subscribe: Posts | Comments      Facebook      Email Steve

How wine can be as cool as beer and cocktails

24 comments

 

It’s certainly true, as Robert Parker pointed out in his recent interview in The Drinks Business, that high wine prices are “a problem and a concern” and that they are creating “a caste system” in which “the younger generation” cannot afford top wines from regions such as “Burgundy, or Bordeaux, or from California.”

But there’s nothing really new about this situation. It’s been so forever. In fact prices for Bordeaux today, adjusted for inflation, are no higher than they were 100 years ago. What is interesting, to me, is the complex psychological contortions by which consumers (and some critics as well) arrive at the conclusion that price is a determinant of quality.

Long ago, vintners understood that the public suffers from this misapprehension. According to Edmund Penning-Rowell, who wrote what is still, to my mind, the most authoritative book on Bordeaux (“The Wines of Bordeaux,” 1969), Baron Phillippe’s [de Rothschild] intense conviction [was] that Mouton-Rothschild was as good as any first growth, and for his money better than most. The only way that this [i.e. rise in its perception by the market] could be achieved was by asking a price as high as any first growth and if possible higher than all.” As Penning-Rowsell later makes clear, the Baron “was able to do this successfully.”

Baron Rothschild, of course, also was the partner of Robert Mondavi in establishing Opus One, which, at the time of its launch (the first vintage was 1979), was the most expensive Californian wine.”

This strongly suggest that Mondavi learned his lesson in pricing from his friend. And we know, from personal experience, how many wineries, faced with tough sales, raised their prices, only to find demand radically increased.

Nowadays, the price of Opus One (about $240 for the 2011) pales in comparison to that of Screaming Eagle ($2,400 for the 2012 in the aftermarket). If your mind works the way most peoples’ minds work (including mine), it can be hard not to be impressed by that kind of price. A rational part of you thinks, “If it costs that much, and knowledgeable people are willing to buy it, then it must be one of the most fabulous wines in the world.” And, of course, these very famous and rare wines always are fabulous. But their prices bear no relationship to their quality, with respect to similar wines from similar appellations. This is why seasoned wine critics taste blind.

Back to Parker. He knows as well as anyone that the Bordeaux, Burgundies and Californians he helped push to astronomical heights can be very difficult to suss out in blind tastings. Why some people continue to buy them is, in fact, a matter for behavioral and cognitive scientists, not wine critics. As for the “younger generation,” I’m not so worried about them. They couldn’t afford Bordeaux First Growths in 1929, when Latour et. al cost nearly three times the price of Gruaud-Larose and Langoa, and they can’t afford it now.

Is price, as Bob speculates, “one reason why such people are turning to drinks other than wine.” ? It could well be, although good craft beer cannot be described as cheap. As I, and many other, observers have noted lately, beer and spirits seem to have the wind at their sails in a way wine at the moment does not, at least in our urban centers. Another question: Has this trend been created and fostered by the media, or did the media simply pick up on something that was already occurring on the street? As usual, it’s a little of both. What craft beer and cocktails have done—which wine has not—is to rise to the level of being cool. All those tattooed young mixologists, those hip brewmeisters, the trendy bars that have popped up from the Mission to Soho—they are the modern face of beer and spirits. What is wine’s modern face? As far as I can tell, it’s a young woman who opts for Pinot Gris on a date, your grandfather, or a somm.

I don’t overly fret about wine’s future because these trends come and go. Wine has been the most successful alcoholic beverage of all time for a very good reason; and what has worked for humans for thousands of years is likely to work for them for thousands more. Nor is wine in any particular financial trouble in the U.S. But it has lost a certain frisson of coolness, or at least the perception, the optics of frisson. In reality, wine is as cool as anything: winemakers themselves are as cool as any dashing mixologist, if not as visible.

But beer, in particular, is on a roll. In Britain, the brew industry is sponsoring a “There’s a beer for that” advertising campaign, crafted by the wildly successful filmmaker Michael Winterbottom (nominated for the Palme d’Or at Cannes), that was launched on Downton Abbey, and also is huge on Twitter and other social media.

If the industry is to lure the under-35 crowd away from beer and spirits to wine, it has to find ways to speak to them in their own language, on their own turf. This involves an accurate and fearless study of how beer and spirits are actually succeeding. One could do worse, as an academic enterprise, to hang out in a Valencia Street bar and study who’s drinking what. I volunteer for this vital work in the field, as the Margaret Mead of the cocktail lounge.

  1. From a consumer perspective, is it even relevant whether wine is cool or not? Maybe if wine is “uncool,” then it will be cheaper.

  2. I like my whites chilled. Chard at 50, Sv Blc at 47, Riesling at 44 and bubbles at 42. Anything below those temps and the wines are no logner cool. They are cold.

    But I like my reds at cool room temperature.

    So, yes, as far as I am concerned, wine is cool.

    Rimshot!!

  3. Bob Henry says:

    “A rational part of you thinks, ‘If it costs that much, and knowledgeable people are willing to buy it, then it must be one of the most fabulous wines in the world.’ And, of course, these very famous and rare wines always are fabulous. But their prices bear no relationship to their quality, with respect to similar wines from similar appellations. This is why seasoned wine critics taste blind.”

    When I set about organizing my winetasting luncheons here in Los Angeles, my aspiration was to assemble as many highly touted wines by the Parkers and Laubes of this world to not only assess their comparative quality . . . because I couldn’t afford to buy every “cult” wine offered to me.

    (And I had a second motivator: to “judge the judges.” Did my perceptions align with Parker’s or Laube’s “take” on the wine? Did they value the same things I appreciate in a wine? When our palates agreed, then I turned to their reviews as a “first filter” in seeking out wines for my own personal enjoyment. And if our palates differed, then I knew to seek out other counsel.)

    Access this website: http://www.kirktech.com/bob_henry/

    Troll through the California tastings.

    With a few exceptions (the vertical tastings), each event was a single vintage/single blind tasting. Wines scoring 100 points and 99 points and 98 points and 97 points down to (say) 95 points. Wines whose identities were kept confidential by one person brown bagging the bottles to look as anonymous as possible. And a second person “randomly” numbering them to assign a pour order to the wines, sampled in discrete flights of six bottles.

    And what was the upshot?

    No one brand consistently garnered “first preference vote” across the arc of sampled vintages. Not Screaming Eagle or Harlan or Colgin or Shafer or Bryant Family or Araujo or Peter Michael or any other top tier Cabernet or Cabernet-blend.

    And sometimes “sleeper” wines that cost less than the near-10% California sales tax on a bottle of Screaming Eagle trumped the elites.

    Dan Berger, in “On Wine” column in the Napa Valley Register, quoted the late Louis M. Martini as observing: “We like best that to which we have become accustomed.”

    If you enjoy so-called “California fruit bomb” wines — who am I to question you? Likewise if you enjoy more so-called “restrained” wines of similar ilk from Europe.

    Its your money, expend it in the marketplace as you prefer.

    Our tastes are filtered through the prism of a lifetime’s worth of experiences. We are all operating in the realm of personal opinion.

    (Aside: Even Parker admitted his own caprice on this subject. Quoting from The Wine Advocate circa 2002:

    “ . . . Readers often wonder what a 100-point score means, and the best answer is that it is pure emotion that makes me give a wine 100 instead of 96, 97, 98 or 99. ”)

    And should your preferences evolve over time . . . that’s to be expected. And a good thing.

    [On the subject of how pricing conveys “status” and perceived “higher quality,” see my next comment.]

  4. Bob Henry says:

    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.”]

    ON THE RELATIONSHIP BETWEEN WINE PRICINGT AND PERCEIVED QUALITY . . .

    Excerpt from New York Times “Dining Out” Section
    (May 7, 2008, Page D1ff):

    “Wine’s Pleasures: Are They All In Your Head?”

    [Link: http://www.nytimes.com/2008/05/07/dining/07pour.html?pagewanted=print%5D

    By Eric Asimov
    “The Pour” Column

    . . . Robin Goldstein, a food writer, [devised a study] . . . to try to isolate consumers from outside influence so they could simply judge wine by what’s in the glass. He had 500 volunteers sample and rate 540 unidentified wines priced from $1.50 to $150 a bottle. The results are described in a new book, “The Wine Trials,” to be published this month by Fearless Critic Media.

    . . .

    The researchers scanned the brains of 21 volunteer wine novices as they administered tiny tastes of wine, measuring sensations in the medial orbitofrontal cortex, the part of the brain where flavor responses apparently register. The subjects were told only the price of the wines. Without their knowledge, they tasted one wine twice, and were given two different prices for that wine. Invariably they preferred the one they thought was more expensive.

    “Forget those blurbs about bouquets, body and berries,” one newspaper account crowed. “A meticulous new study found that the more people think a wine cost, the more they like it. And the less they think it cost, the less they like it.”

    . . .

  5. Bob Henry says:

    Excerpts from CNET News
    (January 14, 2008)

    “Study: $90 Wine Tastes Better Than the Same Wine at $10”

    [Link: http://www.news.com/8301-13580_3-9849949-39.html%5D

    Posted by Stephen Shankland

    In a study that could make marketing managers and salespeople rub their hands with glee, scientists have used brain-scanning technology to shed new light on the old adage, “You get what you pay for.”

    Researchers from the California Institute of Technology and Stanford’s business school have directly seen that the sensation of pleasantness that people experience when tasting wine is linked directly to its price. And that’s true even when, unbeknownst to the test subjects, it’s exactly the same Cabernet Sauvignon with a dramatically different price tag.

    Specifically, the researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure. Brain scanning using a method called functional magnetic resonance imaging (FMRI) showed evidence for the researchers’ hypothesis that “changes in the price of a product can influence neural computations associated with experienced pleasantness,” they said.

    The study, by Hilke Plassmann, John O’Doherty, Baba Shiv, and Antonio Rangel, was published this week in the Proceedings of the National Academy of Sciences.

    . . .

    The research, along with other studies the authors allude to, are putting a serious dent in economists’ notions that experienced pleasantness of a product is based on its intrinsic qualities.

    . . .

  6. Bob Henry says:

    Erratum.

    At the last second just before launching my comment, I re-edited this paragraph (and not for the better). Once again, with clarity:

    When I set about organizing my winetasting luncheons here in Los Angeles, my aspiration was to assemble as many highly touted wines by the Parkers and Laubes of this world to assess their comparative quality . . . because I couldn’t afford to buy every “cult” wine offered to me.

  7. In a room of fellow wine drinkers, I’m one of the first to point out that “points don’t matter.” What I mean, of course, is that I personally don’t pay attention to scores when making personal buying decisions. I care more about what people I know think about a wine and because I am educated about it, I am able to make an educated guess about whether I will like a wine or not.

    Realistically, wine is just like any commodity and its prices are set by supply and demand. If someone is willing to pay $2,400 for a bottle of Screaming Eagle, which might cost the winery as little as $100 to produce, then it’s worth $2,400.

    I think the “cool” people have become attached to beer and cocktails largely because it is affordable. They also have the appeal of being handmade, a label wine hasn’t been able to successfully market. You can even make beer and cool cocktails at home relatively easily, if you really want to. It’s much more labor intensive to do so with wine. As part of this generation that is looking for less mass-produced and more homegrown products, wine needs to find a way to make “small production” more affordable if it wants to succeed with our demographic. It’s been my experience that anything that is “small production” in the wine world is at minimum $40+ and more realistically, $60+. This is a hard sell for a consumer that spends less than that per month on my electric bill.

  8. I think the main problem is wine pricing in restaurants and bars. I am a winemaker and am always amazed that your average restaurant will charge the same price for a glass as they paid for the bottle, wholesale. Depending on serving size this is a 300%-400% markup! I understand there are costs involved like buying glasses (in bulk even Riedels are only $5 a pop,) paying for someone’s time to order and manage inventory, but it all seems so excessive. Margins on beer are similar for kegged beer, but paying $7 a pint just seems more accessible. When was the last time you had a good glass of wine out for $7?

  9. Bill Haydon says:

    Cris, the other side of the number is that wines by the glass have a 20-25 percent gross cost percentage. Wine by the bottle at a 3x markup has a 33% cost gross percentage. So average it a bit out, and the overall wine program will be somewhere in the high 20s (depending on the weighting proportion of glass to bottle sales). That is a higher cost percentage than either beer or spirits in almost any upscale restaurant and probably higher than food in all but the highest end restaurants.

    And cost percentages on kegged beer are far lower than wine by the glass. There are 1984 ounces in a keg. Assume a 5% loss, and you’re getting 118 16oz pints (and many restaurants use 14 oz “pint” glasses) or 826 dollars in gross revenue. I don’t know for sure, but anyone know if a keg of mainline craft beer (one that would sell for $7/pint) costs over $200 wholesale? Because that’s what it would need to be in order to have as high a cost percentage as wine.

    People want their wine to be more competitive? Well, that starts at the cellar door. Oh look, the euro dropped again. I guess that I can go into Spring and drop the by-the-glass deal on an 75 year old vine Muscadet from one of the best communes in the region down to $7/bottle wholesale and offer a restaurant a wine that is easily worth 9 or 10 a glass the ability to get their costs down into the teens! That’s how you compete–not expecting everyone else to take smaller profits so that your wine sells better.

  10. One thing that no one seems to be commenting on in regards to Robert Parker’s comments – I’ve never even heard of people buying these to collect and drink. They are mostly bought as commodities.

    In regards to making wine “cool”. I would love to drink wine at a cocktail bar (and sometimes I do). It’s just that usually the wine available is cheap and gross OR overly expensive (+$15 a glass for a $25 bottle isn’t really enticing). I have asked many a bartender and they just don’t care enough to stock anything I would be interested in drinking. I think it’s sad when the $15 cocktail can be viewed as the better option…

  11. “In reality, wine is as cool as anything: winemakers themselves are as cool as any dashing mixologist, if not as visible.”

    It’s not so much being “visible” as it is being interactive and accessible to the customer.

    If I go to the fancy cocktail bar in my neighborhood, the dashing mixologist is right there. He or she will make a drink to my exact specifications; and if the drink is a little bit off, it or the next one can be adjusted to suit me. I can watch the drink being made and appreciate the technique firsthand.

    That’s just not an option with wine unless you’re tasting with the winemaker. Maybe, at the very best wine bars with the best staff, the bartender will be sufficiently knowledgeable about their selection to be able to direct me to a wine that matches what I ask for. (And that’s a big maybe.) But at that point, the wine is already made; all that’s left to do is pull the cork and pour it. The bartender can’t add a little more tannin, or make the next glass a little less acidic. And the winemaker, as cool as he or she may be, is hundreds if not thousands of miles away.

  12. Dear Chad, I doubt that it costs Screaming Eagle $100 to make a bottle of wine! But as I wrote, top craft beer isn’t particularly affordable. I see shelves of single bottles in my local Whole Foods selling for $10, $12, $15 a bottle. And beer has only half, or less, the alcohol of wine. So it’s a bit of a mystery to me why beer and cocktails are so cool. I think it has to do with fashion and style and trends and buzz–those intangibles that are hard to explain, but are nonetheless real.

  13. Steve, you are absolutely right, Screaming Eagle costs more than $100 per bottle to make. My number was based on average costs of things like grapes, barrels, dry goods, etc. And I’m sure Screaming Eagle pays far more than the average price for many of these things. But even if it costs 10 times that and the release price is $1800-$2200 a bottle, that’s around 100% profit. My point with that is merely that supply and demand are large factors in the price of Screaming Eagle. They have done a superb job at creating incredible demand for a very limited supply product. And to be fair, their target audience is not the same people who are going out to their local bar for a cool new cocktail.

    As for affordability, yes there are single bottles of beer for up to $30 or more (I know Brew Dog beers can sell for $130 for 11.2 oz.). And yes they have less alcohol. But you’re assuming wine and beer drinkers are buying based on alcohol volume/dollar and that’s simply not true. Otherwise, everyone would be buying Dark Eyes Vodka for $15 for a 1.75L.

  14. Bill, I work for a craft brewery and some of our beers are $200 a half-barrel keg. As you said, the average cost of all beers sold is lower, as some of those beers only cost $130-$140 a half-barrel, yet they are still $7 a pint.

    There aren’t tons of wineries with a 300%-400% markup from COGs to wholesale costs. I feel ripped off buying a glass of wine at $15 a glass ($15 wholesale) versus a $7 pint. Like I said, a lower buy-in cost has a lot to do with this psychology. I’m not asking people to lose money selling my wine, but it does seem like most restaurants make higher margins on alcohol than food. This is opposite of other places in the world, particularly those with a stronger wine culture and higher per capita rates of wine consumption.

  15. Bob Henry says:

    Steve writes: “I doubt that it costs Screaming Eagle $100 to make a bottle of wine!”

    Chad writes: “Steve, you are absolutely right, Screaming Eagle costs more than $100 per bottle to make.”

    See this article . . .

    Excerpt from The Atlantic Magazine
    (December 2000, Pages Unknown):

    “The Million-Dollar Nose”
    [Robert Parker profile]

    Link: http://www.theatlantic.com/past/docs/issues/2000/12/langewiesche3.htm

    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 [wine] 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 TO PRODUCE (circa 2000), 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.

    [Capitalization added for emphasis. ~~ Bob]

  16. Bob Henry says:

    The mailing list release price of a bottle of Screaming Eagle is around $800. Add in shipping charges and California state sales tax, and your unit acquisition cost is around $900.

    Screaming Eagle sells in the “aftermarket” (e.g., wine stores) for $1,800 to $2,400 a bottle.

    The winery doesn’t “capture” any of that aftermarket mark-up.

  17. Some interesting things to consider and muse over…

    1) If wine were served more from a keg than bottle, a bar would make more revenue from it, assuming they could get over the hurdle of making kegged wine seem appealing to the under 35 crowd. And indeed, they easily could, because the price per serving would be at equilibrium with craft beer in many cases. Bottling wine is expensive. Bottling beer is expensive. Kegging is cheaper, requires less costs, etc. Wine bottles ain’t sexy to the under 35 crowd. Winemakers and bar owners, nota bene.

    2) The under 35 crowd really doesn’t care much about wine awards because the playing field is incongruent with how awards are given for craft beer. Even then, awards and tastemakers do not contribute much value to the under 35 crowd, because they perceive value largely in a digital environment that is both passive, quick, and largely decentralized. Parker et al is a largely hyper centralized value proposition, and such a proposition doesn’t appeal to the under 35 crowd. The old guard just ain’t hip enough no more. The dinosaurs had a meteor to usher them out, the singular old guard wine tastemakers have the internet.

    3) Expensive wine does not appeal to young professionals, because they are incentivized to park their money elsewhere. The have a different utility function.

    4) The marketing atmosphere for wine is really out of touch with current technology and social trends. Like, it’s really outdated insofar that Morse Code and telegrams seem to be the de facto strategies. Winemakers need to really start marketing more digitally and creatively: paper and trade shows don’t cut it anymore if the goal is to tap into the 35 and under demographic.

    5) Bars need to understand how to store wine and preserve it against oxidation better. The reason I don’t order wine from a cocktail bar is usually because the idiot bar manager (or owner) doesn’t understand how volatile wine is to oxygen, destroying it’s flavor profile quickly. However, such individuals will wax and moan about how their hipster coffee had sat out in the air too long and tastes bitter. Education goes a long way.

  18. Bob Henry says:

    David O.:

    I feel your pain.

    I always ask the bartender how their wines-by-the-glass are stored and preserved upon opening.

    If s/he doesn’t know . . . or doesn’t care . . . I switch my drink to draft beer (if I am camped out alone at the bar).

    Or order a full bottle off the list if dining with friends.

    Here’s a wonderful article on the subject.

    ~~ Bob

    The San Francisco Chronicle “Food & Wine” Section
    (Dec 14, 2007, Page Unknown):

    “Can This Wine Be Saved?”
    [Wine preservation techniques]

    Link: http://www.sfgate.com/wine/article/Can-this-wine-be-saved-Methods-of-preserving-an-3232805.php

    By Janet Fletcher

  19. It’s true – as a 29 year old in the wine industry, I completely agree that ‘wine’s modern face’ needs a new face, one that can be easily identifiable with the millennial generation. I have just embarked on a brand new wine project that we’re bottling in a couple of weeks: a rosé and a pinot noir…in beer growlers. Perfect unpretentious picnic wine, with a sustainable message: guests can bring back their growlers and receive back their deposit, and we will use the bottles again. What do you guys think? Will this wine be cooler?

  20. Bob Henry says:

    Lisa,

    Beer growlers are a half-gallon (64 ounce) capacity jug.

    Link: http://www.bonappetit.com/drinks/beer/slideshow/best-beer-growlers/?slide=1

    That’s roughly the equivalent of 2½ 750 ML bottles of wine. More than a magnum.

    How often do wine drinkers open two-plus bottles of the same wine at one time?

    According to BevMo’s website FAQ section on they’re selling beer growlers:

    “When refrigerated, your sealed growler’s beer has a shelf life of 2-3 weeks. The CO2 shots during the filling process provides the prolonged freshness of growler-filled beer. Keep your filled growler refrigerated for maximum freshness.”

    What is the shelf life of your rosé and Pinot Noir in a sealed growler? Do they need to be refrigerated to retain their freshness?

    How does one keep an open growler’s wine contents from oxidizing?

    The jug opening is larger than a Vacu-Vin stopper . . . so you can’t seal it with a partial vacuum.

    Carbon dioxide and nitrogen gas canisters are costly and ineffective. (Google this San Francisco Chronicle “Wine” section article: “Can This Wine Be Saved?”)

    Seems to me that opening a wine growler is a “same day use-it-or-lose-it” proposition.

    Bob

  21. Bob Henry says:

    Erratum.

    According to BevMo’s website FAQ section on THEIR selling beer growlers:

  22. Bob,

    Thank you for that information! There certainly are some cool growlers out there. Actually, our growlers are 750 ml and 1 liter in size, so they look like larger growlers, but they are smaller. Also, rather than having a flip-top, they are bottled using our bottling line, and have secure screwcaps. While the rosé is meant to be consumed over the next year, screwcaps do not allow for oxidation, so the rosé will keep for 2 or more years. For the 1 liter pinot noir, it is a fun, easy to drink pinot from the Russian River Valley, and is bottles in the same fashion. I estimate the pinot to be best consumed in 6 months through 3 years. If you consider a growler to only be a growler if it holds 64 ounces, then this would not be considered a growler; however, it looks the same, and is meant to be targeted towards the younger generation, who like beer and would hopefully find this a fun way to transition to wine.

  23. Bob Henry says:

    Lisa,

    Please elaborate on these statements:

    “. . . guests can bring back their growlers and receive back their deposit, and we will use the bottles again.”

    – and –

    “. . . our growlers are 750 ml and 1 liter in size . . .”

    If you intend to take back empty bottles for reuse . . . won’t you be spending an inordinate about of time and money removing the residual screw cap “ring” left on the neck of the bottle, washing and disinfecting the returned bottle for reuse, making a judgment call whether the original winery label (after the bottle has been washed/disinfected) is still aesthetically presentable, and attaching a new screw cap for refilling?

    Do the “wine growlers” have a tint to the glass to prevent the incidence of “light struck” wine?

    Link: http://articles.latimes.com/print/1990-12-13/food/fo-8860_1_wine-bottles

    Bob

  24. Really interesting post !! Wine is too much something about price !!

Leave a Reply

*

Recent Comments

Recent Posts

Categories

Archives