My new book Extreme Wine is now officially available and Wine-Searcher.com has just published an excerpt, so you can get a sense of the book’s style and content, both of which will be familiar to regular Wine Economist readers.
The editors at Wine-Searcher picked part of Chapter 4, which is titled “The Invisible Wine” and deals with wines that are for various reasons so scarce (or in some cases so ubiquitous) that they are nearly invisible. I probe a number of extremes in this chapter, but the editors asked to reprint the section on “Twenty Dollar Bill Wines.” Here’s how the piece begins …
Twenty-dollar-bill wines don’t really cost twenty dollars, so you can put your wallet away. The name comes from a joke that is popular among economists and therefore essentially unknown to the rest of the world. The joke goes like this.
A non-economist walks into a bar and says excitedly to the bartender (who is an economist). ‘Wow, this is my lucky day! I just found a twenty-dollar bill on the sidewalk in front of your bar!’ The bartender takes a long look at the fellow, who is waving the bill in the air. ‘No, you didn’t,’ he says. ‘Yes, I did!’ replies the customer. ‘See, it’s right here!’ ‘Can’t be—you’re wrong,’ the economist-bartender coolly replies. ‘You’re ignoring rational economic theory. If there had been a twenty-dollar bill on the sidewalk, someone would have already picked it up. So it is logically impossible that you could have found one.’
‘But look—here it is!’ the customer exclaims. ‘Look, buddy,’ the bartender says, turning away, ‘What do you think I’m going to believe—your bill or my theory?’
The joke of course (sorry, but economists always explain jokes, even the obvious ones) is that economists tend to believe their theories even when they can clearly see refuting evidence with their own eyes. You would think that this makes economists different from regular folks, but in the case of rare wines, we are all pretty much the same.
There are many ‘cult’ wines that are famous for being impossible to buy. They are so scarce, the story goes, that they are all invisibly absorbed by the lucky few folks who years ago gained access to the wine-club distribution list. No one else ever gets a shot. They are as rare as rare can be. I call these the twenty-dollar-bill wines because if you saw one (at a wine shop or on a restaurant wine list), you would probably rub your eyes. Impossible! How could that be? Must be a mistake (or maybe a fake!). If they really had that wine for sale, they would already have sold it.
Now the dirty little secret of these wines is that they are sometimes quite reasonably available, but the myth of impossible scarcity is maintained because that’s how myths work and because no one can believe their eyes. …
Click here to go to Wine-Searcher.com to read the rest of the selection.
By the way, if you still think of Wine-Searcher only as a website that provides information on particular wines, their ratings, prices and availability (see this search for Opus One, for example), then you need to think again because the editors have created a really exciting website with news, features and a wide range of other wine enthusiast information.
There’s more to Wine-Searcher than the searcher part, so you should check it out. (And, yes, they do also publish my column on wine investment, so I have filed this post under “Shameless Self-Promotion.)
Thanks to Wine-Searcher for publishing the Twenty Dollar Bill wine excerpt. Enjoy!
I’ve always loved that joke. And it’s not just a spoof of economists who prefer a theory to facts on the ground. Lots of “regular” professionals work backwards from the assumption that the market must be working efficiently. I once had a PR/marketing guy argue with the data from a well-controlled experiment on a large representative sample. He basically said “if that labeling works so well, wouldn’t someone have already done it?”
Mike,
Here’s the way I heard it the joke . . .
You and your readers are probably familiar with this motto: “A fact trumps a theory every time.”
~~ Bob
Excerpt from The Wall Street Journal “Main News” Section
(July 21, 2008, Page A11):
“Good Scholarship Is Worth Honoring”
[Link: http://online.wsj.com/article/SB121659713454068889.html?mod=relevancy%5D
By L. Gordon Crovitz
“Information Age” Column
. . . A favorite [University of Chicago] campus joke describes an economics student running up to [Milton] Friedman and fellow economist George Stigler to ask why they had stepped over a $100 bill lying on the sidewalk. Their reply: “Don’t be foolish. If there had been a $100 bill, someone would have picked it up.”
. . .
ON THE SURPRISINGLY LOW COMPARATIVE COST OF PRODUCING “EVEN THE [WORLD’S] BEST WINES . . .”
Excerpt from The Atlantic Magazine
(December 2000, Page Unknown):
“The Million-Dollar Nose”
[Robert Parker profile]
[Link: http://www.theatlantic.com/past/docs/issues/2000/12/langewiesche3.htm%5D
By William Langewiesche
. . . For those in the business, maintaining that [elite drink] image is important not only for commercial reasons but also for reasons of personal prestige. Every stage of the trade is involved in establishing the high prices, but ultimately those prices can be sustained only through the retailers and their sales efforts. The problem for the retailers is that wine — unlike luxurious hotel rooms and other hyperinflated products generally covered as business expenses — is usually paid for directly out of the consumer’s pocket. This makes for a scary business, especially toward the high end, where The Wine Advocate roams.
The truth is that even the best wines cost only about $10 a bottle [circa 2000] to produce, and they are not inherently rare. If the initial cost is tripled to allow for profits along the path of distribution, one can reasonably conclude that retail prices above $30 are based on speculation, image, and hype. . . .
ON THE SUBJECT OF LUXURY GOODS PRICING . . .
Veblen goods – http://en.wikipedia.org/wiki/Veblen_good
[Excerpt: “Some types of luxury goods, such as high-end wines, designer handbags, and luxury cars, are Veblen goods, in that decreasing their prices decreases people’s preference for buying them because they are no longer perceived as exclusive or high-status products.”]
Giffen goods – http://en.wikipedia.org/wiki/Giffen_good
[Excerpt: “Some types of premium goods (such as expensive French wines, or celebrity-endorsed perfumes) are sometimes claimed to be Giffen goods. It is claimed that lowering the price of these high status goods can decrease demand because they are no longer perceived as exclusive or high status products.”]
Mike,
On the subject of (literal) $20 wines, I recently took on as a consulting client a new wine store/wine bar/beer bar in Long Beach, California.
I did a deep dive in the wine portfolio price guides of the distributors and brokers (reviewing over 7,000 discrete wines) to come up with the 150 or so that meet this criteria:
“Great vintage – great producer – great property or appellation.”
You will be pleased to know I stocked the store with a lot of Washington state wines.
Here are wines that sell in the store for $19.95 and I recommend:
Whites:
2009 Coquelicot (Santa Ynez, California) Sauvignon Blanc
2012 Tablas Creek “Patelin de Tablas Blanc” (Paso Robles, California) white Rhone blend
2012 Chat. Ste. Michelle “Eroica” (Washington) Riesling
Reds:
2009 Amity “Organic” (Oregon) Pinot Noir
2009 Novelty Hill “Columbia Valley – Royal Slope Red” (Washington) Bordeaux-Rhone varieties blend
2012 Neyers Sage Canyon (California) red Rhone blend
2009 Anderson’s Conn Valley “Prologue” (California) Cabernet Sauvignon
2009 Chateau St. Jean (California) Cabernet Sauvignon
2010 Snoqualmie “Reserve” (Washington) Cabernet Sauvignon
2010 Hugel (Alsace) Pinot Gris
2011 Hugel (Alsace) Riesling
There are more — but I don’t want to give away ALL my “secrets.”
Enjoy !
~~ Bob