What a Lower US $ Means...

TW: Some folks get very uptight about a weakening dollar. There are many variables which impact exchange rates. But below frames what happens when our currency declines relative to in this case the Aussie dollar. All that formerly cheap Aussie wine becomes not so cheap meaning they either stop sending it here or they figure out how to shift some of the product cost (in this case bottling) to the U.S. And voila suddenly our imports slow a bit as American start bottling the Aussie bulk wine or perhaps American buy domestic wine.

Americans drink a bunch of international alcoholic beverages (wine, beer, Scotch etc.). This will change rapidly where ready substitutes exist (many with wine and beer, not so much with Scotch).

From Wine & Spirits Daily:
"CASELLA CONSIDERS BOTTLING YELLOW TAIL IN THE US
The Australian dollar is getting stronger much to the detriment of Australian wine producers such as Casella Wines who export their labels to the US. According to an article in Bloomberg, Casella, who produces Yellow Tail, is considering shipping its wine in bulk and bottling it in the US.

"Casella Wines, maker of the top-selling Australian wine in the U.S., is considering building a U.S. bottling plant and shipping its Yellow Tail across the Pacific in bulk as the Aussie approaches 95 cents," said the article.

They also quote managing direct John Casella as saying: "That is about 30 percent higher than the average and there isn't a 30 percent net margin in what you sell."

Other Australian producers are either halting shipments to the US or pulling up vines "because they can't compete on price."

Wine Snobbery

From Felix Salmon at Reuters:
"Mike Veseth reprints the most depressing list I’ve seen in a long time:
The top ten individual wines (by volume not value of sales) in 2008 were (drum roll) …

1)Kendall-Jackson Vintner’s Reserve Chardonnay
2)Cavit Pinot Grigio
3)Beringer White Zinfandel
4)Sutter Home White Zin
5)Inglenook Chablis
6)Ecco Domani Pinot Grigio
7)Mezzacorona Pinot Grigio
8)Copper Ridge Chardonnay
9)Yellow Tail Chardonnay
10)Franzia White Zin

The top-volume wines are always, by definition, going to be mass-produced wines. But that doesn’t mean that every single one has to be white (or the abomination known as “White Zinfandel”, which is basically wine for people who think that Yellow Tail Chardonnay is too dry).

Franzia White Zin retails for as little as $13.11 for a 5-liter box; if you assume the wholesale price is say $12, and assume 125ml glasses of wine, that puts the cost to the restaurant of a glass of wine at just 30 cents. You can see why restaurants would be keen to push this stuff. And you can also see why any self-respecting diner would rather stick to Budweiser."

TW: This is a post from Salmon is a nice metaphor for how urban elites can get all snobby. Americans drink a lot of wine, much of higher end but the big volumes are in less foo foo varietals and price points. This has always been so not only for wine but for most consumer products. The folks selling wine know this, of course. Sometimes they create slightly more sophisticated sounding brand names (i.e. Ecco Domani and Copper Ridge from Gallo) to advance their cause. But at the end of the day the mass market is far different than those in the big cities would think.

But then how is white zinfandel so different from French rose (without naming names but I know some serious yuppies who really like French rose) except for the provenance (and some technique)?

Order Cheaper Wines Off the Menu

TW: I agree with the analysis. We have drunk some expensive stuff and a lot of much less expensive stuff. With friends at restaurants, we frequently get left picking the wine. Unless for some reason we really talk up the wine or perhaps our friends recognize a wine (but if that is the case they might be picking themselves), folks really do not seem to notice one way or the other. Usually they compliment the wine regardless. In other words our friends are drinking blind. At this point I see no need to order expensive wines either at a restaurant or for home. Unless of course I want to make myself or Ms. Blogger feel special, which does happen on occasion but now that I know...oops getting circular.

From Felix Salmon at Reuters:
[quoting a study]
" 'An analysis of over 4000 wines entered in 13 U.S. wine competitions shows little concordance among the venues in awarding Gold medals… An analysis of the number of Gold medals received in multiple competitions indicates that the probability of winning a Gold medal at one competition is stochastically independent of the probability of receiving a Gold at another competition…

For the 375 wines entered in five competitions, one would expect by chance alone (for p = 0.09), 234 wines receiving no Golds, 116 receiving a Gold in just one competition, 23 receiving Golds in two competitions, two receiving Golds in three competitions and no wine receiving Golds in more than three competitions. The observed frequencies closely mirror these numbers.'

The more I look at empirical studies such as this one, the more I’m convinced that if you’re tasting blind, there’s no correlation between perceived quality and just about anything. On the other hand, we almost never taste blind in real life — and when you know what you’re drinking, there’s are very strong correlations between perceived quality and lots of things, such as provenance, price, and even whether the wine has a screw cap or a cork.

Which is why it’s perfectly rational to order expensive wine in a restaurant: since you know what you’re drinking, and how much it costs, there’s a very good chance that you’ll enjoy the more expensive wine more and the less expensive wine less. If you tasted them blind, on the other hand, there would be no correlation there at all."

Wine

TW: I am with Mr. Salmon.

From Felix Salmon at Portfolio:
"Robert Hodgson has a paper out entitled "An Examination of Judge Reliability at a major U.S. Wine Competition". He had the ingenious idea of serving up three identical glasses of wine -- poured from the same bottle -- to groups of judges; only 10% of the judging panels managed to rank the three identical wines even in the same medal group, even though the wines were served in the same flight. And, as Peter Mitham reports:

One panel of judges rejected two samples of identical wine, only to award the same wine a double gold in a third tasting.

I'm beginning to think there's really no such thing as a really good wine: there's just really bad wine, and everything else."