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What exactly is the relationship between price and quality? Seriously…

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Before I wade into the thicket implied by my header, let me bring to your attention this little spat from across the pond, in which the spokesman for Britain’s third largest supermarket chain accuses the editor of Decanter of being a “snob” after the editor, Guy Woodward, told the BBC there’s a “huge amount of difference” between bottles of wine that cost only 2 British pounds apart, with the more expensive being the better.

The tiff lit up British twitter boards with the ferocity of a royal wedding (well, almost), forcing Woodward to explain what he really meant. On The Telegraph’s website, he said that, at the average price of £4.60 paid in Britain for a bottle of wine (about $7.50 U.S.), “the chances of getting an interesting wine are slim.” Although he had praise for certain cheap wines, including a Rioja, Woodward remained unapologetic. “But these wines remain the exception rather than the rule…”. Continuing, Woodward calculates that “If the price of wine were to rise, producers would be paid a decent wage to reinvest in their vineyards, we’d have better wine [and] people would learn to appreciate it…”. It’s the price wars, with all their deep discounting, that rage in Britain, as here in the States, that keep the cost of wine low, and thus the quality–or so Woodward says.

Is he right?

Well, readers of this space, as well as those familiar with my reviews, know I have long argued that the correlation between price and quality isn’t as neat as you might wish it to be. Often as not, I’ll give a winery’s standard bottling a higher score than its pricier reserve. In big blind tastings, such as the ones that the Napa Vintners arrange for me, I’ll often rate relatively inexpensive wines ($25-$40) equal to, if not higher than, super-expensive cults. I love giving a Best Buy to a wine when it conforms to Wine Enthusiast’s price-rating guidelines. And even when it doesn’t, I’ll give a coveted Editor’s Choice to a wine that out-performs for the price.

But in general, I’d have to agree with Guy Woodward: it is awfully hard to get a great bottle of wine for $7.50. Or even $10. Not to say it’s impossible; it can be done, especially nowadays, when negociants like Cameron Hughes are able, somehow, to buy expensive, well-grown wines at big discounts from producers, who can’t sell it. This is why there are so many great Napa Cabernets lately in the $20-$30 range.

But $20 is not $7.50. At that price point, you have to do your homework very carefully–either that, or you just can’t be too fussy. The wine price wars are fought as fiercely here as in Great Britain, perhaps even more so, driving quality down to an acceptable bottom rung, below which not even the most aggressive producer dares to sink, lest the consumer reject his wines in droves. I have frequently defended the big, mass producers for giving Americans what they want and can afford–but let’s not pretend that these are quality wines. I will claim Guy Woodward’s words for my own: Under $10 or so, “the chances of getting an interesting wine are slim.”

  1. It’s worth quoting Guy Woodward a little further in terms of the tax situation on wine in the UK. With regard to that £4.60 cost: “Half the money goes immediately into the pocket of the taxman. That leaves £2.30. Factor in the transport, the packaging, labour, marketing, the retailer’s margin – and you’re left with around 50p for the wine. Buy a wine at just £6.99, and that extra £2 is all going on the wine itself.”

  2. I must agree with Guy a bit as well. We have a Wine of the Month at our store, a wine we feel offers exceptional value and for years, (about fifteen to be exact) it was $10 and under. That past couple years we have been truly struggling to find wines we wanted to showcase, or were excited about. We found okay wines and just about wrung Spain dry of $10 and under reds but great wines? Wines that thrilled us and we felt everyone just had to try….yeah, not so much. We decided to raise the bar as it were and made the cutoff $15 and under…..whole world of truly exciting wines opened up. A stunning difference in quality in just that little bump. We’ve sold far more wine because of it.

  3. Our dear Samantha also commented on my blog this morning when I praised Castle Rock for offering some good wines for the money. Not every wine they put under their label is a “choice” bottle, but there are wines for all palates, and while I agree (as we all do) that higher price points do increase the likelihood of finding higher quality, there is still relatively useful wine that delivers recommendable quality for price at $12 and once in a while at ten dollars and under–espcically in whites.

    I get the Woodward comment and the opposition to it. I don’t drink $7.50 wine by choice, but my neighbors do, and they do drink Castle Rock and Beringer and Beaulieu and Rodney Strong wines with price tags in the $10-15 range when they can be found at discount. Woodward was not wrong so much as he allowed his words to be misinterpreted. It is something that we who live in the rarified end of the wine world need to take care to avoid when we start criticizing inexpensive wine and the people who drink it.

  4. Charlie, it’s hard to not get one’s words misquoted or taken out of context, in this media crazed world where every blogger can weigh in. I try not to worry about it, and just tell it like it is (or like I think it is!).

  5. Steve and Charlie,

    Along these lines, an offshoot conversation of Woodward’s comment, it’s disappointing from a US consumer point of view to not have a domestic $10-$15 quality wine category of any depth that can compare to the really great $10-$15 selection of excellent wines making their way here from France and Spain via top negociants and importers that don’t need any publicity here. I sense it is US economics vs backcountry EU farm economics, but it’s something to lament over, I think.

    Adam

  6. Quality vs price is why I started WineBlueBook. A wine can be a value at $100 if its peers are priced at $200… Examples include Domaine de la Pousse d’Or, Faiveley, Château Léoville-Barton. We define a wine as a value if the street price of the wine is 25% lower than other wines with similar scores. A great value is 50% or less and an outstanding value is 25% or less (and yes, there are a handful of wines out there that are 75% less than average price).

    And yes, Castle Rock consistently has great value pinots at $10 because they score 85-87 and the average cost for West Coast Pinot that received 85-87 points is $28 – $33.

  7. Woodward is spot on. Marginal gains in quality per unit price are greatest at the lowest price points. For large production wine, the base costs of distribution, tax and all that good stuff will be relatively fixed. So any incremental price increase should largely go to better fruit and wine-making. From $10 to $15 or $20, one can go from simple, acceptable wine to very good, interesting wine. From $20 to $30 or $40, it is not so clear cut whether you will get a clear cut improvement and how much better a wine you get per $.

    I think the folks claiming $100 wines can be relative values are full of it, however. Just because a wine is less overpriced than its very overpriced peers does not a value make. Worth it is another question–it may well be, and put less hurt on your wallet than its peers.

    The problem here is folks underestimate the fungibility of even rare and collectible wine. Structure, oaked and ripe young wines are really not that rare. Aged wines should demand a huge premium because they are indeed rare (and bottle variation makes each wine different to boot!). If you take two single vineyard wines, yes, they will be different, but take away the labels and are you really going to care? Different, yet equal–if swapped few would notice or care.

  8. This brings to mind the anecdotal story of the well known central coast winery which pioneered high quality Pinot Noir and priced it appropriately high but comfortably profitable. They enjoyed consistent critical acclaim and were happy to hold the line on pricing for years. As the region’s reputation flourished competitor neighbor wineries gradually floated their price north of the lead winery benchmark and were rewarded with higher scores at its expense. Despite fixed costs and maintaining consistent quality they choose to reposition the pricing higher. Lo and behold the loftier scores returned.

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