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.)
