Does wine have a low 'diminishing return' threshold?

Question

Over the last year I've been getting more into wine, but not too extensively, only having bought bottles in the range of about $10 - $20 cdn. I've also sampled a good number of wines while dining out.

The thing I'm noticing is that while different wines most certainly have unique characters depending on sweetness, grape, and aging, the variation in overall quality doesn't seem to be too high.

As far as I can tell wine, broadly speaking, can be broken down into two categories: good or cheap. A wine is either pleasant, or noticeably low quality, without much room to really go above and beyond.

So if my assumption is correct then 'fine wine' is a bit of a scam, as the diminishing returns price point seems fairly low.

I wonder, though, am I correct in my assumption about wine's diminishing return threshold?

Answer 1

I can answer this... once you get above about $20 a bottle is not proportional to the value you get out of it. The flavors/tastes simply don't give you the value above that range. A $100 or $1000 bottle of wine starts to get into veblen goods territory. Production costs simply stop contributing to the price on the self above this point. I've tasted several 100 point rated wines and thought where is the emperors new clothes!?!? OK, have tasted one wine that was $10000 a bottle and 230 years old from Madeira that absolutely blew my socks off but those are rare.

Veblen Goods from Wikipedia:

A price increase may increase that high status and perception of exclusivity, thereby making the good even more preferable. At the other end of the spectrum, with luxury items priced equal to non-luxury items of lower quality, all else being equal more people would buy the luxury items, even though a few Veblen-seekers would not. Thus, even a Veblen good is subject to the dictum that demand moves conversely to price, although the response of demand to price is not consistent at all points on the demand curve.

Answer 2

Certainly as many goods there is diminishing return.

Wines between $10 - $20 is a narrow range. If you are happy in that range then no reason to get outside that range.

I find many wines under $10 I consider drinkable. Under $10 you will also get more variation from bottle to bottle. They are often just buying grapes in bulk.

There are many wines in the $20 - $30 range that are what I call no regrets wines. Even if I was very rich those would still be my daily drinkers.

A lot is the grape:

• A pinot nior you need to get close to $20 as it is low yield grape
• A malbec I don't spend more than $12
• An old vine zinfindal then need to get into $40 range or I would rather just drink a $20 merlot

An $80 wine is certainly not twice as good a $40 but there are people with the budget for $80+ wine. Most people can find a lot of good wines in the $4 - $40 range that fit their taste.

Not sure if it is true but Kevin O'Leary on Shark Tank says 90% of wine sold is $13 or less a bottle.

Answer 3

I cannot speak for the canadian market, as i do not live here, but in France we have quite a large choice, and were bottle rank from 5€ to 200€ in a good wine shop.

Assuming there is little return threshold on wine above $20 is, in my humble opinion, a mistake. Because you don't drink a price, but a work. And good work is never cheap. I'm not talking about marketing, a wine harvested by a dwarf wrapped in ham on a full moon night before sorting the grape on the tights of virgins ... but about solid facts.

You might consider this :

• Producer choices Above everything, a wine producer is a skilled craftman whom makes soil, cultivation, harvesting, ageing choices, to make the wine that fits his objectives. Whereas some may aim for low quality high quantity, a great number intend to make the best price over quality wine. And those choices can be expensive.

• Weather It's plain stupid, but a wine is also a product of rains, snow, temperatures, insects, sickness ... production is random. Of course, you can add water, persticides, fertilizers, use UV light by night and cloudy days. But it'll not taste the same.

• Soil&terroir Good soil is rare, and what is rare is expensive. Right terroir also is. Vine don't grow everywhere, and some places are better than other. And as those lands are rare ... Keep in mind that a century old vineyard and a ten years old one doesn't make the same grapes.

• Breeding An industrial wine in steel cask doesn't age and develops flavor the same than in a concrete tank or wood barrel. A wine in a cellar doesn't age like one in estufagem. A wine draught too young will never be good. Don't forget that Pinot Noir, only vines allowed in Burgundy has to age two years in oak barrel and three years in bottle before being opened ? Or that a third of a Savagnin wine barrel evaporate in oxydation to get the taste right ? Well, the producer also has return treshold concerns ...

• Harvesting If the harvest is machine made, it's cheap, but immature or rotten grapes go to the pressoir. If it's hand made, it's expensive, but the grapes (and sometimes, every single seed) are harvested the right day : not before, not after. And even after harvest, not everything proceeds to the pressoir.

• Legal or crafting obligations In several places in Europe, traditions, rules, even laws determines quality standard. When only the upper two third of an harvest can be made into wine, and the worst third can only be transformed into other products, it has a cost. In France, you cannot put wood dust in your wine to flavour it woody. If you want the wood tastes, you get wood barrel. End of discussion. Adding sugar is restricted. You don't add brandy to cut fermentation. You don't add other fruits. In fact ... it must be 99.9% wine and 0.1% preservatives. If it needs something else than grapes, it's no wine. It's not a moral statement : it just simply isn't wine anymore.

• Glass. Is your glass suited for the wine, and its degustation ? It's a common mistake, but there are three kind of glasses : 1/ degustation, standardized to test several wine in same objective conditions 2/ figured : you don't drink Pils, Stout, IPA and Weizenbock in the same beerglass do you ; It does also apply to wine, old&young, white&red does not required the same shape 3/ fancy bullshit. Sorry you bought them. And it's common in restaurant to have the wrong kind of glass.

• Pairing Not every wine fits every dish. Not every wine fits every time of day. Not every wine meets your mood at a precise time.

• Your tastes I'm rude, but do you know what you like ? I'm fond of oxydated wines. Most drinkers can't bear them. I don't enjoy champagne. Most drinkers swear by it. You might not have met what you like, and thus you might not know enough in oenology to assess nor appreciate the subtleties. It's easy to learn (if you have a good teacher), but it takes time. I do not buy expensive wines. Because i'm broke. And because i cannot enjoy them fully : i learn and wait until i'm able to enjoy them When i got my drivers licence, i drived a car older than i was. Today i can ride a common sports car. But i would not dare to drive a Porsche or a Ferrari : i would do nothing but find the nearest wall

I might expose twenty other factors that determines both price and quality.

There are great wines under 10€. Really ! Simple and straightforwards. There are awful wines over 20€. Really ! Miscrafted, mishandled ...

So, please, step over your range boundaries. The threshold you wonder is several rung above the price's ladder ! Ask oenologists, do visit wine trade fair, try to meet producers ... or simply visit a true cellarman in his shop. It'll blow your tastebuds !

Source : my experience as beer cellarman for the importance of the crafting. And several hundred different wine bottle over the years.