What's in a Bottle?

Last week someone asked a question about the wine bottle shape to one of our guests, who revealed that they created their own mold for it, but the specific shape chosen was fairly traditional other otherwise fairly unremarkable.

I’d always wondered about bottle shapes, and did some digging. It turns out that for the most part, the shapes are the result of tradition more than anything else - most wines would taste the same bottled in other bottle shapes, and regional styles have calcified, with wine types that originate from certain places but produced in other ones sometimes adhering to old tradition to send signals about their inherited legacy.

Originally, wine bottles were made to be stored standing up, and were rounder. Later shapes were more cylindrical, allowing them to be stored on their sides, and this change, which coincided with the adoption of the cork closure, led to the development of the regional styles that persist today. Glassblowing techniques were different in various parts of the world, which had significant influence on the styles that emerged. The variety in shapes may have also helped illiterate people better distinguish the wines in the bottles before they opened them.

Source: Wine Folly

The most common bottle type, the Bordeaux is commonly used for red wines, and has high shoulders. It is thought, but by no means confirmed, that perhaps those high shoulders also catch sediment from the wine as it ages. Fortified wines like port and madeira are stored in a similar shaped bottle, but port bottles are shorter and squatter, and often have a slight bulge in the neck to trap sediment while pouring.

The Burgundy bottle has sloped shoulders, a wider base, and is often “used worldwide for Burgundian grapes (pinot noir and chardonnay), as well as syrah, grenache, chenin blanc and others.”  The Alsace bottle is taller and thinner than most other wine bottles, also with gently sloping shoulders. It’s generally used for Riesling; there’s lots of variety in the bottle’s color, including blue.

If you’ve ever felt that sparkling wine bottles were heavier than the rest, it’s not just in your head. The Champagne bottle style (which is typically quite similar to the Burgundy) must be heavier to handle the pressure inside, which can be as much as 3 times the pressure in the average car tire. They often have a dent in the bottom called a punt. While the punt might make the bottle stronger and may help sediment settle out of the wine, it’s not clear that this is the case. It’s likely just a remnant of the techniques used to produce the bottles when they were still handmade. Notably, the Cristal bottle has a flat bottom.

There are many more specialty bottle shapes that I haven’t gone into here, and some houses get very creative, especially in the premium wine category.

Sources:
“Decode Wine Just By Looking at the Bottle” - Wine Folly

“A Brief Guide to Wine Bottle Design” - PUNCH

“Wine Bottle Shapes: Just The Facts” - NewAir 

Wine bottle shapes: why are they so different?” - Winery Lovers

"Cristal Champagne: The Wine of Tsars and Stars" - Wine Folly

Punts - Not just for 4th Down

Most Americans know what punting means in the football context, but I just learned the other day it is what the indent or dimple at the bottom of your wine bottle is called.  There's a common myth that the deeper the punt, the higher quality of wine.  While empirically I've found that more expensive bottles seem to follow this trend (watch, you'll all be feeling the bottom of your bottles now), many sources via Google state that there is no rhyme or reason for it.  The speculation for the purpose of a deeper punt considers effects when pouring, dealing with sediment, balancing the bottle, or dealing with the temperature by increasing surface area.

Maybe one day, some winemaker will get creative and make the punt a feature of their bottle.  Until then, we'll just have to keep speculating.

Is Wine Good For You?

We have seen articles touting the health benefits of wine, the potential downsides of drinking wine, what it can do for your mental health, and everything in between. I honestly don't even know if the current outlook on wine is positive or negative given all of the conflicting viewpoints on the subject. We are inundated with fad diets and an ever-changing data on what a balanced and healthy diet looks like. Today it is Atkins, tomorrow it is Paleo.

Eggs were good for us, and then bad for us, and now they are good for us again. Dark chocolate is good for you also! Or is it?

Taking a step back, we have been drinking wine for thousands of years as a species, and are still around to tell the tale, so how bad could it be?! Drinking it as your only source of fluids is obviously a bad idea, but a life without it is probably somewhat less enjoyable. As with all things - chocolate, eggs, even gluten - moderation is key.

So while the science keeps flip-flopping, I say drink up and enjoy!

Drink Like a Viking

Two weeks ago I met up with some college friends and one of them was raving about mead. We bought a bottle and I was surprised how good it was.  This got me thinking, why isn't mead, otherwise known as honey wine, more popular.  It is very drinkable (pretty sweet actually) and has a similar alcohol content as wine.

As its name suggests, mead is a wine-like drink that is made from honey with some water and yeast added. It is typically made with a "wine" yeast and can be flavored with any number of flavors in addition to the honey. Also like wine, mead needs to sit for many moneys after the yeast has worked its magic. For example, home brewers will let their mead sit for two months to over a year before consuming. Here is a super short overview of how to make mead at home if you're interested. https://www.youtube.com/watch?v=_Ld4hO_GeP0

As I've begun to explore the world of mead, I've learned that it reaches far more of the world than I expected. For example, I thought mead was exclusively a northern European drink. It isn't. People have found evidence of mead making in China that is believe to date back to roughly 7,000 BC (Wikipedia).  This makes it one of the oldest know alcoholic drinks in the world. Much like traditional wine, there is evidence of historic mead making every corner of the world.

Product Dis-Placement

“If anyone orders merlot, I’m leaving. I am not drinking any fucking merlot.”

In 2004, the comedy Sideways raked in five Oscar nominations, and obliterated the Merlot industry.

Following two middle-aged men on a jaunt through the California wine country, the movie was rife with easter eggs for wine nerds, and many a pointed barb aimed at a single, unfortunate varietal.

Nearly overnight, Merlot sales plummeted. Prices of Merlot bottles fell by up to 10%.

The Wine Industry called it the “Sideways effect” - perhaps the most famous example of product dis-placement in film.

How fickle a society do we live in, that a single movie can trigger an appreciable impact on an entire industry?

Sideways is hardly the only example of pop culture triggering radical, immediate changes in consumer demand.

In the 1934 film “It Happened One Night,” Clark Gable takes off his shirt and reveals he wasn’t wearing an undershirt. Sales of undershirts supposedly plummeted by 75%.

Buster Rhyme’s 2001 hit “Pass the Courvoisier” triggered an increase in sales of the cognac of 10-20%.

Kylie Jenner’s 2018 Tweet “Sooo does anyone else not open Snapchat anymore?" wiped $1.3B off Snapchat's market cap.

Since Game of Thrones began airing, there have been over a thousand baby girls named “Khaleesi.”

Whether it’s James Bond’s recent love affair with Heineken or Wendy’s dishing out shade on Twitter, brands are trying their best to have the winds of pop culture blow in their favor. But in an age of authenticity, it’s perhaps the throwaway joke that can make the biggest impact.

Myth or reality: is expensive wine better for your health?

I’ve often heard people saying that you shouldn’t drink cheap wine because it’s bad for your health and even that it gives you more hangover than expensive wine. Apparently this is far from true. As Peter Mondavi said in his visit, the difference on the price of their more premium wine Charles Krug vs. their lower price point wine CK Mondavi is mainly due to difference in the cost of the grapes and the fact that the more premium wine has a higher margin. This has no implications on the health benefits/impact of drinking the two wines.

This article further explains this: https://www.shape.com/lifestyle/mind-and-body/your-two-buck-chuck-habit-hurting-your-health

An interesting quote from the article: “Red wine boasts loads of health benefits—it contains antioxidants like resveratrol and polyphenols, which help fight inflammation; it has been shown to protect against heart disease; and it has been shown to stave off decline in memory as you age. But a fancier merlot is not going to give you a stronger dose of those benefits, says Molly Kimball, R.D. For her, the question of whether expensive wine offers more health benefits is pretty cut and dry. "There's not even a maybe. The price wouldn't matter.”

Burgundy Price Bubble?

This morning on The Economist's daily podcast, there was a discussion of a potential bubble for the price of wine from Burgundy. The piece was a follow-up to publisher's article from early January on how amateur investors have pushed up prices in recent years, aided by increasing liquidity on exchanges such as Liv-ex (privately negotiated transactions only require a transfer of title).

While fine wine has long been seen as an appreciating asset, the high costs associated with storing the product and other friction costs (shipping, handling, taxes, etc.) have made it a highly illiquid asset. However with the rise of electronic exchange platforms, such as Liv-ex, the estimated transaction value of wines traded on the secondary market has risen from $1bn in the early 2000s to $4bn today (of which only ~15% of purchases are done so with the intention of drinking). 

Interestingly, Bordeaux, which used to account for ~95% of secondary transactions in 2011, now only accounts for ~60%, due in part to softening demand in the Chinese market (suspected reason is crackdown on guanxi) as well as high price levels. In its place, the value of Burgundy has risen by 50% over that same time, aided by it being a well recognized wine region with iconic names / brands (required to preserve resale value). Its trade share on the Liv-ex exchange has risen from <2% in 2010 to >14% in 2018.

Like other physical assets, the price of fine wine is largely determined by the degree of supply constraint. Burgundy, as a region, produces far less wine than other well-known region; Burgundy's top estates produce up to ~25-30x less their equivalents in Bordeaux. A rapid rise in demand can often result in a speculative bubble in such a market. 

In traditional macroeconomic thinking, a yield curve inversion is a strong leading indicator of a market correction and / or recession. In the case of Burgundy wines, there has been anecdotal evidence of younger vintages have started to become more pricey than older ones, suggesting an equivalent to a yield curve inversion (unfortunately I haven't been able to find a good chart showing like-for-like secondary prices by vintage). However, Liv-ex points to the fact that there is decreasing trade count in Burgundy wines, with a simultaneous rise in trade value, which has largely accrued to the Grand and Premier Crus (two highest classifications). In their words: "Fewer trades at ever higher prices points to a narrowing of liquidity. Possibly a speculation bubble."

In case you find this topic interesting, you may consider signing up for (free) periodic News & Insights updates from Liv-ex, which has put together a rich library of market analysis. I'm linking here their deep-dive into the Burgundy wine market from earlier this month.

Sources:

(1) https://www.economist.com/finance-and-economics/2019/01/05/amateur-buyers-of-fine-burgundy-fear-a-speculative-bubble

(2) The Economist's The Intelligence podcast, February 25, 2019

(3) https://www.liv-ex.com/news-insights/