Monday, April 10, 2017

Napa versus Bordeaux red-wine prices

In a recent article on Wine-Searcher, Blake Gray addressed the question: Does Napa have too much Cab? The accountant answer is: "not if you can sell it", which is a very short-term point of view. Somebody with a longer perspective would be more interested in whether the domination of the Napa Valley vineyards by cabernet sauvignon wines is sustainable, because sustainability is related to biodiversity, not to monocultures.

Blake looks at the issue by making some comparisons between the Napa area of California and the Bordeaux region of France, whch also relies on cabernet as a principal grape. Let's look at some of the points made in the article.

First, cabernet sauvignon comprises nearly half of the vineyard area in Napa, which is certainly not a monoculture, but it is also quite a domination. How does this domination compare to Bordeaux? Actually, the comparison need to be among all of the common grape varieties, because Bordeaux has more merlot than cabernet.

A number of mathematical measurements of what is called "diversity" have been developed in science, for making precisely this sort of comparison. The idea is to reduce the various grape-variety areas down to a single number that quantifies their diversity, from a monoculture of one grape variety at one extreme to equal amounts of each grape variety at the other extreme.

The one I will use here is called the Shannon Diversity Index (see Wikipedia); and I will apply it to the vineyard area of each of the seven most common grape varieties in both Napa and Bordeaux. The Index will be a number between 0 (for a monoculture) and the natural logarithm of 7 (for equal amounts of each grape variety). The data come from Blake Gray's article for Napa, and from the Wine Cellar Insider for Bordeaux.

It turns out that Napa (1.51) actually has a slightly greater diversity of grape varieties than does Bordeaux (1.28). So, we certainly cannot yet claim that there is anything unusual about the domination of Napa by cabernet sauvignon. However, there seems to be no reason why Napa won't eventually exceed Bodeaux, if the current trends continue.

[Aside: Blake Gray makes the erroneous claim that Europe has grapes that are "disallowed" in certain regions. No grapes are disallowed anywhere in Europe; and any type of wine can be made in any region. What is disallowed is the name that can be used for those wines — names must match the definition of those names. In Bordeaux, in addition to its top seven grape types, which are Merlot, Cabernet Sauvignon, Cabernet Franc, Semillon, Sauvignon Blanc, Malbec and Muscadelle, there are also notable areas of: Petit Verdot, Carménère, Sauvignon Gris, Colombard, Folle Blanche and Ugni Blanc.]

Moving on, Blake Gray points out that Napa winemakers charge the consumer more money for their cabernet wines than do the winemakers of Bordeaux. He quantifies this claim by looking at the most popular wine searches on Wine-Searcher, for the cabernet blends of both Napa and Bordeaux. Search popularity is a convenient way to compare the wine regions, especially as it turns out in practice that the most expensive wines are the most popular searches.

Blake does not show us a picture of the dollar comparison, but we can generate one of our own. As of 18 March 2017, c. 450 of the most popular 500 searches on Wine-Searcher for both Napa and Bordeaux involve wines dominated by one or more of the principal Bordeaux red-wine grapes (cabernet sauvignon, merlot, cabernet franc, malbec). Now, that's what I call domination!

These two lots of 450 wines are the ones that I have compared in the first graph. The two lines show a running average of the Wine-Searcher average bottle price (vertically) against the Wine-Searcher search popularity (horizontally). [The running average is based on nine-year blocks.]

Napa and Bordeaux wine prices relative to search popularity

For the first 30 most-popular searches, the Bordeaux wines are more expensive than are the Napa wines, but after that the Napa wines are consistently 2–3 times more expensive than the Bordeaux wines. The exception is for the Le Pin wine from Pomerol, which is ranked 45th in search popularity but is the second most expensive Bordeaux wine. Furthermore, some rather expensive Napa wines have low search popularity, so that the Napa line on the graph goes up and down like a yo-yo.

Conclusion: a Napa cabernet will cost most of us a lot more money than will a Bordeaux wine, unless we go for the few most expensive Bordeaux wines.

It turns out that this pattern is independent of wine quality. Wine-Searcher also provides an average quality score for each wine, averaged across a number of wine critics. So, we can compare the Quality:Price Ratio for the two regions, as well.

I have done this in the second graph. Each point represents one of the 450 wines from each region, plotted with the average bottle price (vertically) and the average quality score (horizontally). Note the log price scale, which deals with the ridiculous prices of the wines from Screaming Eagle (Napa), Petrus (Pomerol) and Le Pin (Pomerol), at the top of the graph. Also, shown are the exponential price models fitted to each dataset (see the post on The relationship of wine quality to price) — this is a straight line on the graph because of the log price scale.

Napa and Bordeaux wine prices relative to quality score

The Bordeaux wines, on average, score 0.7 quality points less than do the Napa wines. However, the QPR line for Napa is consistently above the line for Bordeaux, indicating that the Bordeaux wines are generally cheaper for the same quality score. This cannot be a good thing for US wine drinkers, but is much better for the wine drinkers of France (where most of the Bordeaux wines are consumed).

Note that there is only one isolated dot below the main wines, which represents the only wine with an outstanding Quality:Price Ratio, relative to the other wines. There are, however, plenty of points above the main group, which represent poor value for money!

In other words, neither Napa nor Bordeaux has red wines that represent particularly good value for money; and it seems unlikely that this situation will change any time soon (see At what price, To Kalon?).

This odd QPR wine, incidentally, is Chateau Tour Saint-Christophe (Saint-Emilion Grand Cru), with an average score of 91 points and an average cost of US$26 — this seems to be commonly available in the USA. The property was recently renovated by Hong Kong-based entrepreneur Peter Kwok, so the wine may not remain cheap for much longer.


  1. One added fact to consider is that the number of acres in Brodeaux (300,000 acres) is much larger than Napa (45000 acres), so you have the scarcity factor driving up Napa prices.

    1. Indeed, Bordeaux is the largest wine-producing region in France, with reportedly 75 million cases per year. However, only about 5% of this is top quality. Similarly, only about 4% of California wine is from Napa, which produces about 10 million cases. So, the direct comparison of Napa versus top-quality Bordeaux is about the same, in terms of volume.

  2. Napa Valley runs the disease propagation risk of becoming a wine grape variety monoculture.

    From wines and vines periodical:

    "Napa Cabernet Prices Raise Concern"


    Abtract: Tony Correia discusses wine grape pricing during the 22nd annual Vineyard Economics Seminar. As nearly every available plot in Napa County is getting planted to Cabernet and growers and wineries are also pulling out other varieties rather than absorb the opportunity cost of not growing Cabernet. "Any land that's in Napa Valley, in the watershed of the Napa River, that can be planted to Cabernet and produce a good crop of Cabernet is being planted today, and they can make a call and sell the fruit for $5,000, $6,000 $7,000"