Category Archives: Value

Wine Economics Part III: Reputation

“What’s in a name? That which we call a rose by any other name would smell as sweet.” The Bard strikes to the heart again. In many ways, the first two posts on Wine Economics (Part I and Part II) danced around the importance of reputation. Today, we will hit the nail squarely on the head.

Haut-Brion, Romanee-Conti, Screaming Eagle (can you tell which winery is in the United States?), Margaux. Want a taste? Go take out a loan first. These names have garnered every superlative under the heavens. Apparently, nothing smells as sweet as those that carry notable names. The famous palates of the globe (world, not theater) score these wines straight into the realm of untouchable—95 points on an off vintage. Many have earned the perfect one-zero-zero. Countdown—kaboom! Prices have taken off! All of the above wines fall into the “cult wine” category, and most readers don’t need the advice to steer clear. You don’t really have an option.

Reputation carries great weight, and that weight can pull the price down or lift it sky-high. Individual wineries work hard to differentiate themselves from the pack, and the aforementioned wine critics are one tool in the bag. Most wineries, however, will never see the famed 95+ point mark, and therefore strive for the more important 90 point threshold. Recommendation #1: If value matters to you, buy 89 point wines more often than 90+ wines. Many critics have a bias toward big and bold, largely because they taste so many wines that only the brutes stand out. A plethora of 89 point wines fill wine shop shelves waiting to be appreciated for the blend of primary and secondary aromas, balanced fruit and acidity, and food friendliness. The brutes will take a club to your meal.

Evidence also exists to deny and support Shakespeare’s claim. Many of the great wines of the world, when stripped of their name in blind taste tests, have not smelled as “sweet” to the loftiest of critics. A few famous blind tastings have lifted up the lowly, and cast the mighty down. So perhaps when we broaden “name” to a varietal, a Cabernet Sauvignon by a name other than Screaming Eagle, Caymus, or Shafer can smell as sweet, seductive, compelling, nuanced, and complex. I recommend you find out for yourself.

Now pan 180 degrees left. Lindeman’s, Columbia Crest, Hardys, Casillera del Diablo: these also carry weight—the weight of the masses. These wineries play a different game, and most of you have heard of them as a result. All of these names offer good wines under $10. Breaking into the bulk wine business requires big money, and connections with the Costco’s and Trader Joe’s of the world. These mega wineries, and many others, have succeeded at this disparate game. One thousand $10 bottles earn you as much as that bottle of Haut-Brion.

Once out the doors of the winery, we look out upon the vineyards (location) and varietals discussed in Part I and II. Reputation plays hardball here also. Napa Valley Cabernet increases confidence, and often the price, more than Colorado Merlot. Piedmont Nebbiolo more than Languedoc-Roussillon Grenache. A parable. The owners of Division Winemaking Company, a Portland, OR label, started receiving phone call after phone call one evening. “What is going on?” Finally, one of the numbers popped a friendly face onto the screen, and so the owner answered. “Eric Asimov just recommend your Gamay Noir as the top choice this Thanksgiving.” Division Winemaking Company makes wine at a local cooperative winery they started. Number of cases? A grain of sand in the Sahara of wine. Read more here

Learn from this story. Reputable wines have typically earned their acclaim, but delightful value wines, at all price points, sit in plain sight in the new AVAs, at the local cooperative winery, in the lesser known wine-producing states and countries.

Recommendations to exemplify the point:2013-pinot-noir-bulls-eye_fitbox_300x800

And here ends the III part series on wine economics. Many simplifications exist in the information above. Economic factors certainly overlap and intertwine in a complex manner. However, generalities are necessary to discuss the topic meaningfully, even if imperfectly. 

Clearly, these three posts have only tickled the surface in regards to the manifold factors tilting wine prices. For example, labor costs, the winery facility and tasting room, and distributors also affect prices, and have gone unmentioned until now. I have also discussed economic factors in isolation without attempting to weigh the importance of these individual puzzle pieces. None the less, these broad strokes afford us the  opportunity to analyze our purchasing choices, and hopefully expand our wine repertoire. Allow the hidden gems to delight and surprise you.

Wine Economics Part II: Varietals

The New World has successfully managed to bring the names of specific grapes (a.k.a. varietals) to the forefront of our minds. Most Old World wines did not traditionally include varietal labeling, opting instead for location specific labeling–Pauillac, Rioja, or Barolo, for example. While much of the Old World continues this original labeling strategy, today I will focus on the varietals within the bottles, regardless of location, and their effect on the bottle price. If you have not read Wine Economics Part I: The Land, partake now.

Pinot Noir and Riesling serve as wonderful varietal exemplars. Respectable examples of Pinot Noir typically start at twice the price of their Riesling counterparts. Why? Winemakers age Pinot Noir, like many reds, in oak barrels–typically French oak for Pinot. New oak barrels from reputed Coopers in France cost $800-3500 per barrel (each contains 300 bottles of wine). This simple reality has obvious consequences for the finished price of many red wines. Cheaper red wines (under $10) frequently use oak chips or staves to reduce the economic impact, but nearly all well-respected wineries continue to use oak barrels.



Once beyond this clear difference, we now must dig deeper. Pinot Noir has earned a unique and significant reputation as the Poet’s Grape, the Devil’s Grape, the Seductress. All allude to the ethereal quality of this grape, which not only presents itself in the glass, but also in the vineyard. Pinot has devastatingly thin-skin, which has unfortunately made many vineyard managers and winemakers bald before their time–you think the presidency is trying! The fickle nature of Pinot Noir requires laborious attention in the vineyard, and this attention costs money–more hands and eyes on the vines. 

Riesling, however, suffers not from these monetary drains (or from want. . . we will get there). Riesling’s crisp acidity and frequent sweetness (for the semi-sweet and sweet wine lovers) needs no oak to shine. Many consider Riesling the ultimate terroir wine, as it has a unique ability to show its place, and the lack of muddling oak contributes to this reputation. Equally important, Riesling is hardy (like Cabernet Sauvignon) in the field. While Pinot Noir needs to be watched for downy and powdery mildew thanks to its volatile attributes, Riesling will quietly go about its slow, steady business of ripening like a stalwart tortoise.

Riesling also suffers not from want. Perhaps the most under-appreciated wine, except by sommeliers*, Riesling still manages to sell moderately well. However, it does not have the reputation for allure or stateliness like Pinot Noir and Cabernet Sauvignon. This diminutive reputation results in deflated demand at the mid and high price points. My recommendation to those on a budget seeking exciting wines with a sense of place–drink Riesling. You will find excellent examples of the varietal at $15 versus $25-40 for Pinot Noir. This lesson extends beyond Riesling to all the other under-appreciated varietals of the world, especially the lesser-known local grapes of many Old World wine regions.

  • Douro, Portugal
  • Loire Valley, France
  • Veneto, Italy 

These three Old World regions produce exciting, unique wines that many have never tasted. Why? The lack of varietal name recognition plays one role. Have you heard of bastardo, tressallier, or glera? These grapes take the main stage in these regions (with others alongside). In short, drink more grapes (and from locales) you have not heard of before. With help from your friend–the local wine shop employee you know (remember, this is a must)–you will find wines that surprise and delight.

The counter-examples, inflated bottle prices, lay in wines where you find varietal reputation aligning with a respected location–Napa Valley Cabernet Sauvignon and Willamette Valley Pinot Noir, for example. Reputation carries great weight, and not only the reputation of the varietal. Next time, Wine Economics Part III: Reputation.

As mentioned in Part I, many simplifications exist in the information above. Economic factors certainly overlap and intertwine in a complex manner–vinification techniques, location, varietal reputation and costs, and reputation are a few of the forces at work. However, generalities are necessary to discuss the topic meaningfully, even if imperfectly. Today is an attempt to isolate the varietal’s economic impact.

*Sommelier = a wine professional, frequently working in reputable restaurants or wine businesses.

Wine Economics Part I: The Land

Why can I buy a solid, terroir-nuanced Cabernet Sauvignon from Washington for $18, while I can’t buy an equally alluring Pinot Noir from neighboring Oregon for under $30? Why the huge variety and volume of respectable Languedoc-Roussillon red blends (France) for under $15, while I can’t buy equally unadulterated* cabernet sauvignons for that price from California? These two scenarios only hint at the tip of the economic iceberg when it comes to wine. The price tag at our local wine shop reflects a complex web of factors leading to that ultimate number. I will devote a series of posts to the factors that weight price tags toward affordability or incomprehensibility.

Part I: The Land

Location, location, location–economically impactful in real estate, retail business, and wine. How can one Napa Valley Cabernet Sauvignon sell for $150, while another bottle from vines grown within eyesight sells for $18? Vineyard location plays a role (discussion of other factors in upcoming posts). The $18 bottle almost certainly originates from grapes grown on the flats at the bottom of the Napa Valley. Flat, fertile valley bottoms encourage abundant growth and yields, and frequently mediocre wine as a consequence. Hillsides, even gentle slopes, typically have more shallow, less fertile soil. Grapes stress in these soils, and as a consequence put more energy into the fruit for the propagation of the plant. Stressed vines produce better wine. Therefore, hillside vineyard sites cost more money in notable grape producing areas–Napa Valley, for instance. The steepest vineyard sites can also add additional expenses due to the relative inaccessibility and associated labor costs to maintain the vines. 

More broadly, land values fluctuate drastically because of other geographic factors. California and Washington’s Columbia Valley serve well as counter-examples. For those who have travelled the Columbia Valley AVA, it is a vast, sparsely populated desert. As a consequence, the value of vineyard land often costs pennies to the dollar in comparison to most California vineyards. Many California AVAs, on the other hand, exist near population centers. California has also received global praise for the production of fine wine for decades longer than Washington. Both of these factors drive land prices higher than similar vineyard sites in the Columbia Valley. The Columbia Valley, of course, has exceptions to the rule. Some sub-AVAs have garnered reputations that drive prices sky-high. Red Mountain, for instance, recently sold land at a competitive auction for a hefty price. Expect more Columbia Valley vineyard land to follow suit as Washington continues to gain international respect. Back in California, the Central Valley, well away from the moderate climate on the coast and the largest population centers, proves the exception in the state, but few grapes recognizable as important wine grapes grow here. Rather, this relatively inexpensive valley produces an abundance of teinturier grapes intended as additives to serve as an inexpensive filler for many, if not most, bottles under $20 from California (and around the world). Wine regulations in California, and most regulations nationally and globally, allow for 10-15% of the juice to come from varietals not listed on the bottle, which gives wineries the option to top off bottles with inexpensive filler. Up north, Washington wineries producing bottles under $12-15 likely use similar or identical additives made from teinturier, but the climate, in conjunction with inexpensive land, greatly reduces the need for additives in most years.

The Columbia Valley AVA. Note the vastness and lack of development in the background. Courtesy of Seven Hills Winery.





Land ownership can also give wineries an economic advantage. For instance, an upstart winery in Oregon, which recently purchased 40 acres of prime Pinot Noir growing real estate, now owes banks or investors for this purchase. This new winery will need to pass on the land expense in the final cost of the bottle (unless the owner cares naught for the economic viability of the winery itself, a scenario that plays itself out with surprising frequency–enter the “hobby winery”). Some wineries in the Old World have had the economic advantage of owning their land for hundreds of years. This allows them to either lower their price, giving them a competitive advantage, or provide additional revenue to invest as they see fit.

The land grapes grow upon exists within our global, competitive economy. As evidenced by the details above, many of the same factors that create disparities between home values significantly impact the cost of wines we purchase from our favorite wine shop. Location, for one, matters. 

Many simplifications exist in the information above. Economic factors certainly overlap and intertwine in a complex manner. For instance, not all low-lying vineyards produce bad wine. Proper vineyard management in low-lying vineyards can produce excellent wine. The soil also plays a substantial role. However, people seeking to produce bulk, value wine frequently choose cheaper land–the lowlands. Generalities are necessary to discuss the topic meaningfully, even if imperfectly.

Finally, excuse the long hiatus. An unexpected death in my family, in conjunction with the holiday season, postponed my writing ventures. 

Coming soon, Wine Economics Part II: Grape Varietals and their Economic Impact. Happy New Year!

*Unadulterated = limited technological and chemical manipulations e.g. additives (Mega Purple), spinning cones to reduce ABV (alcohol by volume), etc.

A Sense of Place

A sense of place through honest winemaking and minimal intervention.

Those with a pulse on the wine industry have familiarized themselves with a new additive called Mega Purple, and its brethren Mega “Cherry Shade” and Mega Red. These concentrates are made from the teinturier grape, a lesser known, though massively produced, varietal from the steamy central valley of California. This grape is used to fill portions of bottles under $10 (and often higher priced wine, shhhhh). If your wine provides nothing more specific than “California” as its geographic location, you will be drinking some Teinturier, likely straight juice and concentrate.* 

Mega Purple is not inherently evil, nor is the grape used to make it. For most of us, our simple economic realities will require us to consume some (or even a lot of) Mega Purple. Some evidence suggests that most bottles under $15 use some form of the concentrate. Why? It rounds out the flavor in bottles lacking fruit, adds richer color, smooths bitter tannins from hard press, and, perhaps most important to the industry, provides consistency. Some wineries, especially mega-wineries, want a dependable, repeatable product. All of the benefits and trappings of this industrial model show in the finished wine. Economies of scale—check. A “go-to” bottle under $10—check. Wines using Mega Purple, however, notoriously mask or even eliminate varietal and locational character. The dark-underbelly of this relatively new phenomena* is a loss of place—homogeneity. 

Place matters. Not only in wine. Dr. Woodard, a mentor and professor of mine, spoke eloquently of the grounding nature of our native environment—the oaks in our neighbor’s grove, the Cardinal aggressively hoarding the bird feeder, the tall, fat thunderheads steadily trodding across the prairie. This sense of place is powerful. Energy giving. Life giving.

Swirling and tasting wine in the Columbia Gorge of Oregon

In front of me sits a bottle of 2011 Fourmen Pinot Noir from Vista Hills Vineyard in the storied Dundee Hills of Oregon. I swirl and smell place—bright, candied cherry, hints of earth, and acid. While industrial wine may be an enjoyable reality, or one forced upon us, we all benefit from taking the time to seek out bottles, at least on occasion, that speak of a specific place. With some care, conversation with local wine shop owners, and wise purchasing (case discounts, for example), wines of place can be found at many price points ($12 for my bottle tonight). 

Tonight, I drink to diversity. I drink to place.

Reasonably priced wines of place**:

  • Beaujolais, France 
  • Muscadet, Loire Valley, France
  • Southwest France 
  • Douro, Portugal
  • Toro and Jumilla, Spain
  • Columbia Valley, WA—seek out second label wines from esteemed producers. Example: StoneCap Wines.
  • Occasionally, if patient, even the Dundee Hills of Oregon’s Willamette Valley 

*For clarity sake, filters and additives have long been used by wine makers. Mega Purple-styled concentrates are, however, relatively new.
**Get to know a knowledgable steward at your local wine shop to find wines that allow the terroir from these regions to speak—not all wines from these locales are produced with fidelity.