Welcome to AffordAnything’s Money Myth-Busting Series, where I poke holes in common financial assumptions. Today’s topic: wine.
Ever heard someone say, “I got this $100 bottle of wine” — implying, “I got the good stuff”? I’m going to debunk that today.
One of my favorite wine regions is Tasmania, an Australian island originally colonized by the British in the 1850′s as a place to house convicts. (The jails in London were packed.)
But for most of my life, I had never heard of Tasmanian wine; after all, France, Italy, and California get all the glory. Once I started paying attention to wine regions, I noticed specific places that receive tons of wine press (no pun intended) like Malbec, Argentina and Marlborough, New Zealand. But Tasmania?
Why hadn’t I heard of it? Well, Tasmania is a bit of an “emerging” wine region within Australia — it hasn’t yet sealed its reputation on the international stage. And that makes its wines gosh-darn cheap.
You see, I’ve done a fair bit of – uh – studying on this topic. And you know what I discovered? (Shhh. Here’s a secret.) There’s actually very little correlation between quality and price.
What matters is market dominance.
Wine, like any other product, relies on its brand name and recognition. If you’ve got a well-established large vineyard that’s been producing decent wine for generations, you can slam a nice markup on your brand. If your vineyard is big enough to have an advertising budget, you price that overhead into the retail cost of your bottles — and add a markup, as well.
A few Tasmanian vineyards are well-known within Australia, and they charge a nice premium. Their wine is legitimately delicious, but the customers certainly pay for it.
If, however, you’re a mom-and-pop operation or a start-up vineyard, you’ll have trouble getting liquor store owners to return your cold calls. It doesn’t matter that your Riesling tastes like the nectar of the gods. You might produce the finest wine on earth, but you’ve got no brand, no marketing budget, and no buyers network. Until you establish a brand, you’ll practically be giving your bottles away.
What happens in wine … happens in liquor and beer.
This is true for all types of alcohol, not just wine. In TIME’s It’s Your Money blog, Brad Tuttle quoted a Reuters blog that noticed the same thing about vodka: while Grey Goose has glossy ads and brand recognition, there’s a lesser-known Polish brand called Wodka, selling for only $10 a bottle, that has blown the critics away. That same Reuters piece also reported that a New York Times blind taste test found that people preferred Smirnoff (a discount brand) over the higher-priced Ketel One or Grey Goose.
Want to drink fine wines, craft beers, or smooth liquor without paying the high-roller prices? Skip the brands that have an advertising budget. Skip the brands on prominent display shelves. Try the tiny bottle collecting dust on a back shelf. Better yet, go online and order a start-up brand that can’t get stocked at a store.
Who knows how it will taste? It might be awful. Or it might be the best you’ve ever had.
What do you think? Are high-priced drinks worth the cost? Leave your comments below, or start a discussion on Facebook.
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A well-written article, but uninformed as well. While I agree that one should not give their dollars up for marketing, in most cases there is definitely a correlation between quality and price. That being said , there are many wines that are excellent values by their quality to price ratio. As flawed as the three-tier system is, it does help insure that a good product will get a fair shake in the market without huge advertising dollars behind it. In fact, many retailers prefer the underdog and only keep the Kendall-Jacksons and Veuve Clicquots around for the non-thinking set.
And what “people” prefer is no barometer, and does not go to quality – only personal taste. Americans may prefer Hershey over Cote d’Or chocolate, but higher quality ingredients and processes go into the Belgian product.
Ha! I’ve had my fair share of experience with wine from an academic perspective. I’ve had tasting classes, international wine tours, and took a 3 week course on wine chemistry in Portugal. By no means does this make me an expert, but I’ve interacted with some cool people in the wine world! I think the bottom line is this…a good wine is a good wine if you like it!
Not looking at a larger picture – just keeping it to the booze, it is hard for me to pull the trigger on something too cheap. I however, don’t have as good taste as I would assume since one of my favorite whiskeys only costs 22 bucks lol
Man I’m THIRSTY! I loved this post- I’m going to go home and serve up a glass of boxed wine, yum yum!
Now I think there’s a taste difference with beer. Comparing Coors with a home or microbrew is no contest- there’s a truly a taste difference…but whether or not that taste is worth paying more for is up to the drinker! I’ve heard great reviews from the Trader Joe’s brand of beer Simpler Times that costs like $3 and totally felt like a $9 single bottle of beer was gross and not worth the price…but that’s more about flavor and personal taste not about “perceived taste,” that comes with a fancy marketing campaign.
I’ll be enjoying my cube wine in about 30 minutes!
There are many who will turn up their noses at two-buck-chuck or boxed wine, but I ain’t one of them. In the right place and time, it’s the right thing to have and drink. Same goes for beer. I picked up a 12-pack of some Mexican off-brand (“Cantina”) for $8.99. Not as good as Modelo, but better than Miller or Bud. And poured in a chilled pint glass after an hour or two gardening in the hot sun, it hits the spot just fine…
Paula, I love wine and this post was fascinating. Of course I wouldn’t pay $100 for a bottle of wine unless it was made of pure gold! Beautiful blog and great content!!!
I just started getting to wine recently. My current favorite wine is a white zinfindel they sell at coscto for $20 for 6 bottles. My husband and I were laughing cause even when we try to be fancy we end up with least fancy thing we can find. haha.
Great post
I’m not one to turn down $10 wine (In fact that’s what I look for when I’m at the liquor store!).
A lot of the Canadian/home grown wine here STARTS at $15 so I often look for cheaper alternatives like malbec.
I agree that wine tastes good in the tastebuds of the beholder- sometimes a $50 bottle of wine tastes no better than a $10 one. I’m definitely not a wine conoisseur so I would not want $100 wasted on me
Ok, I seriously cant pay $100 for wine. The most expensive wine I drink cost me $11.57 at Walmart. Thanks for debunking this myth
@wineguy- study after study have shown that people’s perceptions of a thing color their experience of that thing. And, people perceive expensive things to be better. Of course, in a blind taste test, this doesn’t hold up.
If what you propose about price to value were true, there would be a solid correlation between price and general preference.
“What people prefer is no barometer” ? That is nonsense. What people prefer is the most important barometer when determining your enjoyment of something like wine.
Very enjoyable post Paula! I can never tell a $10 wine from a $100 bottle! In fact some of the more expensive ones I’ve bought have tasted outright horrible!
So…wine in a box is probably not a good thing?
Seriously, I like to drink the local stuff (brew and wine) and not much into the beer you’ll see advertised during the football games.
I’ll take a $10 bottle of wine and be happy…I cant see spending $100 for a bottle- for me, the taste difference just isn’t there.
Although according my opinion a 100$ bottle of wine not always worth 100$, there are many excellent bottles (and other thing in life) worth the 100$.
The point is not buying this 100$ bottle just for a way to express that you have money to spend but for the wine itself.
I’m a big fan of Charles Shaw as well!
@Jacob – Two Buck Chuck!! How can you not love that brand?
I think, especially with things like wine and chocolate, there is a lot of confusion between price and good-ness. There are a ton of studies with blind taste tests where a cheap wine will win out over an expensive bottle any day. But as soon as you tell the tasters what the prices are, they always say that the more expensive tasted better.
I bet the same is true with chocolates – once you’ve got good ingredients in your product, there’s not much to differentiate it besides packaging.
That’s absolutely true with chocolate … the creamy hazelnut filling inside a Godiva is effectively a dollop of Nutella (I’m sure there are some minor differences, but both are manufactured by the same company).
While Godiva is expensive, you can get Nutella at CostCo for pretty cheap. It’s really all about the packaging and presentation.
On that note, my boyfriend loves — LOVES — the store-brand “Pound Plus” chocolate bar at Trader Joe’s. He prefers it more than other chocolates, and it’s incredibly cheap.