Sunday, August 2, 2015

Veseth, Money, Taste, and Wine

Mike Veseth, an economist who studies global wine markets, is a prolific writer. His latest book is Money, Taste, and Wine: It’s Complicated! (Rowman & Littlefield). It debunks the (obvious) myth that pricier wine is always better wine, even though—and I suppose this is why, in part, it’s complicated—we enjoy wine more when we’re told it’s expensive, even if it’s not. The book also offers tips to becoming a smarter, happier wine drinker.

If you’re buying wine for yourself, you should understand that the ability to sense aromas and flavors varies from person to person. The range of responses to bitterness, one of the five basic components to taste (the others being sweet, salt, sour, and the pleasant savory taste of umami), is especially great. About 20% of the population are “supertasters” who have an exaggerated reaction to bitterness, 20% are bitter-tolerant “nontasters,” and the rest of us are merely “tasters.”

If you’ve got nothing better to do with a few minutes of your time and if you happen to have blue food coloring in your kitchen cupboard, you can find out what group you fall into. “Cut a one-centimeter-square hole in a note card, put a little blue food coloring in your mouth, go up to a mirror, stick out your tongue, and look at it through the hole. Welcome to the supertaster club if you count about 150 bright-blue taste buds in that little square. A nontaster has about fifty taste buds per square centimeter, and average tasters are in the middle, with about one hundred.” (p. 25)

Still curious about why people like certain kinds of wines more than others? Veseth points the reader to the websites of Tim Hanni, and, to learn about Hanni’s classification of wine drinkers into four basic groups.

Now to the money side of wine. Have you ever heard of dump bucket wines? When a winery that normally charges a premium price has more product than it knows what to do with, it sometimes keeps the price of its fine wine high in the home market and then off-loads the excess in a market it does not normally contest. (p. 36) Sometimes the wine disappears into the bulk market and reappears “who knows where with who knows what label, perhaps blended with other wines.” (p. 39)

Then there are the big-bag, big-box wines. Not the bag-in-box wines that apparently account for more than half the wine sales in French supermarkets and are now among the fastest-growing wine categories in the U.S. No, the really big bag in the really big box—a 24,000-liter bag in a standard shipping container. The wine is bulk shipped and then bottled in the domestic market, sometimes as a private-label wine. By 2013 50% of New World wine exports were bulk wine, saving an average of $2.25 per standard 9-liter case on shipping and tariffs and reducing wine’s carbon footprint.

And what makes Champagne so special? Not the grapes. It’s traditionally made from Pinot Noir, Chardonnay, and Pinot Meunier grapes used in various proportions. Not the production process, which uses industry-standard technology. Not the cost to produce a bottle, which on average is $13. It’s marketing, a staggering $16 per bottle. And so we have at least $16 worth of good reasons to choose similar sparkling wines that can be equally satisfying at a much lower price.

Veseth also addresses the question of whether one should invest in fine wine. “The problem with fine-wine investment so far—and I think that this is changing—is that most of the action has been in a very small number of particular assets, mainly the famous names from Bordeaux. This makes the wine investment market a bit like the stock exchange in one of those emerging-market countries where the stocks of one or two companies dominate the action.” (p. 135)

And here’s a tidbit for correlation fanatics. “The prices of fine wine and crude oil have been highly correlated in recent years.” According to an IMF study, “wine follows the twists and turns of oil prices, but it is somewhat less volatile in terms of peaks and troughs.” (pp. 138-39)

Veseth’s book is an enjoyable read. Take it to the beach with a bladder of wine.

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