A Question of Price

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A lot of those getting into wine wonder if price and quality have any correlation. I, too, have wondered this. So, I decided to periodically check my ratings in relation to price and see what I came up with. I thought the data may be interesting to readers, so here it is:

Percentage of Wines Rated Excellent or Higher

May – 08

$20 and under: 0%
$20-$30: 20%
$30-$40: 40%
$40-$60: 45%
$60+: 85%

UPDATE – SEPT 08

$20 and under: 0%
$20-$30: 12%
$30-$40: 33%
$40-$60: 49%
$60+: 73%

So it seems that, at least for me and based on my subjective ratings (which includes my general knowledge of the wine’s price), price doesn’t guarantee quality, but it suggests it. I think this is only true with careful selection as I think the decrease in quality at the $60+ price point over the two periods was due to exploration. As soon as you explore, the risk you won’t like a wine increases. But, then again, if you don’t explore, you can’t find out what you like! Also interesting is that the biggest jumps in quality of the bottle seemed to occur when moving from the $20-$30 category to the $30-$40 category, with 20% or over jumps in the number of Excellent ratings over both periods, and from the $40-$60 category to the $60+ category, with between a 24% and 40% jump in the number of Excellent ratings. What does this say? Maybe it’s worth it to push up slighty over the $30 level if you want something a bit more special. But there is less difference when the price goes above $40 until you reach the stratospheric $60+ level.

Posted in: Musings

Comments

  1. Joe
    October 5, 2008

    There is a high correlation between price and quality, but “correlation” is a statistical term – there are outliers, but if an $18 wine is “excellent”, year after year, the price will invariably get bid up. But your note about $30 is an interesting point – I always felt that the greatest improvements in quality come between $20 and $40 – after that you pay a LOT of $$$ for very small increases in quality.

  2. Shea
    October 5, 2008

    Ya, I meant it in the strict statistical sense. I certainly can’t claim to make any logical causative claims (although there may be some btwn things that cost money (low yields, better equipment, better barrels, etc.) and quality.

    Do you think consistent quality always tends to increase willingness to pay on bottles? or is it not also media attention. There are still some lesser known consistently good bottles that are not expensive. All interesting questions.

    Anyhow, I do agree with your point that after $40 (maybe $50 here) the quality increase goes down considerably. There are some exceptions, though. For example, I actually think Bordeaux 2005 (say at an average of $120-$230 a bottle) is a huge increase in quality over even $70 wines taken as a whole.

  3. Edward
    October 5, 2008

    Shea,

    I’d have to concur, there is a definate link in my mind too with quality and price.

    I’ve been drinking a fair amount of cheaper wine whilst on holiday. All very enjoyable and well made, but nothing to make you stop and think.

  4. Shea
    October 5, 2008

    Ed,

    Definitely. This problem manifests the most for me when I’m out for food. Wine taxes are so high here it is pretty much impossible to get a decent bottle for less than $80 at a resto.

  5. Joe
    October 30, 2008

    Sorry Shea, I am a believer in efficient markets – no one can be consistently good and cheap – they may manage to keep it lower on a “relative” basis – i.e. if it doesn’t say Napa, Barossa, Bordeaux, etc. on the label it may always be cheaper, but the prices tend to drift. Catena a prime example – if those wines were from Napa they would be $50, not $20, but you can’t charge $50 for an Argentinan wine. But the Catena prices have drifted up…but a good inexpensive Bordeaux, cheap Oregon Pinot? It will be ferreted out and the prices jacked up – the lag is not predictable, but the trajectory is (IMHO). What I meant is that spending $20 over a $20 wine you get a huge leap in quality – going from $40 to $100 definitely gets better, but you are getting diminishing returns for every additional $20 you spend. Anyway, correlation is a loose term, but I find it works pretty well for wine pricing. A topic worthy of further exploration…

  6. Shea
    October 30, 2008

    So you don’t believe that information deficit may result in certain wines always being undervalued? I say this because wine is such a huge market and it is nearly impossible for one individual (+ sources of info like websites, magazines, etc.) to know all of the offerings and assess them on an even basis. Not to mention that taste differs, even if you accept certain objective criteria for ranking wine quality, is it not possible that the combination of information deficit, sheer and overwhelming abundance of choice in the market, and variation based on individual taste mean that some wines will always be ‘undervalued’ to/for a particular consumer?

  7. Joe
    October 31, 2008

    Hi Shea – of course it is possible, especially if one takes personal taste into consideration (i.e. you love something that WS, RP, IWC and Decanter hate, then it could be cheap for a long time), but I would say that over long periods of time that would be difficult – not impossible, just low probability. I think the more difficult gaps to close are the geographic – will anyone pay for Sardinian wine the same that they pay for Barolo? No matter the quality, consumers (and raters) have preconceived notions of wines, so great values tend to come from geographies (S. Afr, Argentina, Portugal, Uruguay) where the wines don’t have the reputation that collectors value more than the juice inside the bottle. FYI – that’s why I try to taste blind as much as possible, find those gems without my mind getting in the way. Cheers!

  8. Shea
    October 31, 2008

    That makes a lot of sense. I wish I could taste blind more, but when I’m the one choosing the wine to drink, it’s kinda hard :). I still try to remain as objective as possible and I think my ‘gut’ reaction to wine usually tells the truth (i.e. my mind sometimes says a wine is better than my gut is telling me it is).

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