You don't have to be big, to be good

OK, that title needs explaining. What it means is: "your business can be small, and still demonstrate high quality."

Now that I see that statement in writing, I think it's a truism. Too obvious to have to write. Heck, a better argument is that once a business gets large, it is more likely to demonstrate LESS quality, not more.

I am moving from bemused to tired, in hearing the first question so often asked by people who find out I have a small vineyard and small commercial winery: "How many acres [of grapes] do you have?" Also popular is, "How many cases [of wine] do you make?"

Don't be those people. They don't mean any ill will, but they just can't think of a better question. We Americans are so conditioned to worry about size, about rank. These folks have no idea how much work it is to care for even a FRACTION of an acre of winegrapes. Especially when those grapes are growing on a 33-degree slope, carefully chosen for its ability to emulate a lower (warmer) latitude. Especially when each vinerow is kept mulched, fed, and weeded, and each aisle is kept mowed (try pushmowing up a 33 degree slope sometime). I'm not trying to be the biggest in anything. I am only trying to be one of the best grapegrowers and vintners in my area who is showing the world what modern grape varieties can do, and why more of us should be growing them and drinking them. That is quite enough of a goal for anybody.

When you root, plant, grow, and care for, each vine by hand, with frequent "touch" throughout the year... when you make wine in small batches, and hand-process it, and hand-bottle it, always striving to learn more, to become better... then you can (or at least might) achieve high quality, regardless of the number of plants you have.

We appreciate "small quality" in various ways, like when a chef leaves her restaurant to cook in your kitchen for you and your friends, or when the local tailor in a tiny shop resizes one of your favorite jackets, by hand, or when you get a handmade Japanese "Santoku" high-carbon steel chef's knife, instead of a mass-produced one. That prized, small-scale quality does not depend on the size of the shop or the number of customers. 

Growing grapes and making wine are no different.

Better questions to ask me would be, "What are you doing that is different, and why are you doing it?"

(photo credit: Crate and Barrel)



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Wine snobbery versus lower-cost wines

This excellent opinion piece from the New York Times makes the argument that while wine snobbery is at an all-time high, the quality of cheap wines is closer to the quality of very fine wines than it has ever been. This is due to vast increases in winemakers' skills and toolsets.

The average price of a bottle of wine drunk in the US now is $10. I have long believed that it isn't necessary to pay $30, $50, or $100 to get a fantastic bottle of wine. Studies show that even if you work really hard to waste money, it's difficult for a winery to have fixed and variable costs greater than about $25 per bottle, so when you see prices of $125 for an Oregon Pinot, you are paying at least $100 profit PER BOTTLE to the winery's lucky owner. Meanwhile, there are countless (truly a vast number) of $20-and-under wines that are just as good. Wow.

Improving the Quality-Price Ratio (QPR)

QPR, in its simplest form, is a great concept but if you consider it even slightly, it quickly falls apart. It is clear that it's an inferior measure of wine value.

Consider an 85-point wine selling for $11 (whose QPR is 85/11 = 7.7) and an 91 point wine selling for $17 (QPR = 5.3). Does anybody really think that the $11 bottle is a 45% better value simply because it has a 45% higher QPR? Nope; in fact, the $17 bottle is likely the better value.

Clearly, something is wrong with QPR.

So I've been reading about different ideas regarding improving the QPR calculation. I borrowed one part of a solution offered by Robert Dwyer in this blog post: He notes that wine value increases exponentially as they rise through the 90-100 point range, and that makes a lot of sense to me, as the scores lie along a bell curve of distribution, so a 99 pointer is much, much rarer (and more valuable) than a 93 pointer (assuming that there is agreement on those two scores for two different wines).

I don't care for the proposed formula that Mr. Dwyer offers, but I borrowed one element from his article: I used the following factors as "weighting factors" to multiply by a wine's score:

90 points: 1.0 x (no effect on quality)
93 points: 2x
96 points: 4x
99 points: 8x

To take a couple of real-life examples: 2010 Chat Leoville Las Cases has average professional score of 98.3, so its QPR is: 98.3 x 7.3 weighting factor / $340 = 2.11.

A 2013 Lafite has average score of 93.5, so its QPR is 93.5 x 2.4 weighting factor / $480 = 0.47.

96-98 point 2013 Mouton at $360 (higher score and lower price) was hardly better, with a score of just 0.65. 

But 2013 Montrose (from a poor year, but it gets a great average score of 94 and the price is right at $90) gets the highest Bordeaux score in my 20-wine sample: 2.61. 

If you are choosing between the first two wines for investment purposes, the Leoville Las Cases (a Super Second Growth) looks like the far better choice. The Lafite might appreciate more, on a percentage basis, over time, but it has a higher starting price to overcome, so I expect its ROR to be less than the LLC, over time. We shall see.

I'm not sure if this revised method is close to accurate, but I think it's a huge improvement over regular QPR. I just used it to make a wine purchase.

What does this tell us? I think it suggests that First Growths on the market today are overpriced for the wine quality they bring. That's not shocking, but the corollary is a bit shocking: If you invest in the Super Second Growths (Pichon Lalande, Montrose, Leoville Las Cases, and a few others), you might do better over time than with the Firsts. Particularly in an off year where the prices are down but your target wine gets great scores. 

I think that, twenty years from now, people won't look at my 2013s and think, "oh, no! those are from a poor year." I think they will see the wine's age and its high scores, and buy those bottles. As I say, time will tell. Collecting Bordeaux is a Great Experiment. 

In a great year, the First Growths have CRAZY prices, and, via my revised QPR calculation, pretty lousy QPR, So I think my days of buying First Growths may be over. 

Life is all about finding, and exploiting, value. Let others overpay for wine; it is the easiest thing; any idiot can do it. Finding the best wines at the lowest cost--now there is a trick.


QPR