Everyone needs a little break during the summer months, right? Well the nerds aren’t taking any time off, but we thought we might lighten things up a bit by talking about something besides financial products. We’re continuing our never-ending quest to save you money, but today we’ll try to help you get the best deals on some quality wines.
We sat down this week with Professor Tony Lima of California State University, East Bay. Lima is a wine economist with a Ph.D. in economics from Stanford and is a wine semi-professional (see his website here). Since we want to get folks the best deal (and hey, why not some great wine too) we were most interested in Professor Lima’s research on the relationship between price and quality for the California wine industry.
“Those who rely on price as an indicator of quality in this market will spend a lot of money and probably give up wine entirely,” says Lima. The reason, according to Lima, is that wine is subject to personal preference: “The fundamental problem is that each person has unique tastes, preferences, ability to detect aromas, and so on. Wines that we [Lima and his wife Norma] love you might hate.” It’s not hard to determine when a wine is truly bad, but once you enter the range of acceptable “it becomes a question of your taste versus ours.” If we all prefer different wines, then where can we start when picking a wine, let alone determining whether or not it’s a good deal?
It seems as if picking “the best wine” or “the best wine for the money” might not pan out, but there can definitely be indicators of whether or not you are on the right track. As a proxy for quality, Lima compared the medals awarded to different wines at nine different tasting competitions in California, which all awarded the same four medals: bronze, silver, gold, and double gold. There are a few problems that arise from this method, one main issue being that smaller wineries do not always enter such competitions because of the costs associated with entry, which can include fees, transportation costs, and reserving wine for specific sale at the competition for select winners. This factor aside, Lima performed a stepwise regression on the 1884 wines in his sample size from the different competitions. His published paper can be seen here.
What Professor Lima found was that winning at tastings in San Francisco, Orange County, Sacramento, and Riverside all had positive impacts on per bottle price of wines (for example, winning a medal at the Orange County would add about $2.33 to the price of a bottle of wine). Consumers also appear to be willing to pay more for “trendy” wines, leaving other quality wines that are not the hot topic undervalued and a better deal. Of these, “the single most consistent tasting event has been the San Francisco International Wine Competition.” This tasting competition was the best predictor of quality according the study and regression. Lima followed this up by saying, “If the wine won a medal from the San Francisco International Wine Competition, I’d take a chance on it.”
In short, don’t put so much stock in price when trying to pick a quality wine for your next event, or just tonight’s dinner. Avoid trends and grandiose labels, and focus on the consistent and accurate measurements for general quality available. On your next trip to the store, take Lima’s advice and look for medal winners from the San Francisco tasting and see if you aren’t pleasantly surprised that you spent a reasonable amount for a great wine. Or, if you want an expert’s take, Professor Lima was kind enough to leave us with some of his current favorites and recommendations:
Over $40 (sometimes way over):
Between $20 and $40: