gift-giving itself is a badly flawed process. This Scroogish sentiment is in part the result of Joel Waldfogel’s famous article on “The Deadweight Loss of Christmas.” Waldfogel concluded that Christmas, for all its merriment, was actually welfare-reducing because recipients do not generally place a value on gifts that is as high as their cost. They end up receiving stuff they would never have purchased with their own money.

The cost of giving gifts exceeds the benefits, so gift giving is an economic drain. Dismal, huh?  Here’s how it works.

Your aunt paid $50 for the sweater that she gave you. How much would you have paid for it? $50? $45? $40? Well, the fact is that you had the option of buying it for $50 and didn’t, therefore you must not have valued it at the full amount. So its value to you is probably  less than what your aunt paid. But how much less?

Economists seem to agree that the best case scenario is that there is about a 10 percent average loss in gift-giving, which I call the “Santa Tax,” although the “yield” as reported by survey respondents varies a good deal. The National Retail Federation estimates that Americans will spend more than $550 billion on holiday gifts in 2012. If the deadweight loss rate is just 10 percent, that would be a $50+ billion Santa Tax this year. Yikes!

There are many problems with this way of calculating holiday giving gains and losses. It is pleasing to give gifts, of course, and this should be taken into account. But how much would you be willing to pay for the pleasure?  And would your pleasure have been less if you had just given cash? The efficiency loss might be less with a cash gift, but perhaps the pleasure of giving (and thus the incentive to give) would be diminished, too.

Santa Tax Wine Edition

Then we can argue about the size of the Santa Tax. Is 10 percent about right … or do you suspect (as I do) that it might be much higher, especially when you are buying gifts for people who are much older or younger or who have very different tastes or needs from your own? Have you ever received a gift that was 100 percent deadweight loss? If you are honest you probably have. But it’s the thought that counts, isn’t it? How big a Santa tax is too much?

Which brings us to the wine part of the problem. Doesn’t it seem like the Santa tax is probably even larger for wine gifts than for many other things? Most of us have experienced the deadweight loss when a bottle of wine that we’ve paid good money for doesn’t turn out to be worth what we’ve spent. So it is no surprise that the loss rate might be even worse when other people are doing the buying (and giving) for us.

Giving wine as a gift is risky (unless it is someone you know very well) because there are so many different choices and individual tastes differ so much. There are lots and lots of good wine  gift choices, of course, but it is easy to get caught in the Santa tax trap. I’m sure that a lot of holiday wine gifts miss the mark badly.

Maybe that’s why wine enthusiasts receive so many “wine gizmo” gifts instead of wine — but those gadgets are subject to the Santa Tax, too.  The New York Times‘s William Grimes recently complained about this problem.

Across the land, Christmas trees spread their fragrant branches over packages containing monogrammed Slankets, electric golf-ball polishers and toasters that emblazon bread slices with the logo of your favorite N.F.L. team.

But for some reason, the culture of wine and spirits provides especially fertile ground for misbegotten concepts like these. Year after year, it yields a bumper crop of inane but highly giftable innovations like wineglass holders that clip onto party plates, leather beer holsters and octobongs, the most efficient method yet devised for eight college students to consume a keg’s worth of beer simultaneously.

Tyler Colman, writing on his Dr Vino blog, singled out gifts of fancy automated corkscrews for particular criticism. You can probably think of some high Santa tax wine paraphernalia that you’ve either given or received yourself.

Beyond the Octobong: Wine Economist Gift Guide

OK, I suppose the octobong is out, but some of the wine gizmos that Grimes reviews in the article are sort of weirdly fascinating. I guess I can see why they are given as gifts (even though you might never spend your own money on them). So where does that leave us when it comes to wine gifts?

My first bit of advice is simple: don’t give a bottle of wine to friends or relations, share it with them. There is something about a shared experience that transcends a simple commodity transfer. (From a technical economics standpoint, I think sharing adds  some “public goods” elements to the deadweight loss equation that can cushion the Santa Tax loss). Trust me, from an economic theory standpoint, sharing is the way to go.

In fact the more I think about it the more I believe that sharing rather than giving is the key. Sharing a bottle of wine rather than just giving it may seem a bit selfish and is certainly more expensive (since time as well as money are involved), but sharing changes the game from transaction to relationship and this seems to me to be the essence of both the holidays themselves and wine, too.

More Gift Advice (and Shameless Self-Promotion)

Back to giving and receiving. Best gift to give a wine enthusiast? A copy of the new paperback edition of Wine Wars, of course. (Shameless self-promotion never takes a holiday).

Best wine gift to receive? It’s gotta be Wine Grapes by Jancis Robinson, Julia Harding and Jose Vouillamoz — the brilliant 1242 page survey of 1368 wine grape varieties. So many grapes, so much information, such beautiful illustrations. This jeroboam-sized book will provide years of detailed research use (including very cool DNA analysis of wine grape origins!) and hours and hours of simple browsing pleasure for any curious wine geek.

Weight? Yes, quite a lot of it; 6.8 pounds shipping weight according to Amazon.com (although my copy feels light for its size). Deadweight loss? Forget about it!

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Click here to view a pdf of Waldfogel’s original article, which appeared in the December (of course) 1993 issue of the American Economic Review. The illustration is of a certain Mr. Grinch, who may or may not have been an economist.  Happy holidays everyone!

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Red Mountain: Think Global, Drink Local

Red Mountain is Washington’s smallest AVA and perhaps its most distinctive. This compact patch of dirt (see larger map below) has produced the grapes for some of the state’s most celebrated red wines. There’s a real sense of place in the wines according to critics, so the “drink local” part of this post’s title makes sense. But think global?

Well, yes. The wine world is very interconnected; international influences are surprisingly common and take many forms. A visit to Red Mountain (Sue and I were joined by research assistants Bonnie and Richard) revealed two of globalization’s many local faces.

The Italian Job: Col Solare

You might not expect to find one of the legendary names of Italian wine here on Red Mountain, but as you motor up Antinori Drive towards the beautiful winery at the top of the road the association becomes clearer. Col Solare (Italian for Shining Hill) is a joint venture of Tuscany’s Marchesi Antinori and Washington State’s Ste Michelle Wine Estates (SMWE). There has to be a story. Here it is.

It must have been about 20 years ago that Piero Antinori came to America, looking for a wine-producing partner. He wasn’t interested in making an American super-Tuscan. He wanted to do what he thought America did best: Cabernet. So, as the Ghost Busters used to say, “who ya gonna call?” if you want to make great Cabernet? The answer was obviously André Tchelistcheff, the legendary wine maker at Napa Valley’s Beaulieu Vineyards and consultant to many important wineries (including Chateau Ste Michelle).

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Where in America can I make distinctive Cabernet? Tchelistcheff knew what advice to give because in fact he had already given it to his nephew Alex Golitzin who founded Quilceda Creek winery, which makes some of Washington’s highest-rated Cabernets. Tchelistcheff’s advice to Antinori was much the same and resulted in the partnership with Ste Michelle Wine Estates and the Col Solare winery we see today.

The first wines, starting with the 1995 vintage, were made with grapes sourced from several Columbia Valley vineyard sites and produced at a nearby SMWE facility, but eventually the focus on Red Mountain grew stronger and the showcase winery was finished just in time for the 2006 crush. The estate vineyards radiate like the rays of the sun on the hillside below the winery.

The partnership has grown since that first step. SMWE is now the sole importer of Antinori wines into the U.S. market and in 2oo7 the two partnered again to purchase the Judgment of Paris champion Stag’s Leap Wine Cellars. Quite a successful partnership — you’ve got to believe that Tchelistcheff earned his consulting fee.

Col Solare is interesting to me because of the global-local connection. The wine is Cabernet-based, as Antinori wanted, but with a distinct Red Mountain twist, which means that it includes a little bit of Syrah in addition to the usual Bordeaux suspects since Syrah does so well here.

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Col Solare is an impressive achievement. Everyone we talked with on Red Mountain seemed glad to have them there. SMWE and Antinori are good neighbors, good customers for the local growers and good advocates of Red Mountain and its wines.

Red Mountain isn’t a first class wine tourist destination yet — the infrastructure needs further development and another couple of winery tasting rooms wouldn’t hurt either — but Col Solare is already a destination winery and worth the trip.

The Swedish Solution: Hedges Family Estates

Another destination Red Mountain winery, Hedges Family Estates, shows a different aspect of the local-global connection. Tom Hedges is a local boy, who grew up in the Tri-Cities area before the region became known for wine. He studied international business at the University of Puget Sound and then at the Thunderbird grad school in Arizona. I guess you could say that he got into the wine business through the side door — through the business side. Here’s how the Hedges website explains what happened next. 

In 1986 … Tom and Anne-Marie created an export company called American Wine Trade, Inc., based out of Kirkland, Washington State; they began selling wine to foreign importers. As the company grew, it began to source Washington wines for a larger clientele leading to the establishment of a negociant-inspired wine called Hedges Cellars. This 1987 blend of Cabernet Sauvignon and Merlot was sold to the Swedish Wine and Spirit Monopoly, Vin & Sprit Centralen, the company’s first major client.

So you could say that Hedges Cellars was created to satisfy a global demand. Soon Hedges was breaking ground on his Red Mountain estate. Today Hedges is the largest family winery in Washington and was instrumental in establishing the Red Mountain AVA.

It really is a family operations. Tom and his French-born wife Anne-Marie are proprietors, brother Pete Hedges makes the wines, Tom and Anne-Marie’s daughter Sarah is assistant winemaker and son Christophe is director of sales and marketing. The wine portfolio ranges from the Hedges Red Mountain estate wine (a Bordeaux blend, but with a bit a Syrah) to the popular CMS blends and the House of Independent Producers wines.

Taken together I think Col Solare and Hedges Family Estates show the local-global nexus at its best, bringing international attention and expertise  to local wines and taking those wines to global markets. We are often told that globalization suffocates local enterprise, but these wineries show that it can, in the right circumstances, breathe life into them.

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I can’t leave Red Mountain without mentioning two other stops we made that day. It was about time for lunch when we finished our visit to Col Solare and that can be a problem since I don’t think there are any restaurants on Red Mountain.  But we had planned ahead for a picnic and so we headed to Fidélitas, where we bought a bottle of Charlie Hoppes’ delicious Semillon and dined out on the patio overlooking the vineyards. Turns out we didn’t need to bring food — Charlie had arranged for a local barbeque food truck to be available for weekend visitors like us — nice touch!

Our next stop was the world’s best vineyard tour. Michael and Lauri Corliss (of Corliss Estates) had arranged for us to meet Mike McClaren and James Bukovinsky, who were working in one of  the Corliss Red Mountain vineyards just up the road from Fidélitas  supervising  the mid-October harvest. We spent the best part of two hours with Mike and James, visiting every nook and cranny of the complicated site, learning about the careful matching of grape variety and terroir and tasting the perfectly ripe fruit. A real taste of Red Mountain.

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Thanks to Bonnie and Richard for their able assistance. Thanks to Wysteria Rush and Marcus Notaro at Col Solare and Tom Hedges and Deborah Culverhouse at Hedges Family Estates. Thanks to Michael and Lauri Corliss and Mike McClaren and James Bukovinsky for their hospitality.

Photos: (1) Col Solare winemaker Marcus Notaro (in his  classic Inter “Roberto Baggio” jersey), (2) the view down Red Mountain from Hedges, and (3) Mike, Tom and Richard in discussion at Hedges. You can see how tiny Red Mountain is on the map below.

Book Review: Italy in a Bottle (but maybe not what you think)

Grappa: Italy Bottled by Ove Boudin. (Originally published as Grappa: Italien på Flaska) Stockholm Text, 2012. Kindle download available here).

Any book that is subtitled “Italy Bottled” should be about Italian wine — right? The only question is which Italian wine? Italy has so many wines, so many wine regions and so many grape varieties that the question is maybe not so much which wine as it is which Italy?

So it comes as a bit of a shock to discover that this is a book about grappa, not wine, and since this is the Wine Economist blog, not the Grappa Economist or the Spirits Economist, I wondered if I would like it. Seduced as usual by all things Italian, I optimistically opened the e-book and began.

What a beautiful book — that was my first impression. The photos made me wish for a coffee-table sized physical book so that I could just drink them in. But I imagine that a physical book would be enormously expensive (Amazon lists the used 2008 edition of this book in hardback at prices that start at $320 and peak out over $500. Yikes! The e-Book is only $3.99.)  E-book it is, then, but this is definitely best viewed on a computer or tablet with a larger color screen.

Cool photos are nice, but it’s Italy after all, so you expect physical beauty. What about the book itself (and why would a wine enthusiast care)? 

Two Books in One

There are really two books here. The first can be thought of as a Practical Companion to Grappa because it really does tell you nearly everything you might want to know about this fiery liquid and in an interesting and informative way.

Grappa is closely related to wine because it is distilled from vinaccia, the grape solids that remain from the wine making process. The vinaccia residue from red wine is already alcoholic, since the skins and the juice were in contact during fermentation and can go straight to the distillery pot (fresher is better, the author advises). White wine vinaccia is alcohol free because the skins were whisked away before fermentation — these aromatic solids need to be fermented before distilling can begin.

The Wine Road to Grappa

So wine and grappa are related both in terms of raw materials (the grape varieties) and process, but there’s a lot more to the connection than this. Author Boudin assumes that you probably know very little about grappa, but that perhaps you know a bit more about wine and he exploits this fact. He defines the process of making grappa by  reference to wine-making, he talks about grappa terroir and he even outlines a grappa-tasting protocol that generally parallels wine tasting but is fundamentally different from it in some respects.

Grappa is tasted differently from wine because grappa is a different and much stronger drink with a different purpose. Wine tasting is performed on certain occasions or moments – for example when a new bottle is opened or when a glass of wine is served – and afterwards the wine is enjoyed. A grappa on the other hand should be tasted every time! At every intake of the bouquet, at each mouthful, at every swallow and at every taste sensation and association. Grappa is a complex sensory experience that simulates an inner-dialogue as well as a discussion around the table.

Good advice, I think if you want grappa tasting, not grappa drinking and grappa drunking. But good advice for wine drinkers, too. We shouldn’t take these precious liquids for granted. We should always taste (and enjoy)!

Unexpected Pleasures

The fact that Boudin’s insights about grappa often apply to wine is one of the unexpected pleasures of reading this part of the book. To pick an appropriate economic example, Boudin writes about the difference between artisan grappa and the bulk industrial product (a difference that exists in the wine world).

You might expect that he would praise the boutique product and condemn the manufactured commodity. But you would be wrong.

Some aficionados and purists (who only accept boutique grappa) are of the opinion that industrial distillers are a threat to the future of true grappa. However, both distillery schools have their different roles that in the big-picture presuppose each other’s existence.

The role of the industrial distilleries is to provide the world with grappa. Volume production and efficiency are key words here. Industrial-scale grappa is made from not only fresh grape skins, but also grape skins that have been stored for a period of time. Due to the production techniques, industrial grappa has a more neutral flavour. But industrial distilleries can still deliver a good, consistent-quality grappa. …

Customers have the right to know what they are buying. When, where, of what, by whom and by which method is the grappa made? Today, there are not enough labeling requirements to ensure that detailed information is consistently provided. The manufacturers themselves determine to a large extent what should appear on the bottle.

A declaration of goods of this kind would be beneficial for the smaller artisan distillers as they could lay claim to certain quality concepts as discontinuo (batchwise production). The industrial distilleries could offer this as they have the resources, the advantage and a global market. And a stronger focus on the quality of grappa would increases the interest in grappa and consequently the market.

This scenario would benefit all grappa producers.

Giro d’Italia / Grappa Edition

The second part of the book reports on a personal tour through Italy’s grappa heartland and it reads like what it is — a grappa enthusiast’s travelogue, complete with all the practical facts (I visited this town, stayed at this agritourismo, dined at this small restaurant, etc.) that you might expect. It is well written and useful if you want to follow in Boudin’s tracks, either for grappa or wine or simply for  pleasure.

I’ll admit that I didn’t read all of this part of the book. I only wanted to know one thing: Did he go to the hills outside of Asti and visit Azienda Rovero? Sue and I stayed with the Rovero family during our 2011 trip to Piemonte. We loved their wines and the local cuisine they served at the restaurant.  The grappa was great, too, but I ignored Boudin’s advice and didn’t taste it in all its fullness.

But I will the next time because of course he did go there and devotes ten pages to his experience. It sounds like it was one of the highlights of his journey.

Grappa: Italy Bottled is a beautiful book that will interest a wide audience that includes wine lovers. Highly recommended!

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The photo above shows the chapel at the Rovero winery and distillery. Boudin had dinner there and so did we. Here are notes from our meal for your reading pleasure!

One highlight of our stay was a meal at the family restaurant, which is generally open only on weekends. Enrico’s mother prepared a menu of regional dishes that Enrico paired with Rovero family wines. It was the perfect way to learn about the wines — tasting them with the local Monferrato cuisine while talking with the winemaker about wine, wine markets and his plans for the future.  So you want to know what we ate, of course. OK, here’s the menu.

  • Two types of typical Piemontese salami crudo
  • Small puffed pastries stuffed with local cheese
  • Fried zucchini flowers
  • Soft herbed cheese
  • Salad of shredded chicken and radicchio in balsamic dressing
  • Zucchini and basil flan in an intensely rich Parmesan cream
  • Torta di fagiolini (green beans)
  • Tagliolini (thin, flat pasta) with peas and zucchini
  • Veal and roasted potatoes in a Barbera sauce
  • Panna cotta, bonet (chocolate panna cotta), and hazelnut cake

And the wines that complemented the meal:

  • Rovero Baptista (Riesling Italico)
  • Rovero Villa Drago (Sauvignon Blanc)
  • Rovero “La Casalina” (Grignolino D’Asti)
  • Rovero Spanase’ (Barbera D’Asti)
  • Rovero Nebbiaia (Nebbiolo Monferrato)
  • Rovero “Gustin” (Barbera D’Asti Superiore)
  • Rovero Rouve (Barbera D’Asti Superiore aged in French oak)
  • Rovero Brachetto (frizzante red dessert wine)
  • Rovero Calasaya (fortified Barbera D’Asti)
  • Rovero Ampolo Reserva 1998 (grappa made from Barbera)
  • Rovero Brandy (aged in barrel for 10 years)

Exaggerated Reports? Wine Writing and Wine Reading

“The reports of my death are greatly exaggerated.” – Mark Twain

This post is provoked by Andrew Jefford’s now-famous speech “The Wine Writer is Dead,” which he gave at a meeting of European wine bloggers in Izmir, Turkey last month. It’s a great speech, full of wisdom and insight — click here to read the written version on Jefford’s website.

Jefford’s title made me think of the famous scene in Mondovino (see video above) where Aimé Guibert declares that wine is dead (and cheese and fruit, too). It seems to me that Guibert’s obituary for wine was based on the fact that people try to make a living from wine in an increasingly global and competitive market environment and this changes things, although perhaps not as much as Guibert suggests since money and wine have always intermingled and it is foolish to pretend otherwise.

Jefford talks about the problem of making a living, too, and the changing writers’ market environment, but he doesn’t suggest that wine writing has lost its soul in the way that Guibert mourns the death of wine’s essence. Certainly it is difficult to earn a living writing about wine, especially with the decline in paid print-media jobs, he says. So wine writing has evolved into something broader — wine communications  — which seems to be about story telling in all its forms using all available media outlets.

“The world probably doesn’t need more writers … [but] the wine world will always …  need multi-tasking communicators …”.

I tend to agree with Jefford that telling stories about wine is much more than simply writing for print publications, but I wonder if wine writing has ever really been such a narrow and focused endeavor as he describes? He’s been at this longer than I have, so I suppose he is right, but my sense is that the his distinction between wine writing (RIP) and wine communicating is not so sharp as he suggests and that if wine writing has died it probably did so a long time ago.  In any case his point — that people who tell stories about wine should seize every opportunity to do so — is certainly well taken.https://i2.wp.com/www.twainquotes.com/exaggeration2.jpg

Is the Wine Reader Dead, Too?

I’m not really worried about whether wine writing is dead or alive. I’m more interested in wine reading, which I specifically do not define as reading about wine exclusively in paid (generally print) publications. Wine reading seems to be changing dramatically and that’s the more interesting  trend. Unsurprisingly, I tend to think about this in economic terms.

Economists who study the economics of food choice believe  that a key factor in  the growing consumption of high fat fast food is  cost — fast food is relatively cheap both in  terms of money and time, which are strong economic incentives. Even when healthier food is available and consumers understand something about nutrition the economic incentives push and pull them into the drive-through lane on the margin.

I think the economics of readership (and wine readership) works the same way. I’m not saying that writing on the internet is the intellectual equivalent of “empty calories, ” but the shift of readership from traditional print publications to electronic media is influenced by economic incentives (as well as other factors of course).

Electronic texts are obviously cheaper in terms of marginal dollar cost since most of them are available free on the web and even the electronic versions of books are often cheaper to buy than the print versions. And you can often access electronic documents in a fraction of a second rather than the minutes, hours, days or weeks that it might take to get a copy of a print publication. Fast beats slow in a time-constrained world just as cheap beats expensive when money is scarce. No wonder readership patterns are changing.

The shift is magnified by the technology associated with electronic publications — especially tablets and smartphones. I may have already told you about my university student who explained to me that he was going to do his senior year on his smart phone — all his reading and writing would be iPhone-based or not at all. He succeeded after a fact, which I found a bit shocking. Shifting from iPhone to iPad, I think he might succeed quite well today and there’s nothing shocking about it.

Follow the Money, Deep Throat Advised

Reading has always been as much affected by economics as writing. Imagine the chaos created by the introduction of paperback books in the 1930s (or read about it here).  Some observers predicted that paperbacks would be the death of the traditional book world, but in fact it seems that they ended up creating more readers and therefore more writers, too.

Follow the readers. This seems like good advice and I think it is Jefford’s’ point as well. The readers (and viewers and listeners) are shifting, responding to technological change and the altered economic incentives they confront. Writing has to do the same in order to stay relevant, and if a certain idea of wine writing (or writing in general) is a victim of the changing times I think we have to accept that and move on. Joseph Schumpeter called this sort of process creative destruction and we need to take account of what has been created as well as what is lost. Jefford understands this, although he doesn’t put it quite this way, which is why I recommend his talk to you.

It seems to me that there are probably more wine readers today than ever before in history, which is good news for wine writing, however you define it. As Mark Twain might have said, reports of its death are exaggerated.

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Paperbacks then, Kindle today?