Back when I was a youthful twenty-something I took it in the ribs a few times from friends and family that would say I had returned to college to get my M.R.S. degree. Somewhat true <grinning sheepishly>. However, I did not meet my husband until after leaving Oregon State University and all her splendid Northwestern beauty for the great State of California. Truthfully, I forced myself into completing my Bachelors Degree – by hook or by crook – just to finish. I had become notorious for starting things and not reaching completion and I wanted to end that nonsense. At the same time, I wanted to be able to some day offer a somewhat educated parent to my future child(ren).
I forged my way through a liberal arts degree knowing full well that there was no end “Career Goal” in sight and I will admit that along the way there were some failures. As in, F for Failure. Math 119b Survey of Calculus II; F the first time around and a passing grade on the second try after my instructor was probably so tired of my ignorant questions that he just pushed me through. Chem 320a Organic Chemistry; no passing grade in sight and the realization that I don’t actually enjoy Math, Chemistry, or Physics and that pre-Med would be a bad idea. Econ 101? Only suffered through that course to fulfill a requirement and the whole thing was a bad dream – BUT – I did take away one concept that has stuck with me since that class: The Subjective Theory of Value.
Before continuing, I will strap on my Helmet to deflect the stones that are certain to be thrown in my direction for the following reasons:
- I am not proficient enough in Economics to properly explain the theories associated with this field (so of course, publish my feeble attempts to understand, right?) and…
- The way this Subjective Theory of Value ties into a discussion on Wine will make some people cry foul; or just cry.
Class is in session, let us begin.
Value is thus nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Carl Menger, Principles of Economics
If value exists as Menger defines it, why then do we continue to question the high prices of Cult Wines, First-Growth Bordeaux or Grand Cru Burgundy and then continue into a diatribe/sales pitch about “value wine”? This topic is beaten to a pulp in popular wine media, social media, the Blog-o-Sphere, etc.. and the entire debate has no leg to stand on. Price is not Value. Before we get all heated up about wine, let’s consider some other consumer commodities:
Chocolate. Nestle Semisweet Morsels 20.7 cents/ounce. Sharffen Berger 62% Cocoa 61.8 cents/ounce.
Coffee. Yuban Traditional Medium Roast “Premium” Coffee 25.8 cents/ounce. Peet’s Coffee Major Dickason’s Blend “Deep Roast” 74.9 cents/ounce.
Diamonds. Where 1 ounce = 141.747616 carats and an average diamond is about $1500 per carat give or take…we’re looking at about $212,641.42 per ounce.
Water. A liter bottle of Evian comes in at about $1.79 making it 5.3 cents/ounce…penny for your thoughts and a nickel for a sip.
The question of price is answered objectively as the above examples convey. The question of value is subjective…and as explained by Menger, gets a little confusing. Why pay more for coffee or chocolate? What was the cost of producing these goods? Which goods required more labor? How much is water worth to you? What value does a diamond represent for you? Are we lost in the desert and dying of thirst? Or are we wandering in a proverbial love desert of loneliness hoping to get engaged? Questions like these will begin to guide you toward your own subjective interpretation of value.
The last time I put my finger on the pulse of the consumer base in the wine industry, the heartrate was strong and nobody was dying of thirst. But there were plenty of connoisseurs hoping for love at first sip from their next bottle. My point here is that wine is a luxury product. And that’s it. Wine is not a resource that we need for survival (though I treat it as if it were the air I breathe). It is the Diamond and not The Water in the Paradox. There’s no “fair and equal distribution of Wine” Act. There’s no “Price point to make wines affordable for Everybody” Act. However, there IS fierce competition, a free market, ingenuity, creativity, sustainability, talent, marketing, vineyard designation, oak programs, “Rock-Star” Winemakers, art labels, wax caps, screw caps, original wood cases, Parker Scores, Spectator Reviews, corporate conglomerates, mom and pop shops, and everything in between. And then there’s you – and your discriminating palate (by the way, it’s not PC to “discriminate”) and hopefully your discriminating consciousness.
YOU will be the one to make the final decision about what a wine is worth to you and what you can afford to pay. Coming to the realization that a wine you might want is out of your price range is not a reason to tear it down. That is a promotion of mediocrity and when provisions are made for mediocrity you get people like me who are granted a Passing Grade in Econ 101. The world does not need more of that – go back and read paragraph 2 to decide for yourself the value of this article, the value of your time, and the value you now place on not promoting mediocrity.
If a wine you want is out of your price range, pick yourself up, dust yourself off, understand that wine is one of life’s Beautiful Luxurious Pleasures, and go find a bottle that gives you enough pleasure per dollar for you to consider it a value. Then step back from the article/blog post/commentary that is deriding Screaming Eagle and Lafite, compose yourself for one second, and understand that the prices for wines like these are ridiculous because enough people paid them. <I will enter a plea here that we not digress into a dialogue on “supply and demand” as that is such a sophomoric approach to this discussion.> We are all well aware that scarcity drives up the price of a rare bottle. In truth, the price paid for a status bottle of wine was a simple expression of the consumer’s perception of value – and they were entitled to it. No sooner could we make everybody drive a Honda Civic and not a Mercedes or everybody have bare walls in their mud hut rather than Monet in their Mansion, then we could make every wine drinker swirl <insert your favorite value wine here> in their glass. And thank God for that!
If the intention is to share ideas about which inexpensive wines drink better than their price point, and a popular opinion grows on that shared idea, then go with it. But if the aim is to convince an ultra premium category buyer that they won’t find value in the rare or exclusive bottlings they are purchasing then you might as well be talking to an empty room. This category of wine consumer does find value in obtaining nearly unobtainable wines and they quite possibly spend a fair share on less expensive wines that they enjoy for another purpose as well. So why is there a bully push to get the biggest supporters of wine out of the game?Inexpensive wines that cost conscious consumers enjoy are not mutually exclusive to astronomically expensive Wish Wines that are collected and curated and occasionally chugged down with wild abandon. Both price categories can exist in the same economy and really one has little effect on the other.
The bottom line is that all wine should not be equal. All wine should not be the same. All wine should not be priced under a cap that a cohort of wine writers deems to be appropriate. Sitting around speculating about what that saturation point in the market will be is simply a waste of good wine drinking time. One man’s affordable luxury is another man’s swill and vice versa. And that, my friends, is my Subjective Theory of Value as it pertains to wine and I encourage you to continue the debate and commentary. Should name calling (Elitist!) and Stone-throwing commence, I’ve still got my helmet on.
If you haven’t had enough, please enjoy the following
Elite Wine Bashing Posts for your Reading Pleasure:
-Richard Hemming for Wine Searcher gives us “Hemmings Rule” where if you love expensive Bordeaux you will find more “value” in spending less on a Bordeaux varietal wine from another region where the most expensive wine costs less than 10 times the price of its cheapest equivalent. Sounds simple, right?
-Mike Steinberger rails away on how he agrees with Keith Levenberg of Noble Rot Magazine that Sine Qua Non wines are vile and disgusting and more expletives than you can say in front of a sailor. Steinberger then continues to say that critics who give high ratings to both wines like Sine Qua Non and wines like La Tache and other DRC are a huge farce and are misleading consumers. Don’t miss the comments section where somebody actually asks, “Do we really need all these different wines from everywhere?” <— is your Screen Name “The Wine Nazi”?
-W. Blake Gray ponders the mysteries of Screaming Eagle and passive aggressively calls for transparency from a Cult Cabernet producer. There is hope…by #10 We don’t know if Screaming Eagle wines are worth the money… Gray is beginning to understand the Subjective Theory of Value.
-Chris Mercer for Decanter.com reports on an incredible wine sale and at least sticks to facts and information. A breath of fresh air.