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HOME > AFTERTASTE > WRATH > HOW MUCH IS TOO MUCH?
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How Much is Too Much?

The so-called wine boom in America has had some rather strange effects. One of these has been the changing relationship between price and quality. It seems that wine is becoming one of those product categories, like fashion, in which the relationship between price and quality is quite vague. In the mid-1980's, the American automobile industry was caught in just such a situation. In that case, foreign competition, internal creativity and managerial reform helped lift it out of its morass and on to great heights in the 90's, culminating in the recent S.U.V. craze -- a market dominated by American producers. The fine wine industry may be about to embark on the same kind of journey.

Oh sure, there are many California producers getting top dollar who agonize over their product. We all know the stories of hand crafting behind the making of Williams-Selyem Pinot Noir. Burt Williams seems to have adopted an old-fashioned, labor of love approach to wine making, paying his growers very well and retaining some control over their viticultural practices. Because Williams-Selyem crafts wines mostly using fruit from the painfully few premier cru-standard Pinot Noir vineyards in California, the fuss was certainly justified, and their higher prices somehow more acceptable.

But the general elevation in prices over the past decade, largely the result of this unprecedented run of economic prosperity, has led the intelligent consumer to ask himself a single, central question about his wine buying: what is a reasonable sum of money to pay for quality wine? In a consumer category where, like automobiles, you can spend virtually any sum of money you'd like, this is an important question. What are you prepared to pay for quality?

Now, I understand that the answer to this question will vary - by region, varietal, and producer, at the very least. Yet for each of us, there is an answer. There is a number we are comfortable paying, and another we are not. I am somewhat uncomfortable paying more than $20 for a California Merlot, for example. Generally speaking, I find that its quality fails to live up to that pricing level. Oh, there are exceptions. St. Francis, Swanson, Duckhorn, Beringer Reserve -- buy these by the truckload, if you can afford to. They're worth it. But in general, I'll pass at that price. To my mind, California Merlots just don't have the same exciting flavor profiles offered by California Chardonnays or Cabernet Sauvignons. Nor do they have the structure, sophistication or complexity of their Bordelaise counterparts. At $70, I would simply rather buy Pomerol than Pahlmeyer. In short, the varietal fails to pass my Quality + Price = Value -- or QPV -- standard.

Every wine buyer has their own personal QPV Index, whether they know it or not. It is based not only on disposable income, but also on personal perception and experience, as well. In fact, the latter two are probably more important than income; I find that my QPV Index doesn't change much with changes in my disposable income. This makes sense: if I made $200,000 a year, I would still be disinclined to pay more than $20 (okay, maybe $25) for a California Merlot. My change in income would not effect the relative quality of these wines at their price points, and competition from other varietals and regions would almost certainly convince me to buy something else. I think most wine buyers, as they gain experience in the marketplace, are increasingly thinking the same way. Rather than buying mediocrity in a preferred varietal category, they are taking advantage of better wines in other categories. Their QPV's are telling them that California Merlot is a bad way to spend, say, $30, and that wonderful Chardonnay or Cab can be had for the same money.

Yet in the area of QPV's, I make no value judgments: they are intensely personal. Many of my wine-drinking friends are comfortable spending much more on wine than I am, in virtually every varietal and regional category. To them, this is simply the price of admission. They have made peace with the rising prices of the late-90's, and their QPV has accordingly been adjusted upward. They know, for instance, that high quality Napa Valley Cabernets now begin at (if you're lucky) $25, and drive relentlessly upward from there. The ceiling on that market is determined only by your own personal QPV, for only it will allow you to answer questions like "Is Opus One really worth that much?" or "Would you pay $100 for Chateau Montelena Cabernet?" In California Cabs, as with automobiles, you can spend as much as you like, and your QPV will tell you just how much that is.

There is, however, another theoretical framework at large in the wine-buying world. There is an assumption among some consumers that price and quality are more closely linked than they actually are. In many ways, this is understandable: Americans are sophisticated consumers, and American retailers generally offer us unique values on a wide range of consumer products. This is true of automobiles, for example. Better cars with more advanced features and engineering tend to cost more money. In the consumer market, with surprisingly few exceptions, you do actually get more when you pay more. As consumers, we are simply too sophisticated for it to be otherwise.

Yet increasingly, this paradigm poses serious problems for the wine buying public. First of all, that public is not yet as savvy about wine as it is about other consumer products. In addition, the prices of most premium wines have been rising relentlessly over the past several years, making the question of price vs. value an even more difficult, moving target. This has meant that, thus far, price and quality have achieved only a distant relationship in the American wine industry. Yet, by and large, consumers have yet to come to terms with this. They continue to assume that, like other products, wine prices can be taken as a strong indicator of quality. I would argue that this is increasingly untrue, particularly at the higher pricing levels.

Evidence of this abounds: take the Napa Valley winery that sells its wine for a half, or even a third, of what his neighbor does, for wine sourced from the neighboring vineyard. Vinification, winemaking, counts for much, and no one would say that a winery with Helen Turley or Christian Moieux on staff should charge anything less than premium prices. But what may be at work in many cases is the economics of the "wine boom" itself. Those who bought in late, after the start of the Great Demand, paid vastly inflated sums for prime vineyard land and winery labels. They are now servicing their debt with wine revenues. From such places come overpriced wines. This has, of course, fueled much of the spectacular upward trend at work in California wine pricing generally. Does anyone believe, for example, that Caymus Napa Valley Cabernet was three times the wine in the '95 vintage that it had been in the '93?

Of course not. But over that span, the retail price almost tripled. Are $60 wines better than $20 wines? Frequently (though not always). Are they three times as good? Not often. But what is the conscientious writer, with an active QPV, to do about this? He will speak the truth, and ignore the hype. He will tell you that there are still great bargains to be had, on soulful superb wines. Often, these come from wineries owned by people who bought in earlier -- often decades earlier -- and who probably paid relatively little for their wineries. They generally charge less for their wines, which is ironic, because they frequently display a wealth of localized knowledge of terroir and experience with their chosen varietals. Sometimes operated by a single family, the owners may have tended their vineyards outside the tasting room window for generations. There is little debt to service in such places, and no external pressure for increased corporate profits. There is only the wine. Little surprise, then, that these often produce the modern premium wine buyer's bargains. Try Alderbrook's Russian River Valley Pinot Noir, or an Alexander Valley Vineyard red (any of them, they're all good), or for something special, a Hanzell Chardonnay, and you'll see what I mean. All hit well above their (price) weight, and offer real satisfaction. They also fall well within most people's QPV. They certainly fall within mine.

by Mark Arvanigian

(EDITOR'S NOTE: PfW Panelist Mark Arvanigian's Archive of weekly articles on wine topics appears in the Fresno Bee On-Line.)
 

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Article written August, 2000
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