Saturday, January 01, 2011

Pinning Down Value: Part 3 of 3

Ive used the chart from Pinning Down Value: Part 2  for the last few months and found it a convenient method for establishing the Value of a wine given its price and rating. However, I also found when I reviewed the list of wines tasted, rated and evaluated in the 2nd Half of 2010,  from a value perspective, there were too many ‘fringe’ wines creeping into level 1 (Worth it!) and not enough deserving wines at the 2 (Buy a few more!) and 3 level (Stock up!).
One of the oversimplifications in the chart of Part 2 was a linear relationship between price and rating from the lowest price to the highest.

The approach Part 3 takes is for wines priced above $30 to have a steeper price/rating slope. Similarly, each of the slopes from $20 to $30 and from $10 to $20 is less steep. As well, in Part 2, a rating of 83 indicating that a wine was on the fringe of being ‘Enjoyable’ was eligible for a 1 Value. This is now thought to be too generous and has been shifted to 85, a solid Enjoyable.  Even a $10 wine should be Enjoyable as a minimum Value requirement.  The chart is based on the standard bottle size of 750mL, Canadian dollars and ratings using the Wine Advocate Rating system. 

The changes in the new Chart lead to a broader area called the ‘Poor Value Zone’ which doesn’t mean a wine in this area is ‘poor’ it’s just not a reasonable return for its price. 

Irrespective of what the wine trade may consider a fitting compensation my bias says that if the cost of producing a wine exceeds $60 it has transcended a ‘what’s in the bottle’ Value as a consumer’s purchase criteria. Other factors have come into play. For instance if someone says ‘this wine was made from grapes hand-picked from vineyards on the south-western slopes of the Gironde and only new French oak was used during….etc. ’ it could lead to justify the wine’s purchase. Or if a wine has undergone a lengthy and/or costly production process it may be a reason for a higher price and consequent purchase. In either case a higher price may not lead to Value at any level. However, other factors such as: Medal Awards, WAR/Star/Point ratings, lists of ‘Smart Buys/Top 50 Picks/Favourites’ as recognition by professional critics usually come after a wine’s release and may encourage a purchase but likely not set a higher price.  

These slope changes put ‘knees’ in each of the Value regions at which price changes at a different rate.  The positions of the knees were chosen entirely subjectively at the $20 and $30 levels based on the belief that prices increase more steeply at these price points for only one reason: an expectation that these wines will have higher ratings and merit the higher prices.  Justifying the expectation could be the result of selection of vineyards, grape maturity, cost of the process and ageing cycles as appropriate for each product tier. However, once above the top price point, my $60, other considerations come into play such as those detailed in
Wine Trials 2011 .

When a WAR rating is based on ’what’s in the bottle’ it’s the job of the Chart to isolate the wine’s Value given its price. 

A mathematician may have selected a more appropriate set of curves, however, a mathematical approach could also infer a precision level not intended or warranted. The concept of ‘Value’ is highly subjective and if this new chart comes close to addressing how value is perceived its job is done.

Using the Chart included here I’ve re-evaluated the 186 wines listed in the
2010 2nd Half: Reds and Whites+  and updated the previous blogs entries. This re-evaluation resulted in twenty-three reds and twenty-four whites being shifted closer to what I consider their correct Values. Still subjective but at least staying consistent wine to wine.  

Why is a number for Value important?  Simply, it conveys recommendations for buying. Tasting notes describe the wine from which you can decide if a wine is appropriate for an occasion? Comparing all wines in contention based on Value is the next step allowing you to optimize a purchase - ie. ‘getting the best bang for your buck’.

If any of this strikes a chord I hope it’s not dissonant.

Cheers, Ww

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