Monday, September 13, 2010

Pinning down Value - Part 1 of 3

I’ve been thinking about how to evaluate wines. To do it in such a way that is quick, simple and unequivocal...  that allows a comparison of wines of different prices and ratings and represents their value for us, the consumer - a Value index for each wine if you will.

(click here for Pinning Down Value - Part 3 of 3
Not the thumb suck addition of 2-3 points to a 100 point rating or a ½ point to a scale 1 to 5. Not that these aren’t meaningful to the reviewer - they’re just not meaningful to me.  I’m not one to accept a comment like ’Buy a case’, ‘A Great investment’, ‘Points added for value’.  For me any such comment although well intentioned shouldn’t be taken seriously. Without backup the comments are 'colour', added verbage to stress a point. I’m not the wine writer so can’t interpret his impressions of ‘value‘.  Follow Twitter for awhile and if you made a purchase on every recommendation you’d quickly be broke. Wouldn’t it be better - for those interested in comparative values - for you or I, knowing the Price of a wine and its Rating, to calculate the wine’s value for ourselves? Intuitively we do it. A consistent determination of Value just makes it easier to share. 

So what’s this 'magical transform'.  Still 'under construction’ the chart illustrates some initial thoughts.  (Chart updated in Part 2)

Extremes often bracket a problem so I took the lower limit of wine prices as anything below $10 and an upper limit of $10,000.

I found the lower limit to be workable but I couldn’t fathom what to do with the higher boundary. It seemed un-interpretable with any price. I believe the book
Wine Trials 2010 solved this. It introduces the notion of ’conspicuous consumption’.  In other words, some wines are purchased not so much for their value as for the status they carry as a result of their purchase. Examples of Brand names are Rolex, Fendi, TAG Heuer, Guerlain, Dom Perignon, Château d’Yquem, etc. It would be futile to attempt to assign an intrinsic value to higher priced wines.  

Their price needs rationalizing for what’s in the bottle - not a social status, a label, geography or vintage. 
Bringing it down to earth I’ve set the chart’s upper limit to what I thought to be an acceptable level, stripping out the `conspicuous consumption` part of a price. For example, a 375mL bottle of Château d’Yquem 2001 from Vintages (#503862) costing $475.95, for ‘Value’ purposes would be based on a price of $100 (any habitual consumer of this wine is free to disagree - but bear with me!).

Another consideration is that a price for me may not be a reasonable price for you and vice versa. The answer is straight forward - stay out of any area of the chart that’s uncomfortable.

A separate point that‘s not a point:  I arbitrarily set a $50 limit when buying an untried wine. I just have a harder time parting with money when the colour changes from purple to orange or for amounts needing more loonies than fit in a milk jug. It’s a nervousness I acquired having to raise a family on a limited income. However, if after tasting, the wine turns out to be one I rate highly I can see myself rationalizing a purchase if not of a case, bottle multiples. A Value Index will help me overcome my sensitivity by quantizing a strong motivational argument (tongue firmly in cheek).

If every reviewer or wine writer for whom you’ve developed some trust or affinity could be convinced to use the Wine Advocate Rating system* you could easily calculate a Value for every one of his reviews.

Some chart reading:

  • Any wine costing $100 or more better be good to start with or it’s a negative Value. Face up, you're buying it for a different reason.
  • A $10 wine , or below, rated 100 points (yes, unlikely) would have the highest Value. This sets the upper boundary. 
  • For simplicity there’s an assumption of a linear relationship between price and value.
Observations based on the assumptions (and using chart in Part 2):
  • A $20 wine can be rated as low as 84 before being a negative value.
  • A $40 wine can be rated as low a 86 before being a negative value.
  • A $60 wine can be rated as low as 88 before being a negative value.
  • An $80 wine can be rated as low as 90 before being a negative value.
  • Any wine rated below 80 is flawed and is not considered a value at any price.
Enough navel gazing…. I'll do some more 'mulling'.

Cheers, Ww

* This is a Rating System not the man that is espoused to have created it.

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