Wine in cans in 2020

At this time of the year, web sites are prone to either review the departing year, or prophecy the incoming one. So, let’s try some of that here; although we will first have to go back in time.

Way back in 1965, winemaker Tom Angove was running an industrial-scale wine operation in Renmark, South Australia. This meant that he had to sell more cheap wine than people were buying in bottles at the time, at least in Australia. He knew of a product used, since 1955, to transport and dispense battery acid in the USA — a flexible plastic bag inside a box. After some trial and error, he developed a version for wine, which became known as “cask wine” in Australia and “bag-in-box wine” everywhere else (Cask wine turns 50 and it’s time to pay it some respect). By 1970, the Wynns wine company had modified it into the form that we know today, with a tap not a clothes peg (1970 Wynns perfect the wine cask). This packaging gradually replaced the venerable glass flagon as the preferred way to retail cheap wine, worldwide.

Well, that was 50 years ago, and it has been suggested that it is time to move on. Plastic is no longer a recommended way to package anything, let alone wine, because the oceans are now full of plastic debris, resulting from single-use packaging. This is called pollution, which results from a failure of human recycling processes — plastic is rarely re-used, but it can be recycled, although it often isn’t.

Glass can also be recycled, but at much greater expense. Sand has to be heated to a horrendous temperature in order to turn it into glass bottles; and that glass has to be heated to not much less, in order to recycle it into new bottles. These procedures burn huge amounts of fuel of one sort or another, which then contributes to global climate change, via the so-called carbon footprint. We could, of course, re-use the glass bottles that we have, rather than recycling them. In the past, this has been done for soft drinks, but not often for wine (see A 5-cent deposit on wine bottles in New York? Maybe).* Glass is also very heavy as far as packaging goes, much worse than plastic. This also contributes to global climate change, by increasing transportation-related burning of fuels.

On the other hand, aluminum cans are easier to recycle and cheaper to freight than are bottles. So, it seems inevitable that the suggestion for wine-in-a-can will be made. It is used for beer, so why not wine? This is easily argued on the grounds of being more in-tune with the modern world (see Making smarter sustainable choices at the bottle shop) — we should care about the sustainability ethics of producers, and make retailing choices that minimize our own environmental impact (buy local products, reduce unnecessary packaging, etc).

There are a number of options for drinks producers, given that consumer awareness is at an all-time high, and the ongoing creation of laws restricting single-use plastics (eg. Thailand has a total ban on plastic bags from 2021). For instance, there are now flattish (recyclable) PET containers that are said to be 40% more spatially efficient than round bottles, and are 87% lighter than glass bottles (Eco-packaging trends across spirits, wine and beer). There also exist bottles made of much lighter glass than is the current standard, which cuts transportation impacts.

So, it seems obvious that, among these options, wine cans are going to become prevalent. The wine industry is simply going to have to accept it, just the way it did for plastic bladders in cardboard boxes. Given this prognosis, the industry needs to embrace the idea, and to make the most of it that they can (pun intended). There is no point in leading the horse to water — the horse needs to be proactive, and lead itself.

Cans are not yet the Next Big Thing, of course. It seems that bottles currently command $US15 billion in sales, bag-in-box $1.4 billion, and cans only $90 million (A skeptic’s guide to wine in cans), so the can manufacturers are not yet rubbing their hands with glee. Still, we need to think about the future, because it has been suggested that Wine in cans will represent 10% of the market in 2025.

The basic question, then, is how to retain as much as possible of wine’s special ethos, while sticking it in something that looks like a beer can, at best, and a cola can, at worst. You don’t go to a debutante dance dressed like a house cleaner — even Cinderella knew better than that. You might, however, go to a sports game or a picnic or to the beach carrying a 6-pack of wine, snuggled next to the beers and coolers.

Part of the issue, then, is about what sort of wine should be in these cans. The best stuff comes in bottles, we all know that. You don’t lay down a cellar full of “Chateau Cardboard” (as we called it in Australia); and, so, the bag-in-box packaging has not been used for the best-quality wines. Presumably the same will be true for cans — cellaring “a 12-pack of wine” will not be the same as laying down “a case of wine”.

This will not stop the advertisers, of course. Back in the 1970s, the most successful Australian brand of bladder wines, Orlando Coolabah (launched in 1973), had a series of television ads based on the slogan: “Where do you hide your Coolabah?” (see Australia Remember When). It showed examples such as hiding your wine cask behind a large pot plant, so that the other party-goers could not get their hands on the good stuff.

Sadly, current examples indicate that canned wine will be cheap, fizzy, and best drunk cold, no matter what the advertisers tell us. Not unexpectedly, this matches the current expectations for beer and soft drinks, although these may not be the best role models to choose. Aluminum cans are currently not seen as part of the alleged trend towards premiumisation of the wine industry (see Has there really been recent premiumization in the wine industry?). Discussions of canned wine “quality” refer to the shelf-life not the enjoyability — retail examples indicate that we will be lucky to get a use-by date, let alone a vintage date. Surely the wine industry can do better than this?

Apart from these cultural expectations, the sensory experience may also leave something to be desired, of course, as noted by Lettie Teague (A skeptic’s guide to wine in cans):

Consuming straight from the can thwarts one of the great pleasures of wine: its aroma. Unlike the wide mouth of a wine glass, a can’s small opening isn’t made for sniffing; any scent of flowers, fruits or forest floor will be trapped in the can ... I tasted every wine both straight from the can and from a glass, and while some held up better from the can than others, all were better from a glass. Drinking straight from the can not only meant forsaking aromas but also savoring a first taste of can, not wine. When the wine was lousy the can only amplified its worst attributes in the manner of a tinny loudspeaker.

There are all sorts of technical issues. as well (see The recent Bulk Wine Conference addressed what can ruin wine in cans). These include the special lining used in food-grade aluminum cans, which needs to be tested separately for each wine. There is also the matter of dents and other damages that easily occur to cans, which has retail consequences. Consumers seem to treat dented cans as unacceptable, at best, and at worst they are seen as a sign of health problems with the contents (as noted to me by Bob Henry). In neither case is the retailer likely to make a successful sale.

There are also social issues, such as the fact that most wines have 2–3 times the alcohol content of beer, and therefore need to be consumed differently. The idea that soft drinks, beer, wine, and coolers may all come in the same packaging may require some sort of regulation regarding clear warning labels.

There are major advantages to cans, of course. Notable among them, you will be able to use your shower beer holder to drink wine while getting clean under a stream of water. Try doing that with your wine glass!

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* In southern Europe, and among migrants from there to the New World lands, wine flagons have often been re-used. The customer brings the empty flagon to their local winery, and exchanges it for a full one (and pays for the contents). The used flagon is cleaned by the winery, and re-filled. This procedure does not fill the oceans with plastic, nor does it engender much in the way of transportation costs.

Christmas traditions

At this time last year, I presented The first wine-themed Christmas card, which was from 1843.

If you are interested in knowing more about Christmas cards, then the Moo card site once produced an infographic compiling some of the more interesting bits of information. I have included it here because it is no longer available on the original web site. Click on it to see the infographic at full size.

An amazing amount of other information about Christmas Traditions & Customs around the world can also be found at the Why Christmas web site.

God jul och gott nytt år!

Will the slowdown in the Chinese wine market catch up with Australia and Chile?

World imports and exports have recently been in the news, not least because the world’s largest wine-producing region (Europe), the world’s largest wine-consuming region (the USA), and the aspirant to both crowns (China) have been doing political battle with each other, based, I think, on one of the early scripts for Game of Thrones. The tariff machinations are certainly just as convoluted and devious, and the future outcome just as uncertain — the Scandinavian word saga was invented for just this sort of situation.

This is, of course, having a seriously negative effect on wine producers, sellers and drinkers (Who suffers from tariffs on wine?). Exacerbating this situation, recent data show a slow-down in the rapid rise of China as a wine-consuming nation. Having recently been the world’s fastest-growing wine market, it is currently ranked as the number 2 still-wine consumer by value and number 5 by volume (IWSR predicts declining volumes but increasing value in the global wine market). Given the small size of current Chinese wine production, this makes China a significant import market, worldwide.

It is thus worthwhile to look at the current situation for the major countries exporting wine to China.

The data shown in the graphs below were released by the country’s official trade organization, the China Association for Imports and Exports of Wine & Spirits (CAWS) (taken from China’s top 10 wine importing countries in H1 2019).

The first graph shows the estimated bottled-wine imports for the first half of 2019, as both volume (millions of liters) and value (millions of US dollars), for the top 10 supply countries. Bottled wine accounts for 90% of the import value; and the listed countries account for c. 97% of those imports, with 63% for the first two countries alone.

As you can see, volume and value do not rank the countries in the same order. Chile has moved to the front of the pack in terms of volume, while Australia has moved to the front in terms of value. France, the long-term leader of bottled-wine imports, has dropped to third and second, respectively. *

This movement means that the average wine-price per liter (in US$) has also changed:

Australia Germany France United States Argentina Italy South Africa Portugal Spain Chile

$5.60 $5.29 $5.03 $4.94 $4.80 $4.17 $3.44 $3.19 $2.29 $2.09

So, Australia sells its wine at an average of 2.7 times the price of the Chilean imported wine. Clearly, the Australians must think that they are on to a good thing. Indeed, the increasing price per liter for Australian wine is a global trend (How Australian winemakers are distancing themselves from the country’s reputation for cheap bottles).

We can now proceed to compare the 2019 data with those from 2018. Overall, imports experienced substantial drops in both volume and value this year: 14.1% for volume and 19.5% for value. These are substantial numbers, and must affect the producing countries significantly. The percentage changes for the main 10 countries are shown in the next graph.

As you can see, all of the countries experienced drops in volume, except Chile, which showed continued growth of its bulk wine exports. All of the countries showed corresponding changes in value, except Australia, which maintained its ground in spite of a drop in volume — indeed, China now represents c. 35% of the value of Australian wine exports (see AAWE).

These drops have been attributed to China's slowing economy, the depreciation of the renminbi (RMB), and the uncertainties associated with the protracted US-China trade war. The latter point is particularly important, given the free trade agreement between Australia and China that came into effect this year. [The current US president has pretty much withdrawn from all of the free-trade negotiations that were ongoing at the start of his term of office, except the USMCA, and replaced them with a series of reciprocal tariffs, instead.]

Australian success

The results for Australia suggest that the Australians have a different strategy to everyone else. This is so because Australia has a fairly small population, by world standards, and the people can easily act together, as a single marketing group.

For example, the Australian federal government is currently implementing a A$50 million Export and Regional Wine Support Package (ends June 2020), which “has enabled the Australian wine sector to compete on the world stage like never before, delivering bold, eye-catching marketing campaigns on an unprecedented scale” (Wine brands encouraged to tap into export growth opportunities). The money has been used to participate in a major way in events like the China International Import Expo, the Wine Australia China Awards, ProWine China, and the Decanter Shanghai Fine Wine Encounter (Australian wineries Shanghai-bound as exports continue to grow in value). This is a long way from a trade war! There is even an annual China-Australia Wine Marketing Summit.

Also claiming active involvement has been the Australian Wine Research Institute. In recent years: “We placed our focus on value growth, rather than volume, and really getting to understand the consumers in emerging markets like China ... Our job was to go into China and look at consumer preferences while working with Australian producers to manufacture products that suited that market” (How Aussie wine has thrived over a decade of change).

It is also worth noting that wine is not the only large export to China — China represents approximately 20% of all Australian exports (Australian brands shine at second China International Import Expo).

As a counter-point to the single-country image, however, I should also point out that Australia is a continent, and therefore its wine regions are as different from each other as are any other continent’s. The fact that the only Australian wine you know of is Shiraz from the Barossa Valley reflects the fact that this wine is distinctive, not the lack of any other, very different wine styles.

This is relevant here, because the main wines being marketed in China come either from the Barossa or from Mclaren Vale, which is a short distance further south. These are the prime sources of the “soft fruity wines from well-known varieties that newcomers tend to enjoy, but also more refined styles that appeal to aficionados” (Why Australian wine is so successful in China). These are the wine styles referred to above.

In this regard, we should not overlook the role of the Penfolds wine brand (owned by Treasury Wine Estates, TWE), which is apparently responsible for two-thirds of the Chinese imports from Australia. Indeed, in recent years Penfolds has specifically targeted the Asian market as a whole (How Penfolds, a 175-year-old wine brand, is staying relevant and appealing to the Asian wine):

There are significant economic and demographic differences within Asia, which implies differences in demand and consumer behaviours. There are some trends that we observe in consumer behaviour in Asia. Firstly, the importance of millennials which form a significant part of the population — they are more social, more involved and tend to spend more than the Gen X.

There is also diversification of channels from supermarkets to online and specialty wine stores. Finally, luxury alcoholic beverages keep growing in the region, which shows a significant increase in affluent and middle-class consumers in Asia. This implies that brands need to continuously build their credentials and luxury appeal, to keep growing with that segment. as consumers will keep trading up as income increases.

The importance of the diverse retail channels, has been stressed elsewhere (Cracking China: what’s the best route to market for imported wine?):

Local analysts and trade consultants say the decision by Treasury in 2015 to switch from what had been an exclusive distribution deal for Penfolds with one importer, to go to a multi importer model, has been responsible for transforming not only the brand’s fortunes in China but the importer model for the whole country. Almost overnight it opened the market and different channels for multiple players to be working with effectively the same brands, helping take those wines to China’s mass market.

Perhaps we should also not overlook the importance of Western wine labels when presented to consumers who do not even use a Western alphabet, let alone speak one of the languages (Hong Kong in turmoil):

TWE struck it lucky because its Penfolds range is distinguished by bin numbers rather than words (Bin 389, Bin 407, Bin 707 and so on), making it easy for consumers to recognise the different labels. Better yet, the Wolf Blass range is characterised by colour coding, from the Yellow Label entry level range through to the ultra-premium Platinum range. This helped the company get traction with Chinese consumers early on.

Penfolds is not, however, the only large wine-producing group in Australia to specifically target the Chinese market. The Randall Wine Group, run by Warren Randall, the so-called King of Australian Wine, has been busy for the past couple of years buying up vineyards in the Barossa Valley and Mclaren Vale (Randall snaps up more vineyards to quench China’s demand for Aussie wine), with the stated intention of supplying the Chinese middle-class consumer. The group now has c. 3,500 hectares of premium red-wine vineyards in South Australia, and it is now the biggest vineyard owner in both the Barossa (1,600 ha, c. 20% of the area) and Mclaren Vale (750 ha). This will allow it “to consistently supply in excess of 12 m bottles of Barossa luxury red wine‚ a favourite among the booming Chinese market” — this is more than double what the entire USA currently supplies to China. It seems rather like: Putting all of your eggs in one basket.

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* It is worth noting the comment that: “China wine import stats in any given year must be taken with a huge pinch of salt, bearing in mind the fragmentation of brands and importers, and the frequent habit of trade loading and dumping that is so common in the region” (Nimbility Asia report). For example, the data from Nimbility Asia differ somewhat from that given above (Bottled wine imports to China declined sharply in H1, and market headwinds remain strong), although the patterns are roughly the same. However, for their volume data Georgia and Moldova replace Argentina and Germany, respectively, and for their value data New Zealand replaces Germany.

When will world wine consumption finally catch up with production?

There has been much recent talk about world wine production, not least in relation to global climate change. Among all of this, we have been told, by the International Organisation of Vine and Wine (OIV), who collate worldwide records, that the 2019 production level has returned to near “normal”, after a small grape crop in 2017 was followed by a bumper crop in 2018.

Furthermore, concern has been expressed that the 2018 wine production, much of which is now being released to the consumers, has produced a market glut. This is obviously not good for the long-term viability of wine producers, so it is worthwhile for us to look at current trends in both the worldwide production and consumption of wine.

Production

The data graphed below come from the OIV database, which has collected worldwide data since 1995 (ie. the past 25 years). The first graph shows the total level of wine production from those countries with commercial production that exceeds a specified minimum. The data for 2018 is still provisional, since not all producers have yet been reported their final numbers; and the 2019 data are preliminary, as wine production is still ongoing.

As you can see, wine production varies considerably from year to year, but there is no consistent trend upwards or downwards, nor are there any repeated cycles. So, we may conclude that current wine production is simply varying stochastically around a particular “average” level (currently c. 270 million hectoliters annually) — this is indicated by the dashed line on the graph.

The 2017 production was the smallest since the beginning of the 1960s, while the 2018 production was exceeded only by that of 2004 (for the longer-term trends, see my post The smallest global wine production for 55 years). The estimated 2019 production level, on the other hand, is only c. 3% less than the 25-year average. We therefore cannot claim that this year is in any way unusual, in terms of production — it was the previous two years that were unusual. Note that world production is dominated by European producers, who contribute about two-thirds of the wine (62-69% annually during the current century).

The consequences

The importance of the return to normality in 2019 results from the obvious over-production of wine from the 2018 grape harvest: “with demand continuing to soften in volume terms, this reduction in supply comes as welcome news for wine producers” (Global wine supply moves closer to demand in 2019). In Europe, for example, there are reports of “a fairly well-inventoried bulk wine market in Italy for Prosecco, Pinot Grigio and Primitivo, as well as built up inventories of France’s Languedoc reds” (The ups and downs of the 2019 global bulk wine market).

In the USA, Napa grape prices for 2019 are well down, making it “a year where it’s tough to sell grapes and bulk wine, because most of the buyers already have sizable inventories because of 2018” (A historic harvest and a changing market: Napa's growers navigate grape glut). Furthermore, “the slackened thirst for purchases of excess North Coast grapes and wine is expected to extend into 2020, as vintners move the bounty of the 2018 harvest through sales channels that aren’t growing as fast as the influx” (As North Coast vintners move through ample wine supply, Napa County adjusts rules for small vintners).

One suggested response to this situation in Napa is for “vineyard owners strategically replanting some acreage this year, [thus] delaying future fruit production to correspond with market rebound” (Napa's growers navigate grape glut). This option has also been suggested in Italy (Barolo consorzio bans new plantings for three years to avoid wine glut).

Consumption

These are pretty serious suggestions, which obviously leads us on to a comparison of production with global wine consumption. The OIV data are shown in the next graph, with the consumption shown in pink.

Clearly, there have been long-term trends in the consumption data — there was an increase in consumption until 2005, followed by a dramatic drop, returning to the 1996 level. The drop was then reversed, with the previous (2005) consumption level recovering by 2014 (9 years later). Wine consumption has shown a roughly linear increase since 2007.

Thus, we may conclude that production has remained static while consumption has very recently been increasing. We may then ask the obvious question: when will the level of consumption catch the level of production?

We can answer this question using a very simple linear forecast, as shown by the two dashed lines on the above graph. It is important to note that forecasts, by definition, assume that the current trends will continue unabated into the future, which may be rather naïve. Indeed, there have been media predictions that future wine consumption will actually plateau, or even decrease (eg. Worldwide alcohol consumption declines 1.6%).

Anyway, the forecasting lines for production and consumption intersect in the year 2034, which is 15 years away. Until then, production will continue to exceed consumption, and the risk of a wine glut will remain real.

As an aside, if we produce the same type of forecast based solely on the consumption data from 1995 to 2005 (when there was a also a linear increase), the forecast year of equality between consumption and production is 2029. Thus, the dip in consumption from 2005-2014 had the effect of delaying the forecast by 5 years.

An alternative forecast for future consumption is shown in the final graph, where consumption is treated as actually having already reached a plateau (at an average of c. 238 million hectoliters annually), with a dip in consumption during 2005-2014.

For this forecast, both wine consumption and production increase only very slowly. In this scenario, consumption stays at <90% of production for the foreseeable future (the two lines slowly reach equality in the year 3555!).

Obviously, some of the pundits are concerned that this second forecast is more likely than the first one.

Why are there wine monopolies in Scandinavia?

Few people mention the “Railway Monopoly” or the “Road Monopoly” when referring to government-owned (and funded) railways and roads, but if the government owns alcohol distribution then they always mention a “Wine Monopoly“. There seems to be an unclear distinction here.

If a government takes control of any of these things, there is always the same intended good reason for it. They are providing a service in an industry where cutting corners, with the incentive of increasing profit, may not be a good idea.

For example, the railways of the USA cannot support modern high-speed trains because the initial lines were built “on the cheap“ by industry, whose motive was to make money, not provide transportation. On the other hand, in Europe and elsewhere the lines were often built with government funds, and those governments have continued to maintain the networks. (See: The rest of the industrialized world has high-speed rail, why can’t the U.S.?) The USA has moved almost entirely to road (and air) transport, with a lot of lobbying from the road-based interests, and rail has been sadly neglected. Times may change — after all, China laid down the world’s largest high-speed rail network in just two decades (to replace its high-polluting domestic air business).

Alcohol

For alcohol, on the other hand, government control usually has to do with health. Indeed, current consumer surveys continue to list health as the main reason for voluntarily abstaining from alcohol intake, especially amongst Millenials. However, government edicts are hardly voluntary, at least compared to government support for the current Dry January campaigns.

The temperance movements have long presented both health and moral arguments against alcohol. Most of my readers will be familiar with the anti-alcohol movements in English-speaking countries. As recently noted by Paul Nugent: “The temperance movements ... were well-organized, globally-connected, typically led by Protestant evangelicals and very largely driven by ordinary women.”

Similar temperance pressure has also existed elsewhere, often with very different effects from the alcohol bans that you are familiar with. For example, Joseph Bohling explains (2018. The Sober Revolution: Appellation Wine and the Transformation of France) that the effect in France was to create the modern system of clearly demarcated high-quality wine-making regions, in order to encourage people away from drinking large amounts of cheap wine. In the second half of the 1900s, wine consumption per capita halved, while appellation wines rose to >50% of the volume consumed.

Alcohol problems occur notably in societies where binge drinking of spirits has long been accepted cultural behavior. You can see the current list of countries with problems in the following map, where an increasing amount of blue indicates increasing prevalence of alcohol-use health problems (Alcohol Use Disorders DALYs, Age-Standardized Rate, 2017).

Note that these problem countries tend to be in the colder northern regions — spirits can keep you warm during the long dark winters. However, some of the tropical countries are not excluded, for entirely different reasons.

In the (Protestant) Nordic countries (Finland plus the Scandinavian countries; Scandinavia = Denmark, Iceland, Norway, Sweden) binge drinking used to be part of the culture. Traditionally, fruit (ie. non-grape) wines and beer might be consumed with food, or might not. However, the drinking of spirits was part of a completely separate set of activities. The basic idea was to keep drinking until you literally couldn’t continue — it was more like a sports challenge than anything else, with the participants mostly being male.

So, the idea that the governments might try to take control of this situation should not come as a surprise — “Sell ​​alcohol without any profit, and then we can limit the negative effects of alcohol on society” was the motto. The argument was that if the governments got control of the supply, then two things could happen: (i) individuals acquiring unreasonable amounts of alcohol would be made very difficult, especially for drunk persons; and (ii) the populace could be educated to consume alcohol in the manner of southern Europe — that is, in moderation, with meals.

The alternative approach to control has always been high taxes, of course. At various times, all of the Nordic countries have been world-renowned for their alcohol taxes, although currently none of them are particularly onerous. The idea of introducing Prohibition was not really an option, given the failure of that approach in the USA. Sweden actually rejected it in a 1922 referendum, while Norway briefly tried it on spirits (from 1921-1926) and fortified wine (1921-1923). However, Iceland did have Prohibition of one sort or another from 1915 onwards, but dropped the ban on wine in 1922, spirits and low-alcohol beer in 1935, and strong beer in 1989 (!).

The current situation

Denmark, unlike the other countries, never has had government control of alcohol, except in the semi-independent Faroe Islands, which has had an alcohol monopoly since 1992 (through the Rúsdrekkasøla Landsites stores). It may not be insignificant that Denmark’s colour in the above map is quite dark, compared to the other Nordic countries.

Norway is not a member of the European Union (EU), but it is a part of the European Free Trade Association, and therefore abides by many EU requirements. Its government has had complete control over alcohol sales since 1922 (through Vinmonopolet = The Wine Monopoly), currently including spirits, wine and non-low-alcohol beer. Note that, in the above map, Norway is light blue, which paler colour is probably not accidental. The government previously also held monopolies over alcohol importation and wholesaling, but these were dropped in 1996, as part of the European Free Trade agreement.

Iceland is also a member of the European Free Trade Association, rather than the EU. Its government has had complete control over alcohol sales since 1961 (through Vínbúðin = The Wine Shop). It is worth noting that for both Iceland and Norway, the problematic aspect of their flirtation with Prohibition was wine sales, because banning wine meant that the European countries with which they traded fish (especially France and Spain) refused to take any seafood unless they could send wine in return. The governments therefore needed to take control of wine sales, rather than trying to prevent them.

Finland still has government control of alcohol sales (through Alko Oy), although when it joined the EU in 1995 its concomitant monopolies over alcohol production and bulk importation had to be dropped. Sadly, total consumption of alcohol in Finland increased up until to 2007, and alcohol-related problems were also recorded to increase (see Upward trends in alcohol consumption and related harm in Finland). More than a decade ago, I was in Helsinki just before morning peak-hour, and the park outside my hotel was well-populated by people who were “under the weather” (all male) — they were literally cleared away by the police just before the morning commuters arrived.

Things have apparently improved greatly since then (see Alcohol consumption in Finland has decreased, but over half a million are still at risk from excessive drinking), although the color of Finland in the map above is still rather bluish. Moreover, Finland recently introduced a new alcohol act of parliament, allowing, for example, stronger beverages to now be sold in grocery stores — the results are being monitored, of course (Finland has avoided dreaded effects of new alcohol act, so far).

Sweden has the biggest population of the Nordic countries, and also produces the biggest alcohol-consumption revenue, being 21st worldwide (Finland =29, Norway = 30, Denmark = 32).

The Swedish government did not have alcohol production or importation monopolies when it joined the EU (unlike Finland and Norway), but it did retain a monopoly over sales. However, a few years ago Sweden dropped control of trade sales (restaurants, bars, caterers, etc), while still retaining control of retail sales (through Systembolaget = The System Company). In the above map, Sweden is yellowish, the best of all the Nordic countries.

Sweden’s Systembolaget was founded in 1955, when a large number of regional sales outlets, based on a strict rationing system that had been in place since World War I, were merged into a single national company (originally called Systemet = The System). As the company itself puts it: “The old System stores were largely located on hidden back streets. The signs were unobtrusive, and the windows advertised completely different goods, such as clothes and shoes. But when the new Systembolaget was founded in 1955, the management decided to bring the stores into the city centre.”

I first encountered Systembolaget in 1998; and it was as primitive as you are all expecting a monopoly to be, in terms of service. You had to ask for your bottles across a counter, having waited patiently in a ticketed queue; the weekday opening hours were rather short (10 am to 3 pm); and the queues on Friday afternoon (open until 5 pm) were extensive, because the shops were not open on weekends.

Actually, the shops apparently originally were open on Saturdays, because it was a workday (and a school day!). So, it was 1982 when Saturday closing was introduced; and this remained in force until 2001 (although even now the stores still close at 3 pm on Saturday). A few partial self-service stores started to appear from 1984, with the first fully self-service store opening in 1991. However, it was not until 2013 that all of the stores had adopted this format. Limited online-ordering was instituted in 2001, culminating in full home delivery in 2012, which became nationwide in 2019. There are also numerous agents that will receive ordered alcohol, and keep it until you can collect it.

So, my previous blog posts about Systembolaget (click the keyword search in the column to the right) describe the current situation, not the past. Today, it really does behave like a liquor chain of international standing (with 3,500 employees), in spite of my pet peeves. The fact that it is government-owned is not, in practice, relevant, other than the positive effect of the increased purchasing power that can be achieved by a truly national chain.

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Footnote on the downside of large monopolies:

Back in 2005-2008 there was a large corruption court case in Sweden, in which 92 people were indicted for receiving or giving bribes. Of these, 77 of them were Systembolaget employees, accused of receiving money, travel and other gifts from suppliers in exchange for promoting their goods. At least 65 people were found guilty.

There are not 6 million missing female premium wine drinkers

Recently, Wine Intelligence published an article discussing the results of a 2018 survey of "how women differ from men when it comes to the wine category". The article is entitled Missing: 6 million female premium wine drinkers, and was written by Lulie Halstead.

The article starts off quite mildly, with some very sensible ideas, followed by some good data collecting. The data are then explained in terms of possible causes. Then the article finishes by going completely off the rails. The bottom line is expressed as:

Women are significantly under-represented among US wine drinkers who spend $15 or more on a bottle. Could they be the next growth opportunity?

Other people have already commented on this article (eg. Tom Wark: Expensive wines, men v women, and peacock feathers), but I wish to focus on something rather different.

The data involved in the report is discussed like this:

One finding ... was that women generally spend less money on wine than men. This finding held for all 6 markets we studied for the report (US, Canada, UK, Japan, China, Australia), but was especially true in the US market, where the female share of wine drinkers spending over $20 in off premise fell to 35% (vs 50% incidence in the monthly wine drinking population).

Our US Premium Wine Drinkers 2019 report in July also showed this lack of female participation in premium wine in general (defined as typical spend of $15+ in off premise) – at this level, the gender split is a very similar 64% male and 36% female.

So, the data indicate that there are fewer women than men among purchasers of premium wines. To me, that seems quite sensible on the part of the women, since I am generally absent from that end of the wine market, myself. Value for money plummets as value increases, as I have shown many times in this blog (click on the Value for money search link under Labels For Posts at the right of this page). Under these circumstances, I can get some very good wine for $US 12-20, certainly enough to match the amount of wine I drink. So why should I pay more, except for special circumstances?

So, we do not need to look very far for an explanation for the gender imbalance; and Ms Halstead quickly finds it, too:

One clue may come from differing gender attitudes to money in general ... A study of [the] US customer base published in 2018 ... suggested that women were more cautious and sensible with their money, and less tolerant of risky or aggressive investing strategies. A similar study in 2019 among UK private investors also reported very similar findings. Various academics ... have also put forward similar theories regarding men’s impetuousness in spending their disposable income and financial risk-taking.

So, the women are more sensible than the men. Has any woman ever doubted this? Unfortunately, Ms Halstead then concludes:

So in life, so, it appears, in wine. Our US data on wine drinker attitudes consistently shows that, while women appear to know as much about wine as men, they are significantly less confident in that knowledge. As such, they gravitate towards reassurance and safety in their wine choices, and will often opt for a cheaper, tried-and-tested wine over a more expensive and unknown product.

Now, hold on just a cotton-picking minute! It is a long way from wine being <$20 to wine being cheaper. We are talking about value-for-money, not cheapness or untestedness. The conclusion here does not actually match the data (the inference does not follow logically from the premise).

Sadly, it gets worse. The final conclusion is:

So, as we consider the absence of women in the US premium wine consumer base – out of 22 million, 14 million are men, so theoretically to match the monthly wine drinking population we are missing 6 million or so women – it’s clear that we need to work a bit harder to convince my gender that expensive wine is worth buying.

In other words, there are 6 million sensible low-risk-taking money-wise women in the USA who should be actively encouraged to start behaving more like the men, and spend unnecessary amounts of money.

I see this is as being as sexist as anything I have ever heard. Why should we make the women more like the men? Why not, instead, make the men more like the women? If the women are behaving sensibly, as Ms Halstead suggests, then surely the latter would be a much better idea for society as a whole.

It is time for people to stop thinking that men are always the enviable ones. We will never get rid of gender bias, let alone discrimination, if we always see an apparently male-preferred role or behavior as the default, and thereby think that we need to modify an apparently female-preferred role to match it. The men are not necessarily the best role models! Instead, we should think about what sort of society we want to live in, and then try to adjust whichever behavior is at odds with this.

It is totally unsuitable to place marketing dollars (designed to increase alcohol-based profits) ahead of societal good. That is, we should not encourage people to spend more money, when their own behavior currently indicates that they think this is unnecessary. If the wine industry wishes to be seen as a responsible part of society, then it must realize that profiteering is a very different thing from education. Teaching people to value high-quality wines is one thing, but encouraging them to pay excessive money for it is another thing altogether.

I will finish with an alternative, but closely related, example. If you go into any poker room, in any casino or sleazy back-street dive, anywhere in the world, you will immediately notice that >95% of the participants are male. Indeed, gambling is generally carried out by men (but not all men!), with the major exception being the purchase of lottery tickets, which is more gender neutral. Does this really mean that we should be encouraging women to acquire a (potentially financially ruinous) gambling addiction, just to make poker unbiased? I hope not; but I have actually seen this suggested, as well.

The perilous state of the US wine industry?

There has been much talk lately of a slow-down in wine sales in the USA, if not an actual decrease in sales. Indeed, there are similar comments for other wine markets, as well (eg. Wine sales plummet £146m in the on-trade). I thought that it might be worthwhile to look at a picture of some of the data, rather than simply present a few summary details, as occurs in most of these commentaries.

It is simplest to look at the Big Picture, by considering total sales, including all wine shipments from California and the other US states, as well as imports entering US distribution (including bulk imports bottled in the USA). These data are available from Market IQ at the VINEX wine marketplace, covering the years 2002 to 2018, inclusive.

The data for the volume of sales are shown in the first graph. “Table wine” includes all still wines not over 14% alcohol, while “Fortified wine” includes all still wines over 14%, plus sake.

At first glance, all three wine categories show strong upwards trends, suggesting a healthy wine industry. However, all three graphs indicate a recent slow-down in sales — that is, they are all approaching a plateau. Indeed, some simple mathematical modeling of the Table wine category suggests a plateau of c. 353 million 9-liter cases, sometime around 2025.

The plateau implies saturation of the current market. The forecast saturation point is perilously close to the sales of 339 million cases last year, indicating a very small increase in the size of the market over the next half-decade.

This modeling is very simplistic, and it does not actually take into account a possible down-turn in sales (or the creation of some new market possibilities). That is, it is a forecast not a prediction — a forecast is based on the premise “if things continue the way they are currently going”, rather than using a crystal ball.

So, things, indeed, do not look good for those people who want the wine industry to continue growing. If the US population is continuing to grow, then sales of all goods can be expected to grow with it — and the population has been growing at c. 0.65% per year for the past 5 years. The wine industry is currently not keeping pace with the population.

Another aspect to look at is, of course, the total retail value of the wines. Using the same data source, this is shown as the blue line in the next graph. The estimated retail value includes markups by wholesalers, retailers and restaurateurs, for both on-premise and off-premise sales.

At first glance, this looks much better, because there is no apparent plateau — sales continue to grow in a nice linear manner, year by year. However, we all know that inflation also tends to make prices do this, irrespective of any actual increase in sales. So, to get a better picture of the real changes in retail value, we need to adjust for inflation, which ran at a yearly average of 2.1% over this same time period (see US Inflation Calculator).

I have shown this adjustment for the pink line. Things doesn't look quite so good, now. Indeed, there have been times when the increase in total wine value did not keep pace with inflation. There is also a small hint of a plateau here, which we might expect from the above graph of sales volume.

A similar pattern is seen if look solely at wine shipments from California, as listed by MarketIQ. Over the same time period, the volume increased by 46% while the value increased 87%.

The difference between the two graphs (volume versus value) is often attributed to premiumisation, which I have discussed before (Has there really been recent premiumization in the wine industry?). That is, drinkers are now allegedly drinking less wine of a higher per-bottle value than did their predecessors. Many commentators seem to think that this is a Good Thing.

However, Damien Wilson has noted out that this is not necessarily so (Is wine premiumisation a doom loop?). He points out that past history, notably in France, shows us that the two things involved in premiumisation (decreasing volume of sales and increasing per-bottle price) counter-act each other unequally, rather than balancing each other. That is, the total value of retail sales decreases through time, so that the wine industry contracts.

He rightly emphasizes that “there is a real risk that the focus on pushing pricing upwards will only end in the market’s downward spiral ... As the number of wine consumers in the US has stalled in recent years, the local wine sector should avoid profiteering in favour of new market investment ... Should wine producers chase short-term profit by pushing prices higher – or is it time to focus on creating more wine consumers for long-term business growth?”

These are wise words, because a healthy industry needs an increase in the actual number of consumers through time; and the current wine industry in the USA does not seem to have this.

You may (not) be surprised which Wine Gourd posts are least popular

As a blog author, I sometimes check on which of my posts are popular and which not. One of my least-popular posts, to date, raises some concerns, at least in my mind, about the wine industry.

Anyway, let’s start with a picture of the 186 posts published up until the end of October. [Note: last week’s post was published at the usual time, but Blogger did not send out emails to subscribers until a day later. Blogger’s email system has generated many complaints from users, over the past couple of months.]

The posts are shown in the graph in chronological order (horizontally), with the number of page-views reported by Blogger vertically (as at 9th November).

Since most of the posts get most of their page-views within a week of being posted, there is no reason to expect that the poorly read posts in this list will acquire too many more readers. It took a while for the blog to get going, so it was a month or so before viewers increased; then there was a slow peak in numbers, after which the number of page-views per post settled down. The 10 earliest posts may never be read!

At the top end of the scale, the most popular posts are listed in the side-bar at the right of this page, so we don't need to discuss them here. My interest here lies in the other end of the scale.

The recent posts that have received fewer than c. 200 page-views are (in rank order):

• The first wine-themed Christmas card (1843)
• Medical practitioners and malt whisky
• Let the author beware
• Getting the question right
• Difficulties restricting alcohol sales to minors in the Internet Age

The first two of these were the Christmas posts for 2018 and 2017, respectively, so maybe that is not unexpected — however, the first one does point out that the the first known commercially produced Christmas card celebrates wine as well as Christmas. The next two posts are somewhat esoteric.

So, the post that I wish to discuss here is the last one in this list. It explores the two current scenarios for online sales of alcohol, in face of the legal requirement that people under a certain age should neither order wine nor receive it.

Some of my correspondents are not at all surprised that this post has been effectively ignored. It addresses a thorny issue for the wine industry, and one that seems to be: (i) ignored by practitioners, and (ii) over-looked by commentators. The wine industry seems not to be overly concerned about the possibility of providing alcohol to minors.

Further discussion

In the interests of continuing my discussion of this topic, below I point out that the wine industry in at least one country has tackled this issue for themselves (ie. without government interference): Australia. I think that the wine industries elsewhere could do a lot worse than trying something similar.

The organization concerned is Retail Drinks Australia Limited, which is the national industry association representing the interests of all off-licensees in Australia (ie. everywhere that supplies alcohol without being licensed to serve alcohol to the public, such as a bar, pub or restaurant).

They have recently produced a detailed document called the Online Alcohol Sale and Delivery Code of Conduct. Below, I quote selected parts of this document; in particular, section 4.1.3 presents a practical way of tackling the legal requirements.

The Retail Drinks Online Code is an industry-wide framework developed in collaboration with government and community to enhance compliance in the responsible online sale and delivery of alcohol ... The Code seeks to address one of the challenges in regulating online alcohol sale and delivery, which is that liquor licensing legislation is state and territory based, but the marketplace is national.

The voluntary industry Code provides a robust, best-practice and fit-for-purpose framework governing the rapidly growing online alcohol sale and delivery market ... The Code covers all points of the direct-to-consumer process involved in online alcohol purchases and deliveries, nationally ... Signatories to the Code cover more than 80 per cent of all alcohol sold online in Australia.

4.1.3 Identification Procedures

    Retailers must adopt adequate procedures in their systems which verify that Customers are aged over 18. For the purposes of this clause, the extent and manner of the adequate procedures can be determined by the Retailer but must include more than only manual date of birth entry (age-check) by the Customer.

    Any person accepting the delivery of alcohol, either the Customer or another adult, is required to provide sufficient identification documents upon accepting a delivery if they appear to look under the age of 25.

Acceptable forms of identification in this instance include:.

• Australian or Foreign Passport;
• Australia Post Keypass in Digital iD™ in relevant approved jurisdictions;
• Australia Post physical Keypass proof of age card;
• Australian Proof of Age document;
• Drivers Licence or permit issued by an Australian State or Territory;
• Drivers Licence issued by a foreign country; and
• Photo Card issued by a public authority of the Commonwealth or of another State or Territory for the purpose of attesting to a person’s identity and age.

Alcohol industries elsewhere should take note of the entire Code of Conduct, and try something similar for themselves. It may not be easy, but it does seem necessary in the Internet Age.

My annoyances with my alcohol monopoly

The European Union (EU) officially discourages monopolies, but actually bans only commercial ones, not government ones. One of these exceptions that has thus been allowed to stand involves retail sales of alcohol. The Nordic countries have long had government ownership of alcohol sales, and for a good reason, which I will discuss in a future blog post. However, the only alcohol monopoly left in the EU is Systembolaget, in Sweden, although Vinmonopolet continues to operate in Norway (which is not in the EU).

I have written about Systembolaget before, and I recently pointed out its principal advantage — wine is often cheaper than elsewhere in the EU, and sometimes cheaper than in its homeland (Can we trust between-country or between-state comparisons of wine costs?). This has apparently annoyed some of those readers who object to monopolies just on principle.

So, in order to balance things, in this post I will discuss some of my pet peeves about having to deal with Systembolaget. This is just to make it clear that not everything is roses, and also to get my annoyances off my chest (I am glad that you are here to read about it).

The objection to government monopolies is usually that they “manifestly cause waste and inefficiency, while denying consumers the range of price and service options they desire”. I have previously argued that this is not true for Systembolaget: (i) I have pointed out that, as the third biggest alcohol retailer in the world, Systembolaget provides me with a wide range of wines (Wine monopolies, and the availability of wine), and (ii) decent wine is less expensive in Sweden compared to most other places (Why is wine often cheaper in Sweden than elsewhere?).

Any beefs that I have must therefore be about service. Below, I list the five things that have annoyed me over the years.

1. Crazy choices of wine name in the database

A wine database should list the name of the wine, the name of the producer, and the name of the grape-growing region (along with other information, of course). However, Systembolaget is likely to choose something quite arbitrary as the main title for their database entry — some of the staff apparently cannot distinguish between the brand name, the producer name, and the appellation. Sometimes they swap the wine name and the producer name, and sometimes they leave one of them out entirely. Indeed, the largest name on the bottle label may not be the one chosen for the database title, which can be confusing when you are looking for a bottle in a store.

Here is an example of three apple ciders released for sale at the same time. Note that in the third case the brand name and the producer name (Pomologik) have been swapped. This is sadly typical of what the database presents to users.

2. A cavalier attitude to vintages

Systembolaget has an explicit policy not to care about wine vintages. The staff in the store apologize for this, since it is obviously crazy, but there seems to be nothing they can do about it. Anyway, you can imagine the confusion this can cause.

First, the database may list one vintage while the central warehouse supplies a later one, without warning; and the database may not be updated for some time (see below). For example, on 12 September I ordered half-bottles of 10 different wines, and 4 of them had different vintages to what was advertized (two whites were 2017 instead of 2016, one red was 2015 instead of 2014, and one red was 2018 instead on 2015 (!)).

Second, what is available in any given shop may not match either the database or the warehouse, depending on how long the bottles have been in the store. Indeed, the information on the shelf-talkers may not even match what it on the shelf bottles. A fortnight ago I came across two different white wines where the shelf-talkers said 2017 while all of the 20 bottles except one were the 2018 vintage.

Finally, it is entirely likely that the staff will simply shove the bottles of the new vintage in front of the old ones. So, if you look carefully, you will sometimes find old vintages at the back of the shelf. In the white-wine example in the previous paragraph, one of the 2017 bottles was in the back row and one was in the second-back row.

This can create interesting situations, of course. I once ordered a red wine from the warehouse of a particular vintage, and then found two previous vintages of the same wine in my local shop. So, I got to do an interesting 3-vintage comparative tasting, just because Systembolaget does not care about vintages. A similar situation occurred more recently, when I found two Australian rosé vintages (2018 and 2019) — the older vintage was considerably darker, and the aroma considerably more muted, presumably from sitting in the shop for an extra year. It is not all bad (just annoying most of the time).

3. The database is sometimes not up-to-date

There are three main ways this can happen.

The first one is the vintages, as referred to above. The vintage listed in the database may not be the one actually present in any given store. There is only one way to find the vintage you want — go to each store and check every bottle on the shelf.

Second, if there are only a few bottles listed as being present in a particular store, then it is probably a database error. Indeed, if only one store lists a particular wine, then it will definitely be a database error. Do not get your hopes up.

Third, most wines are not actually available in the main warehouse, but are instead stored by the distributor (mostly an importer, of course). This causes an information disconnection — if the distributor does not inform Systembolaget of changes in availability, then the database will be wrong. Things are much better these days, compared to a decade ago, but it can sometimes be a lottery ordering a wine that has to come directly from the distributor.

4. The ordering of “temporary assortment” wines

The Tillfälligt sortiment refers to bottle collections that are released c. 20 times per year (c. 60-90 products per release). This is the assortment from which I get most of my wines, because it is usually here that the interesting stuff appears.

The products are released at precisely 10 am on Fridays, and cannot be ordered beforehand. The products will appear only in a selected few shops, depending on the quantities available, but they can all be ordered from the central warehouse, and will then turn up at my local store a few days later. How long the products remain available after release is determined entirely by the quantities — once they run out, that is it.

Sadly, I usually have to order them, because my local store is not one of the selected few stores where they are available (see below). So I always order within an hour of the release, just to be safe. Obviously, this requirement to order online at a specified moment is a real pain in the butt. However, the only other way to do it is to go to one of the stores that actually has the wine — they are unlikely to run out as fast as the warehouse.

And the warehouse can run out very fast. For example, last September 6 I tried to order one of the 360 bottles of the 2009 Viña Gravonia stated to be available in the warehouse. I clicked the order button literally within the first few seconds after 10 am, but I was still told that the product was now “not available” from the warehouse.

The really annoying part, though, is that even days later there were still bottles of this wine available in all three of the stores where some had been placed. However, I cannot order any of those bottles during the first week after release — I have to go one of the stores; and, of course, after a week (when I could order them) they had all gone.

There must be a better way.

5. My home town is discriminated against

I live in the fourth largest town in Sweden, and the government recently “upgraded” it to city status (due to population size). Systembolaget does not know any of this. This is mostly annoying with regard to the Tillfälligt sortiment referred to above.

First, rare bottles are distributed only to the three largest cities — we get no allocation whatsoever. Second, when the bottles are supplied, we clearly do not get enough for the local populace, because we are always the first place to run out. Therefore, if there is any county without a particular wine, it will be mine. I used to feel that I should be paranoid about this, but I got over it — it is just a fact of life. Occasionally, a town in a nearby county will have what I want, and a 30–45 minute drive will snare me a bottle before it disappears; but this is a ridiculous way to have to do it, even when it works.

It is time for Systembolaget to get into the modern world. If the government can do it, then their monopolies should be able to do it, too.

Conclusion

None of these issues is a deal breaker. They are annoyances and frustrations, but not unendurable. Perhaps it is the price that I have to pay for getting wine more cheaply than elsewhere. If so, then so be it.

Historically, monopolies can be very effective, but they are also known for their abuse of power, and sometimes just sheer laziness. The latter seems to be the case with Systembolaget. However, even within this context they are amateurs compared to one place I worked as a teenager — the TV Times magazine (in Australia), which was the government-owned competitor to the commercial TV Week. What went on there beggars belief; it is no wonder that it folded soon afterwards.

The modern ranking of Bordeaux left-bank wines

A few weeks ago, I looked at what various modern commentators have written about how modern Bordeaux wines compare to the official 1855 Bordeaux Classification of the Médoc châteaux (Making modern sense of the 1855 Bordeaux classification). In that post, I looked only at the five groupings of the châteaux — Premier Crus Classés through to Cinquièmes Crus Classés (First to Fifth Growths),

However, classifications are artificial, because they usually have arbitrary boundaries between the groups. In this case, wine quality varies continuously, and the best wines in one group are therefore not all that different from the worst wines in the next higher group. As I noted in the previous post, no-one wants to be the top château in class 3 instead of the bottom château in class 2.

This issue can easily be circumvented for the Médoc wines, because the original assessment, by the Bordeaux Brokers’ Association, actually ranked the top Haut-Médoc châteaux (as well as putting them into groups). This ranking was intended to be based on quality, as determined by the long-term prices achieved by the various wines.

Obviously, this process can be repeated in the modern world; and so it comes as no surprise that various people have done so. I will be looking at their results here.

Modern ranking schemes

I have compiled the data from a number of modern rankings. These are attempts to rank the châteaux anew, in their modern context, without direct reference to the ranking of 1855. However, it is worth noting that this procedure is somewhat confounded by the fact that the current prices are influenced by the 1855 ranking in the first place.

In all cases, these rankings are derived from a calculated score of some sort.

1. Gary M. Thompson and Stephen A. Mutkoski (2011) Reconsidering the 1855 Bordeaux classification of the Médoc and Graves using wine ratings from 1970-2005. Journal of Wine Economics 6: 15-36. The list was based on the quality scores from three expert wine ratings (Wine Advocate, Wine Spectator, International Wine Cellar). The châteaux ranking was then derived from a regression analysis incorporating a number of relevant factors.
2. Albert Di Vittorio and Victor Ginsburgh (1996) Pricing red wines of Médoc vintages from 1949 to 1989 at Christie's auctions. Journal de la Société Statistique de Paris 137: 19-49. Based on auction sales prices from 1980–1992. The châteaux ranking was derived from a regression analysis incorporating a number of relevant factors.
3. (a) Orley Ashenfelter (1988) A new and objective ranking of the chateaux of Bordeaux (based on auction prices, of course!). Liquid Assets 5: 1–9. (b) Orley Ashenfelter (1997) A new objective ranking of the chateaux of Bordeaux. Liquid Assets 13: 1-6. These two lists were based on average auction sale prices from 1985–1988 and 1994–1996, respectively. I averaged the two listed scores for each château.
4. The Liv-ex Fine Wine 100 Index tracks the trading-exchange prices of 100 top wines (95% of which are from Bordeaux). Rankings of the Bordeaux châteaux, based on average prices over the previous 2-5 years, were produced in 2009, 2011, 2013, 2015, and 2017. I have taken the average of these list prices. Sadly, the 2017 list has only 48 châteaux, not 60, with only five 5th growths listed — the text says “5eme – £250 to £312” but the list has nothing < £274.

This provides us with nine separate rankings of the wines, based on:

1. auction prices 1980–1992 2. auction prices 1985–1988 3. auction prices 1994–1996 4. wine-exchange prices 2003–2007 5. wine-exchange prices 2005–2009

6. wine-exchange prices 2007–2011 7. wine-exchange prices 2009–2013 8. wine-exchange prices 2016–2017 9. wine-quality ratings 1970–2005

Obviously some of these price periods overlap, which will give extra weight to data from the duplicated years. Also, the ninth ranking is based on expertly assessed quality, which is only loosely related to price. Nevertheless, combining these rankings still seems like a worthwhile exercise; and so this is what I will do below.

Another issue is: exactly which châteaux were included in each ranking. For my purposes here, the number varies from 58–68, out of a total list of 70 châteaux. The differences stem from the slightly different purposes of the authors, and what data were available to them. There were 61 châteaux from the original 1855 list (it started at 58, in 1855, but some estates have been sub-divided and others combined), plus nine extra châteaux that make it into the rankings of various of the researchers, based on the modern quality of the wines.

Comparing the rankings

So, when comparing these nine modern rankings, the number of times each château has been ranked varies. Two-thirds of the châteaux (46 / 70) appear in all of the rankings, and 65 / 70 appear in more than half of the rankings, but some château appear only rarely (eg. the small estate Château Desmirail appears only twice, even though it was included in 1855).

In order to address these inequalities, each ranking scheme was converted to a proportion from 0 to 1, before being compared to the other rankings. The ranking schemes can then be compared most easily using the standard Correlation coefficient.

First, the correlations among repeat rankings by the same people are all >80%, and actually go up to 97% (Liv-ex 2013 versus Liv-ex 2015). So, at least we can say that the researchers are consistent through time — once they get a ranking they pretty much stick to it!

Second, in most cases the correlations between people are much lower, in the range 50–70%. This is still quite high, as a half to two-thirds of the variation in rankings is shared between the researchers. The cause of the variation that is not shared is not discernible in any detail, other than to say that the different sources of prices clearly have some effect.

The main exceptions to this point are the correlations between the ranking of Di Vittorio & Ginsburgh and the two rankings by Ashenfelter, which are 91-93%. These are based on auction prices covering the years 1980 to 1996, and so it is perhaps no surprise that they produce very similar rankings of the châteaux. Oddly, though, the correlation between the rankings of Ashenfelter 1988 and 1997 is only 83%, indicating that there are numerous small changes in the rankings over the decade separating the two.

Of these modern rankings, we might expect that the Ashenfelter and Di Vittorio & Ginsburgh rankings would most closely match the procedure allegedly used by the Bordeaux Brokers’ Association to produce the 1855 ranking. However, this does not mean that they closely match that ranking. Indeed, the correlations of the modern rankings with the 1855 ranking are mostly 30–40% (actual range 29–47%). That is, only about one-third of the variation in today's rankings matches the situation in 1855 — there is much more difference than there is similarity.

The modern ranking

So, what might a new ranking look like? Given that there is more similarity than difference among the modern rankings, we could simply combine them, by calculating the average rank for each château across the nine rankings. I have included the final list at the bottom of this post.

We can get a feel for this combined ranking by using a simple stripe plot, as show next. Each vertical stripe represents one of the 70 châteaux, with the average-rank scores increasing from left (best) to right (last).

Based on what we see here, we could, if we wanted, group the châteaux, although it would not be into five classes, as was done in 1855. Three main groups would be practical, although the second and third of these could then be further sub-divided.

There would be 13 châteaux in the top class, with no distinction between First Growth and Second Growth, as there was in 1855 (five First and 14 Second). This seems to accord with modern opinion, that the best of the Seconds are not less than the Firsts.

There are also three châteaux at the bottom of the ranking that probably should not be included in the list, as being consistently inferior these days: Château Cos Labory, Château Belgrave, and Château Lynch-Moussas.

Finally, we can visually compare this modern ranking with that of 1855. The dots at the left represent the châteaux ranks in 1855 (from bottom to top), and these are connected by lines to their position in the 2019 ranking. The gaps in the 2019 ranking represent those châteaux that were not ranked in 1855, while the groups of 2–3 dots in the 1855 ranking represent those properties that have since been sub-divided.

Note that at the top of the list (the bottom of the figure) there have been only local changes in the ordering. However, elsewhere there have been wholesale changes in rank order. As noted above, there is much more difference than there is similarity in the two lists.

Of course, who knows what will happen next, if global climate change has the expected effects on the wine industry. Check with your local wine blogger in 10 years’ time.

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Ranking of the Médoc châteaux
based on the average ranks from the nine modern rankings

Château Latour
Château Lafite-Rothschild
Château Mouton Rothschild
Château Margaux
Château Haut-Brion
Château La Mission-Haut-Brion
Château Palmer
Château Léoville-Las Cases
Château Cos d'Estournel
Château Ducru-Beaucaillou
Château Pichon Longueville Comtesse de Lalande
Château Montrose
Château Lynch-Bages
—————————————————————
Château Pichon Longueville Baron
Château Pape-Clément
Château Léoville-Barton
Château Beychevelle
Château Léoville-Poyferré
Château Haut-Bailly
Château Calon-Ségur
Château Gruaud-Larose
Château Grand-Puy-Lacoste
Château Pontet-Canet
Château Rauzan-Ségla
Château La Lagune
Domaine de Chevalier
Château Lascombes
Château Branaire-Ducru
Château Smith-Haut-Lafite
Château Duhart-Milon-Rothschild
Château Giscours
Château Saint-Pierre
Château Talbot
Château Malescot St. Exupéry
Château Brane-Cantenac
Château Langoa-Barton
Château Chasse-Spleen [doubtful position due to few data]
Château Clerc-Milon
Château d'Issan
Château Cantenac-Brown
Château d'Armailhac [aka Mouton Baronne Philippe]
—————————————————————
Château Lagrange
Château Cantemerle
Château Haut-Batailley
Château Boyd-Cantenac
Château Prieuré-Lichine
Château Batailley
Château Gloria
Château Kirwan
Château Rauzan-Gassies
Château Haut-Marbuzet
Château Durfort-Vivens
Château Ferrière
Château Malartic-Lagravière
Château Grand-Puy-Ducasse
Château Haut-Bages-Libéral
Château Marquis de Terme
Château Lafon-Rochet
Château Pédesclaux
Château Marquis d'Alesme Becker
Château Pouget
Château du Tertre
Château Croizet Bages
Château La Tour-Carnet
Château Desmirail [doubtful position due to few data]
Château Dauzac
Château de Camensac
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Château Cos Labory
Château Belgrave
Château Lynch-Moussas