How not to write a wine report

I do not usually do this sort of thing, but this time I am going to name names.

Let me explain. I used to teach university students about data analysis and presentation, and one of the exercises for those students was being given a series of published graphs and tables, and then being asked to find the inconsistencies (which I had previously found for myself). The idea was to show them real examples of all the ways one can go wrong when dealing with data, so that the students would (hopefully) be a bit more careful themselves, in their own future professional lives.

However, my examples were always kept anonymous — there is no point in fingering a few practitioners when the problem is actually widespread. We all make mistakes, and we don't necessarily expect to be pilloried for it, especially when most other people are also making the same sorts of mistakes.

In this post I am going to do the same exercise, but this time I am going to tell you the source of the errors, because they are all in the same wine report:

The Irish Wine Market Report 2018, produced by Drinks Ireland.

If you want to try the exercise for yourself, then stop reading here, and go read the report, instead. Make your own assessment of how many inconsistencies you can find; then come back here to see how well you did. Otherwise, read on now.

I have included a small part of each table or figure, to illustrate my points.

My comments

Page 5

The Wine Sales data are apparently in “millions”, but what are the units? Bottles? Liters? Euros? It turns out (as shown on page 8) that they are cases of wine. So, “0.2” ≈ 200,000 cases of wine.

Page 6

The Excise Receipts are apparently in “€”, but that cannot be right. Even the excise itself is €3.19 per wine bottle (the highest in the European Union!). Given the number of bottles per year (pages 5 and 8), I suspect that the numbers are actually each “million €”.

Page 8

The Country of Origin table has a duplicated column. The column is headed “2017”, but it contains a copy of the data from the “2018” column.

Furthermore, some of the columns do not sum to the “Total” given. The worst instance is the “2015” column, where the “Total” provided is 296 cases less than the sum of the numbers given. This, incidentally, is the error that used to most surprise my students — that, in the modern era of computer spreadsheets, people still can’t add up.

Even more inconsistent is that the data given on page 5 do not all agree with the Totals shown in this table. Notably, for the year 2000, page 5 shows 4.8 million (not 4.48 million, as shown here), and for the year 2013, page 5 shows 8.9 million (not 8.22 million, as shown here).

Page 9

The Percentage Share table contains some wrong numbers, based on the original count data shown on page 8. This occurs once in the “2016” column and four times in the “2000” column — the biggest difference is “2.9%” (shown here) instead of 3.6% (calculated from page 8).

Also, the number of decimal places for the bottom two rows is inconsistent, with 1 decimal place for most of the columns, but 2 places for the “2000” column and none at all for the “2013” column. Furthermore, the data for the bottom two rows shown in the “2018” column sum to 100.5% (not “100%”, as shown), which happens because both numbers are wrong (they should be 37.2% and 62.8%, not “37.8%” and “62.7%”). The same pair of numbers for column “2016” are also incorrectly rounded. Once again, all of this is based on the count data shown on page 8.

Page 10

First, what on earth is an “Excise: Tax on Tourism”? Excise taxes are placed on goods where the government doesn’t want you to overdose, like tobacco and alcohol. So, in Ireland each bottle of wine effectively has a minimum price, which will be equal to the excise duty — costs and profit are added to that price. So, what has tourism got to do with this?

Anyway, the reference to “HL Excise Rate”, does not make sense. The rates shown in the table are per bottle of wine. I suspect that the “HL” stands for “hectoliters”, which is how excise rates are usually quoted officially (see Excise duties in the EU), but it has no relevance to this table.

Page 13

Finally, I freely admit to being mystified by the High Excise Rate Tables. I have been unable to perform any calculations that will produce the numbers shown in this table. As far as I can determine, there is a constant €3.19 excise rate and a constant 23% value-added tax, but that information does not lead me to any of the numbers shown here. To me, there has been a complete failure to communicate with me, in this instance.

Conclusion

I always emphasized to my students that: (i) I would like them to get their reports right, and (ii) if they can't do that, then they should at least make them consistent. And when they are reading the literature, they should make sure that other authors have done the same — it is the first line of defense against false information. I still think that this is so.

Difficulties restricting alcohol sales to minors in the Internet Age

We live in the Internet Age, but not all governments seem to have joined us. For example, some of them have laws that are impractical to implement for online sales, which is the basis of modern commerce. One of these laws seems to be the common restriction on the sale of alcohol to minors. This is easier to implement in some countries than in others, as far as digital shopping is concerned.

This topic seems to have received little discussion from the wine media.

Before the internet, restricting sales to minors was relatively straightforward:

The customer walks into an actual bricks-and-mortar sales location, selects their goods, and walks up to the payment point. The seller visually assesses the age of the buyer, and if there is some doubt about it, asks for some form of officially acceptable identification that shows the buyer's date of birth (such as a driver's license).

The seller may be legally covered in this scenario. If the buyer is misrepresenting their age in some way, then they are taking the legal responsibility, not the seller. The seller is likely to have met the practical requirements of the law.

It is different, however, with online sales, because the seller is never face to face with the buyer:

Typically, the buyer registers with the seller's internet site, and electronically reports their date of birth. The goods are then dispatched by courier. The courier delivers these goods face-to-face to a recipient, and it is now the courier’s job to assess whether the recipient is legally entitled to receive the goods. It is thus likely that the courier is now the one taking practical responsibility for implementing the sales restriction.

Who is legally responsible here, and for which parts? * And how can they carry out their role responsibly? Before we further increase digital shopping options, as is often advocated, we need to clarify the legal requirements.

There seem to be two basic governmental implementations, at the moment.

Alternative 1

First, let's consider Sweden (where I live), as quite typical of the situation in the European Union. Swedes have individual Personal Numbers, and they each carry a card to verify this (it serves as their driver's license, and most other cards you can think of). They see no problems with this arrangement, because Swedes actually trust their government to behave responsibly — 1984, with its Big Brother, would never have been conceived by a Swede.

So, restricting online sales for minors is easy in Sweden. When I register with a site offering restricted sales, I use my Personal Number. The first 6 digits are my birth date, which is publicly known, while the final 4 digits are private. The registered information associated with the Number that I provide can be compared to whatever other information I provide, such as my delivery address, phone number, etc.

So much for the sale, where there is independent verification of the purchaser's age. For delivery, the courier electronically scans my ID card, to formally record me as the recipient. For non-restricted sales, on the other hand, the courier simply gets my signature, in the usual manner.

So, there is an electronic trail recording the online transaction from beginning to end, based on a unique identification number. The Internet Age is easy to implement in this situation.

Alternative 2

This is not true in countries where there is no Personal Number and no ID card. Many people do not trust their government, and perhaps they are right not to do so, in these cases. This seems to be particularly true in the USA; but the Australians also long ago refused their government’s proposal for an Australia Card (even though the combination of a driver’s license and a Tax File Number pretty much tags all adults, anyway).

In this scenario, there appears to be no practical way to restrict sales to minors; and it is often unclear who is taking responsibility for trying to do so. (For a discussion of the pros and cons of digital ID, see: One country’s uber-convenient, incredibly invasive digital ID system; also Estonia: the inside story of building a digital nation.)

For Alternative 2, a typical scenario at the online point of sale is simply to ask the purchaser to self-report their date of birth using an online form. This information is essentially uncheckable (but beware of “guest checkout” procedures that bypass even this basic requirement!). Furthermore, trying to correlate this information with other data sources, such as a delivery address and phone number, would probably be seen as an invasion of privacy. The only people who could do it these days would be FaceBook; and while they might be willing to supply this information to the online seller, the fee charged would likely remove all profit motive from the seller’s business.

The delivery scenario is no better. Is some poorly paid courier driver really supposed to verify something about the recipient? They could ask for a driver’s license, if the recipient has one handy, because a signature could easily be illegible. If the courier fails to verify, are they then legally responsible, as the person who physically provided the alcohol to a minor? In some jurisdictions, apparently so.

There may be no checkable trail here; and any attempt at compliance with the law would simply meet the letter of the law but not its intent. Even a minor could confidently undertake to circumvent this system!

Conclusions

So, it seems to me that countries with a Personal Number / ID-card combination have a simple route for implementing restrictions for online sales — an electronically checkable means of working out whether a person is a legally acceptable recipient of any specified goods. On the other hand, countries without this sort of system currently have no straightforward digital mechanism for verifying anything worthwhile.

Therefore, some governments have not yet fully thought through the implications of the Internet Age. Laws that were devised for face-to-face sales may not be practical for online sales, without some extra mechanisms to make their enforcement implementable.

There is also presumably a need within the wine industry for some sort of Code of Conduct governing online alcohol sales and deliveries, as this would give retailers and couriers confidence that their procedures are compliant (see Retail Drinks issues online liquor sales warning). In each jurisdiction, what exactly are the actions needed for a seller and deliverer to be seen by a court to have “acted in good faith”? **

This post arose from discussions with Bob Henry.

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* For those of you specifically interested in the USA, the current situation may be complicated, as always, because the country is actually a collection of states, each with its own laws. The Criminal Defense Lawyer web site suggests (Supplying alcohol to minors):

States approach this situation very differently. In some states, the law requires the seller to take specific steps, such as inspecting a buyer’s identification and even requiring the buyer to fill out a declaration of age. As long as the seller takes this step and still sells alcohol to a minor, sellers can avoid a conviction by showing they took all the required steps. In other states, selling to a minor is a strict liability offense. This means that if a seller sold alcohol to a minor, it doesn't matter what steps the seller took, as any sale to a minor is prohibited. Still other states allow a mistake about the buyer’s age to factor into a court’s decision when it determines what sentence is appropriate.

In any case, it is the person who makes the face-to-face sale that is likely to be charged with an offense, not the employer.

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** Retail Drinks Australia does have a new Code of Conduct for the online sale and delivery of alcohol. However, the descriptions that I have read (eg. Australian wineries back Retail Drinks code of conduct) do not even mention sale of alcohol to minors!

Wine and world happiness

Some of you may have noted the recent release of the 2019 World Happiness Report. This is sponsored by The Sustainable Development Solutions Network (SDSN) and The Global Happiness Council (GHC). Reports have been produced yearly since 2012 (except 2014).

The 2019 Report describes itself as:

a landmark survey of the state of global happiness that ranks 156 countries by how happy their citizens perceive themselves to be. This year’s World Happiness Report focuses on happiness and the community: how happiness has evolved over the past dozen years, with a focus on the technologies, social norms, conflicts and government policies that have driven those changes.

This is a very interesting document. However, my point in this blog post is that it contains no mention of wine, which seems to be a serious oversight.

The group of independent researchers who compiled the report quantify happiness for each of the 156 countries using four measures of subjective well-being:

• Cantril Ladder life-evaluation question in the Gallup World Poll — asks the survey respondents to place the status of their lives on a “ladder” scale ranging from 0 to 10, where 0 means the worst possible life and 10 the best possible life
• Ladder standard deviation — provides a measure of happiness inequality across the country
• Positive affect — comprises the average frequency of happiness, laughter and enjoyment on the previous day to the survey (scaled from 0 to 1)
• Negative affect — comprises the average frequency of worry, sadness and anger on the previous day to the survey (scaled from 0 to 1)

The authors try to explain these measures of subjective well-being by relating them to six possible “explanatory” variables: Social support; Freedom; Corruption; Generosity; Gross Domestic Product per capita; and Healthy life expectancy. Wine is not explicitly mentioned here, but I figure that it might fit in under several of these variables, particularly the last two.

Obviously, I need to evaluate this for myself.

One simple way to do this is to look at the value of wine imports for each country. I need to look at value, not volume, because a lot of cheap wine can be just as “happy” as a smaller amount of expensive wine. I need to look at imports, because most countries import most of the wine they consume. This potentially disadvantages the bigger wine-producing countries, where people mostly drink the local wines; but, as you will see in a moment, this does not have much effect on the results. Also, predominantly Muslim countries are also disadvantaged; but (sadly) the World Happiness Report does not list many of them as particularly happy places.

The wine import data come from Comtrade, which is the United Nations International Trade Statistics Database. This database lists US$ values for wine imports in 111 countries; but only 92 of these overlap with the 156 countries in the World Happiness Report.

The comparison of happiness with wine imports is shown in the graph. Each point represents one country. I have excluded two outliers (Kuwait and Pakistan), both of which have medium happiness scores but extremely small imports (off the bottom of the graph).

As expected, there is a concurrent increase in both characteristics — happy countries import lots of wine, and wine-importing countries have generally happy people. The line on the graph shows you that the relationship between the two variables is exponential (note that the vertical axis uses a log scale).

I will leave it to my readers to decide which way around cause and effect works in this instance. Does drinking wine make you happy, or does being happy make you drink wine? Or does being relatively wealthy, on a global scale, make you both happy and prone to consuming wine? The World Happiness Report could usefully have addressed this issue.

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Appendix

For those of you who do not check out the World Happiness Report for yourselves, I will note the following:

• The Nordic countries are the ones whose people think they are the happiest: 1 = Finland, 2 = Denmark, 3 = Norway, 4 = Iceland, 7 = Sweden — I live in Sweden for a reason, obviously
• The 36 member countries of the Organization for Economic Co-operation and Development (OECD) dominate the top of the list, occupying 19 of the top 20 spots — wealth is clearly associated with happiness
• The English-speaking countries do pretty well: 8 = New Zealand, 9 = Canada, 11 = Australia, 15 = United Kingdom, 16 = Ireland, 19 = United States
• The focus of parts of the Report is on the USA, where happiness took a nose-dive during the 2007 recession, and has not really recovered since then — the USA was a much happier place from 1973–2003 (the period for which the Report has data) than it is now
• Among adolescents in the USA (13–18 years), the happiest time in the USA was 1998–2012
• The recent decrease in happiness of US adolescents is highly correlated with the rising use of the internet — particularly the time spent on social media rather than in-person social interactions.

Has there really been recent premiumization in the wine industry?

I don’t necessarily claim to know much about the wine industry, but I do know something about numbers; and sometimes I wonder about the numbers discussed in the wine industry. Indeed, it seems to me that the numbers I am presented do not always lead to the conclusion that is also being presented.

One such example is the oft-repeated claim in recent years about the so-called premiumization among modern wine drinkers. For example, we have headlines such as this: “Consumers in established markets are consuming less frequently, but pay more per bottle.” This claim comes from noting that the average price of wine bottles has increased recently, while the number of drinkers has decreased.

Premiumization of everything

This claim is apparently worldwide (see, for example: The US Wine Industry in 2019; UK shoppers trade up to higher priced wine; Proportion of Australians drinking alcohol down). It is an important conclusion for the wine industry:

Every number, every study, every expert and every trade group says the same thing: premiumisation has become a part of the wine business, and all will benefit as the consumer spends more money for a bottle of wine.

However, in all cases the conclusions are based on summary data, which can (unfortunately) hide what is really going on. Sometimes, we need to dig deeper. In the case of premiumization, we readers are not given enough information to do so.

Background

Many of the the problems that I see refer to the word “average”. This is not a reference to anything that might exist, such as an “average person”. Oh no — this refers to things like an “average price”, which does not exist. The price of each bottle exists, especially if you are the one paying for it, but the combined price does not.

Averages are figments of the imaginations of mathematicians. You take a bunch of numbers that do exist (eg. prices), and perform some mathematical calculation, in order to produce another number (eg. the average), which does not exist in the real world.

The reason I am intrigued by averages is that they represent patterns in data that can be created in many different ways; and knowing about the average does not necessarily tell you about the underlying patterns and causes. After all, if there are two patterns in my data, one going up through time and one one going down, then the average pattern will appear to not change at all (ie. the two patterns will cancel each other out). I might think that “nothing is happening”, when in fact two things are happening, both of which it might be important for me to know about.

So, let’s look at our specific example: premiumization.

Does premiumization really mean that drinkers are moving up-market?

It seems to me that there are at least four different ways that the average price of wines might increase through time, some of which have nothing to do with premiumization. These are illustrated in the four graphs here. In each case, we are shown how many drinkers there are within each of two wine-price categories: those who drink Everyday wines, and those who drink Premium wines. These groups change in size through time across the graph, sometimes increasing, sometimes decreasing, and sometimes staying the same.

The first graph illustrates what we might call “True premiumization”. Here, the number of people drinking Everyday wines decreases while those drinking Premium wines increase. That is, the Everyday drinkers have become Premium drinkers. This is the interpretation that we are currently being given.

The second possibility, as illustrated in the second graph, is which the Premium group increases in size but not the Everyday group. That is, some of the Everyday drinkers have become Premium drinkers, while new drinkers have moved into the Everyday-drinking group. This might be called “Semi-premiumization”, because there is less movement of people but more overall drinkers.

Another possibility is simply “Inflation” of wine prices. Here, wine drinkers keep drinking the same types of wine they always have, but the prices of those wines go up. After all, wine prices do not usually go down, not even when the grape quality varies from vintage to vintage (which the price used to do, once upon a time).

Finally, there might be a net loss of people as wine drinkers. If this happens, it is likely to be those who drink Everyday wines who depart, not the Premium drinkers. After all, at heart wine is simply one type of flavored alcohol, and there are plenty of alternative, and often cheaper, ways of getting that. One can buy high quality craft beers and ciders for much less than the cost of wine. One can also buy flavored coolers, and even flavored spirits, although the latter are not necessarily cheaper than wine. These days, the grape-growing industry is also competing with cannabis producers. There are thus many reasons why the pool of wine drinkers might decrease through time.

So, that makes at least four ways that we could observe an increase in average wine prices through time. We might call all of them “premiumization”, but I think that this would be very misleading. The last two possibilities, in particular, seem to have nothing whatever to do with wine drinkers moving up-market. Indeed, the response of the wine industry should probably be very different in these two cases.

Conclusion

So, which of these four possibilities are we being shown when the media discuss wine drinkers moving up-market? We need more data in order to decide.

Jeff Siegel has also high-lighted this issue (The downside of premiumisation), mainly in the context that premiumization may be nothing more than the third and fourth options listed above. If this is so, then the industry is looking at the future through rose-tinted spectacles. He concludes:

Given all of this, shouldn’t it be time for the industry to put an end to premiumisation? If wine is in a fight for its future, shouldn’t it focus on selling well-made and affordable products in response to the competition from craft beer, spirits and all those hard ciders and seltzers? ... So expecting an end to premiumisation because it’s a dead end once the last Baby Boomer dies is probably hoping for too much.

Cellar musings

I rarely write “wine posts”, as opposed to “data posts”, in the sense that I usually write about the wine-data aspects of the wine industry, rather than about the personal aspects of wine. Today, I though that I might do the latter, just for a change.

In some ways, this is in response to Tom Maresca’s current musings on Desert islands, fantasy cellars, and other such vinous misdirections. He is on the right track, as usual, but I don’t agree with everything Tom has to say; and hence my own musings here about wine cellars.

I have never had any aspirations to have a wine cellar, although my current abode does have a subterranean storeroom, and there is wine in it. Indeed, there are quite a few bottles, either in it, or somewhere else around the house. The same cellar also has my wife’s wine-making equipment, for making fruit wines, the current fruit wines themselves (she makes a pretty good gooseberry wine), and the results of her jam and jelly making activities.

The only reason for me having a cellar is the same as Tom’s — I cannot afford mature wine, so I prefer to buy it young and mature it myself. It does not take many years of storage to turn a good wine into a very good one. If my wife and I drink one matured wine per week, then I need 4 dozen wines per year, which leads to a simple calculation about how many wines I need in storage.

The cellar collection is not a fantasy one, by any means, nor one for a desert island. It is simply a bunch of wines that I have accumulated over the years, either as recommendations from someone else, the current vintages of wines I like, or wines I have picked up when traveling. This sounds pretty standard, to me.

What is not standard is the arrangement of the stored wines. I have always stored them the same way, for all of the past 30 years. This started as a necessity, when the bottles were in boxes in the bottom of a wardrobe or cupboard. The only way I could access anything was to have all of the wines of the same maturity in the same box. That is, the box was labeled with the year in which the contents should be consumed — not the place of origin, or the style of wine, but simply the time when I planned to drink them. I have kept things that way, although no longer out of necessity.

So, every January 1st I bring out into the dining room all of the bottles for the coming year. What a treasure trove it is, and what a lovely surprise to find out what I have! Wines I have been looking forward to; wines that I have forgotten, but can now reminisce about buying — where and when and why; and wines that I have no recollection of ever acquiring, let alone why I did so. Vinously, this is definitely the best day of the year.

From then on throughout the year, I dig into this upstairs part of the collection — the drink-now part of the cellar — every time I want a mature wine. This is, of course, supplemented by the drink-now wines that I buy during the remainder of the year, such as rosés, fruity whites and young reds. Mature wines are best, but they should not be the sole diet of a wine drinker.

The other thing that seems to be odd for most wine collectors is that I rarely buy more than one bottle of any given wine. To me, there are simply too many interesting wines on this planet for me to want to repeat myself. Sure, I miss out on following the development of particular wines, which seems to be so fascinating to other people; but, instead, I get to explore a far greater part of the wine world than do most people. For the same number of bucks, I can travel further in the wine world than I could if I bought six of everything.

The wines themselves are mostly from Australia and the European Union. Australia is where I first found out about wine, and is therefore the vinous world I know best. The EU is where I have lived for nigh on 20 years now, and therefore is the one I have learned about most recently.

At one stage I started to focus on the wines of Sicily, just before everyone else jumped on the bandwagon. Now, everyone knows about the brilliant wines from Mt Etna, which can challenge the produce of Burgundy, the fortified wines of Marsala, which give the wines of Jerez a run for their money, and the grapes such as Nero d'Avola and Nocera that winemakers around the world are eyeing as potential saviors in response to climate change. Getting there before the crowd is my only claim to vinous prescience.

This leads to Tom Maresca’s “question anyone knowledgeable about wine is constantly asked: What’s your favorite wine?” To which he claims “the only sensible answer is: The one I’m drinking right now.” I doubt this. The one I am drinking now may be a mistake, either because it is no good, or because I am drinking it with inappropriate food. For me, my favorite wine is the next one, even though I do not yet know what it will be.

I entirely agree, however, when Tom whispers in our collective ears: “Let me let you in on a nasty little wine world secret: Fabled wines can disappoint just as readily and just as often as more ordinary ones.” You better believe it! First Growth Bordeaux is rarely worth the money, based on my experience, and neither are the top wines of Australia or the USA.

Nor, of course, are older wines necessarily any better than their younger selves. There was a time, not that long ago, when it was possible to get Barolo wines from the late 1950s for not too much money, if you searched carefully on eBay (wine is permitted on eBay throughout western Europe). Some of them were very good, fortunately. However, Tom’s recommendation to “focus more realistically on wines that can give you nearer-term pleasure” is also the best advice I could give.

Besides, we need to store a few wines now, because who knows what wines climate change will have us drinking in a few years time. I have not seen this point made before; but in a changing world, we need to preserve a bit of the past.