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How much has globalization helped U.S. wine drinkers?
More than I had thought:
For instance, the real price (in 1988 prices) for the basket of the entire Top 100 list [for the U.S.] was $4,313 in 1988; $3,132 in 1993; $2,533 in 1999; and $2,421 in 2004. That is nearly a 44% decrease in prices from 1988 to 2004. At the same time, there was no significant change in the quality of the wines on the Top 100 list.
Here is much more information, from Karl Storchmann.
Posted by Tyler Cowen on June 23, 2008 at 06:19 AM in Food and Drink | Permalink
Comments
I am concerned that they have not fully corrected for the fact that the Wine Spectator takes price into account [or more accurately, what they perceive to be "good value"] when creating the Top 100. While I believe the sense of the result, I am not persuaded by the methodology.
And of course, if we want to include positional consumption or subjective perceptions of quality (which include delight in the label), then we should be looking at a fixed basket, such as second growths from Bordeaux.
Posted by: jn at Jun 23, 2008 7:35:49 AM
is that adjusted for inflation? If it's not that should increase the savings.
Posted by: Stefan Hayden at Jun 23, 2008 8:00:37 AM
Is wine the rare exception to the rule that globalization hurt the rich wine drinkers of the world, while benefiting the poor T-shirt wearers?
(And while I'm at it, why does your spellcheck challenge "globalization"?)
Posted by: Bill Harshaw at Jun 23, 2008 8:17:31 AM
So, it's cheaper for them to indulge the delusion that wines, especially "top" wines, are actually distinguishable.
This helps them ... how?
Posted by: Person at Jun 23, 2008 10:45:34 AM
I suspect that the last 4 years have been hard on this trend, since between 2004 and 2008 the dollar has declined 20% against the Euro. I only speak from the experience of say the 1000 to 1100 range of wines, but they definitely have trended up (in $ prices)in the last couple of years.
Posted by: liberalarts at Jun 23, 2008 10:56:56 AM
Person,
Are you implying that all wine tastes the same?
Posted by: josh at Jun 23, 2008 11:22:17 AM
I am concerned about the following finding:
...replacing an Old World wine (French, Italian, etc.) with a New World wine (US, Australia etc.) lowers the average real price by 1%...
If this is true; and it is supported the 2 cheapest years to buy wine, 1994 and 1996 having very high composition of U.S. wines in the basket; then how do we know that we are not indeed observing the effects of trade protection itself! The price index is calculated by taking the cost TO AMERICANS in USD. When we find that US customers pay less when they primarily buy US wines, how is this evidence of the benefits of globalization? Maybe I am misinterpreting their methodology...
Posted by: Steve at Jun 23, 2008 3:34:40 PM
I'm not implying anything. I'm *saying* that if you buy more expensive wines, thinking you'll get better
quality, the only gain in quality is in your mind. The whole thing is a charade that fails in double
blind tests. Wine is about signaling, not about taste.
A fool and his money are soon parted.
Posted by: Person at Jun 23, 2008 5:44:55 PM
Person - did you lose your tastebuds and sense of smell in some sort of freak accident as a child or are you just trying to get a rise out of everyone? There are plenty of $40 wines not worth the money (and plenty of decent $10 wines), but that in no way proves that expensive wine is no different from cheap wine.
Posted by: Sean at Jun 23, 2008 6:34:13 PM
The whole thing is a charade that fails in double blind tests.
It is difficult to taste the difference between a $40 bottle of wine, and a $400 bottle of wine, sure.
But, it is most definitely easy to taste the difference in a $6 bottle of wine and a $40 bottle of wine.
Posted by: Rex Rhino at Jun 24, 2008 2:20:19 AM
Felix Salmon's analysis of this shows it's pretty much bunk.
http://www.portfolio.com/views/blogs/market-movers/2008/06/23/are-top-wine-prices-really-falling
Posted by: crack at Jun 24, 2008 10:58:02 AM
The other reason this is bunk is that very few people who are affected by the recent boom in wine prices care very much about the type of wines likely to appear on Wine Spectator's list, which reflects (1) Wine Spectator's aesthetic standards (which many people don't share), (2) commercial availability (wines with small production are usually ineligible, yet these are among the most sought-after), (3) value (even within the universe of Wine Spectator ratings, the list does not purport to rank the best or highest-rated wines, but the best for the price; this means that the average or total price of all the wines on the list may remain constant from one year to the next even if average quality continues to decline), and (4) grade inflation (which has affected wine ratings just as much as universities, undermining the conclusion that quality remains the same just because the ratings remain the same).
How much globalization has helped "U.S. wine drinkers" is a much more complicated question. Casual wine drinkers who don't fuss over wine and don't spend a lot on it probably have more to choose from, although this also means they may have more trouble finding something they like. Serious wine drinkers who buy wine to cellar and are willing to spend a lot for their favorites have been seriously screwed by the current market. Just a few years ago, the very best and most expensive wines in the world were attainable, even as special-occasion splurges, on a normal income; now even many of "the rich" can't afford them. Do a study like this focusing on Bordeaux first growths, DRC, etc. and the difference will be staggering.
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