Wine as a Veblen Good?

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Josh Grossman
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Wine as a Veblen Good?

#1 Post by Josh Grossman » April 1st, 2019, 7:39 am

Do you buy wine that is considered a Veblen good? On the wiki page for Veblen good, there is a picture of a bottle of Louis Roederer Cristal--a forum favorite. That said, I can think of much worse examples than Cristal (Screaming Eagle, DRC, First Growths). How much of some wines high prices is scarcity vs. the Veblen effect? Certainly Screaming Eagle (21 times the price of other Napa 100 point wines) is a Veblen good but where is the line between scarcity and Veblen?

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Re: Wine as a Veblen Good?

#2 Post by Josh Grossman » April 1st, 2019, 8:07 am

Or maybe there was a reason that Cristal didn't seem like the best example of a Veblen good to me: https://www.beyondcostplus.com/blog/veb ... real-world

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Re: Wine as a Veblen Good?

#3 Post by GregT » April 1st, 2019, 8:50 am

I don't, which is why I don't buy classified growth Bordeaux, high-end Burgundy, and allocated Napa Cabs. To me, the juice in the bottle is not that much better, if at all better, than many other wines and I'm not interested in letting people know what I'm drinking or conspicuous consumption. In some cases, the wines are quite good - I haven't had every one.

Things like Cristal also became fashion items. I suppose that doesn't really make any difference but I imagine that when a company has spent a lot of time creating a brand image of exclusivity and rarity, that making it available to just anybody with money isn't quite in the same spirit of things. A Veblen good has to be about more than just money, as every expensive thing isn't necessarily a Veblen good.
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Re: Wine as a Veblen Good?

#4 Post by Anton D » April 1st, 2019, 9:13 am

Definitely a Veblen good. Without these Veblen Wines (we should copyright that) many oenophiles would have no satisfying way to fulfill their need to work social signaling into the hobby.

If there were no Veblen wines, would we have ever had the bozos in the "heavy lumber" wine tasting crowd?

It takes a Veblen good to generate something like a self-referential frat of winos...Hollywood Jef, Big Boy, King Angry, The Punisher, The Bone Collector, The Pope
King Angry, The Hillbilly, The Big Ticket, Bad Boy Bruce, and The Don.

Wine bleeds Veblen.
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Re: Wine as a Veblen Good?

#5 Post by Josh Grossman » April 1st, 2019, 9:15 am

GregT wrote:
April 1st, 2019, 8:50 am
I don't, which is why I don't buy classified growth Bordeaux, high-end Burgundy, and allocated Napa Cabs. To me, the juice in the bottle is not that much better, if at all better, than many other wines and I'm not interested in letting people know what I'm drinking or conspicuous consumption. In some cases, the wines are quite good - I haven't had every one.

Things like Cristal also became fashion items. I suppose that doesn't really make any difference but I imagine that when a company has spent a lot of time creating a brand image of exclusivity and rarity, that making it available to just anybody with money isn't quite in the same spirit of things. A Veblen good has to be about more than just money, as every expensive thing isn't necessarily a Veblen good.
Thanks. I will never buy Sceaming Eagle, anything owned by LVMH (Château Cheval Blanc, Château d'Yquem, Dom Perignon, Veuve Clicquot, Ruinart, Krug), E. Guigal, M. Chapoutier, Groupe Artémis (Château Latour), Constellation Brands (Mondavi and Opus), or Penfolds Grange as the conspicuous consumption is one of my least favorite parts of wine culture. Where I am confused is where to draw the line? It's easy to identify the especially guilty luxury goods conglomerates or négociants, but certainly there are many expensive Burgundies whom's main goal is to only make great wine (not money)--so it's not just price (of course, there's a good chance that all of Burgundy is turning into a Veblen good). I'm fine with paying for scarcity as that fits into the supply and demand curve.

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Re: Wine as a Veblen Good?

#6 Post by Markus S » April 1st, 2019, 9:22 am

Could be...if you let it.
$ _ € ® e . k @

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Re: Wine as a Veblen Good?

#7 Post by Josh Grossman » April 1st, 2019, 9:27 am

Anton D wrote:
April 1st, 2019, 9:13 am
It takes a Veblen good to generate something like a self-referential frat of winos...Hollywood Jef, Big Boy, King Angry, The Punisher, The Bone Collector, The Pope, King Angry, The Hillbilly, The Big Ticket, Bad Boy Bruce, and The Don.

Wine bleeds Veblen.
I don't know who any of those people are so I must be doing something right? They all sound like they could be names of upcoming blends of Dave Phinney wines (same thing?). I did fall guilty that I didn't know Nowness.com is just marketing for LVMH: https://en.wikipedia.org/wiki/Nowness

Tricky bastards!

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Re: Wine as a Veblen Good?

#8 Post by Josh Grossman » April 1st, 2019, 9:41 am

Markus S wrote:
April 1st, 2019, 9:22 am
Could be...if you let it.

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Re: Wine as a Veblen Good?

#9 Post by Josh Grossman » April 1st, 2019, 10:08 am

Anton D wrote:
April 1st, 2019, 9:13 am
Definitely a Veblen good. Without these Veblen Wines (we should copyright that) many oenophiles would have no satisfying way to fulfill their need to work social signaling into the hobby.

If there were no Veblen wines, would we have ever had the bozos in the "heavy lumber" wine tasting crowd?

It takes a Veblen good to generate something like a self-referential frat of winos...Hollywood Jef, Big Boy, King Angry, The Punisher, The Bone Collector, The Pope
King Angry, The Hillbilly, The Big Ticket, Bad Boy Bruce, and The Don.

Wine bleeds Veblen.
Looks like someone beat us to the punch:
https://www.veblenwine.com/

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Re: Wine as a Veblen Good?

#10 Post by Anton D » April 1st, 2019, 10:15 am

Josh Grossman wrote:
April 1st, 2019, 10:08 am
Anton D wrote:
April 1st, 2019, 9:13 am
Definitely a Veblen good. Without these Veblen Wines (we should copyright that) many oenophiles would have no satisfying way to fulfill their need to work social signaling into the hobby.

If there were no Veblen wines, would we have ever had the bozos in the "heavy lumber" wine tasting crowd?

It takes a Veblen good to generate something like a self-referential frat of winos...Hollywood Jef, Big Boy, King Angry, The Punisher, The Bone Collector, The Pope
King Angry, The Hillbilly, The Big Ticket, Bad Boy Bruce, and The Don.

Wine bleeds Veblen.
Looks like someone beat us to the punch:
https://www.veblenwine.com/
Damn!!!!
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Re: Wine as a Veblen Good?

#11 Post by Kelly Walker » April 1st, 2019, 10:25 am

While Crystal is a true Veblen good, much of the wine we, as collectors purchase, are actually Giffen goods. Like Veblen goods where demand increases with price, Giffen goods demand also increase with price because their correlated Veblen goods become too expensive driving up demand and subsequent price of lower cost alternatives. The classic example is the demand for 1er cru Burgundy as GC wines become unobtainable/unaffordable.
White wines matter

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Re: Wine as a Veblen Good?

#12 Post by Anton D » April 1st, 2019, 10:33 am

Kelly Walker wrote:
April 1st, 2019, 10:25 am
While Crystal is a true Veblen good, much of the wine we, as collectors purchase, are actually Giffen goods. Like Veblen goods where demand increases with price, Giffen goods demand also increase with price because their correlated Veblen goods become too expensive driving up demand and subsequent price of lower cost alternatives. The classic example is the demand for 1er cru Burgundy as GC wines become unobtainable/unaffordable.
Yup, my wine hobby strays into Giffen territory!
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Re: Wine as a Veblen Good?

#13 Post by David Glasser » April 1st, 2019, 10:41 am

Veblen goods.
Giffen goods.
Plain old good does it for me.

I don't really know where to draw the line either. If classed growth Bordeaux and tête de cuvée Champagne are Veblen or Giffen goods then I guess I am guilty of contributing to the problem. Not losing sleep over it. I've given up on a number of them as prices increased beyond my tolerance but I have no objection to buying wine with caché if the price/quality is OK for me. Does Pichon Lalande give me 5 times the pleasure of Lanessan or Meyney? No, but it's still worth it to me.

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Re: Wine as a Veblen Good?

#14 Post by Josh Grossman » April 1st, 2019, 11:09 am

Kelly Walker wrote:
April 1st, 2019, 10:25 am
While Crystal is a true Veblen good, much of the wine we, as collectors purchase, are actually Giffen goods. Like Veblen goods where demand increases with price, Giffen goods demand also increase with price because their correlated Veblen goods become too expensive driving up demand and subsequent price of lower cost alternatives. The classic example is the demand for 1er cru Burgundy as GC wines become unobtainable/unaffordable.
Pierre Gonon St. Joseph Vieilles Vignes Cuvee Giffen. Certainly much of the Northern Rhone has undergone a Burgundgiffication (it's amazing if you combine any three words, it then sounds German).

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Re: Wine as a Veblen Good?

#15 Post by Mel Knox » April 1st, 2019, 12:03 pm

Something I 've noticed is that academics from every field are sneaking into the wine world. Geologists are a natural fit. We've got the Society of Wine Economists, which can claim TV as one of their own, although sociology might make a claim. Climatologists are having a field day. There's always the history of wine. Political scientists can ruminate about how lines for appellations are drawn...our own version of gerrymandering.

For sociologists wine has got to be a goldmine of opportunity, Status seekers, label drinkers. I love how people will tell me something like, I buy my wine from Kermit Lynch/Scribe/Alice Feiring/France/Grocery Outlet..subtext I am cool.

Every time I read about a wine auction I think of Veblen. He talked about how charity balls were just another chance to show everybody how successful you were...maybe a fancy dress gown for your beautiful wife....a new chariot...I remember Wine Spectator pix of various auctions...yikes!

Owning a winery is the second best thing next to owning a sports franchise in terms of getting your name out there.Not so good in terms of making money.

I knew a woman who was a chain gang supply person for a big drinks company. She did not understand why anybody would pay more than $35 for a bottle of wine, but was proud of her collection of Jimmy Choos etc. Most people want to be cool. Buying expensive goods may not really help with this but that doesn't stop people. Does your Rolex tell better time than my Casio? Does your Ferrari get you through rush hour traffic better than my Honda?? Is your Tesla more ecological than my Prius or are you just richer?? (my soft spot: I want the expensive Tesla so I can be both ecological and cool)

Josh Grossman, are you boycotting Arbor Mist because of Constellation?? Don't do that. You are denying yourself one of the great pleasures of this planet, especially the Pink Moscato Raspberry.Word on the street is they are selling Arbor Mist, so everything will be ok as long as the new owners don t change the blend.
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Re: Wine as a Veblen Good?

#16 Post by Richard Albert » April 1st, 2019, 12:48 pm

For the conspicuous side of conspicuous consumption, put OWC's in the cellar full or empty. Its all about perception, baby!

We drink our treasures unlike many other Veblen goods; we piss away the ownership and the display factor, not like driving a Lambo, or having a substantial yacht, a $50M estate, a Picasso, or flashing a 10 carat diamond which "is forever". Pull the cork and the pride and flash of ownership evaporates. Additionally, Veblen juice is significant to just a tiny sliver of the population, so I say semi Veblen. It ain't the same if you need to splain it when 98% of minds start shutting down with the word Chateau, then add Le Pin and lose 99+% which may be where you would want to be, but a poor ROI for a Veblen good
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Re: Wine as a Veblen Good?

#17 Post by Jonathan Loesberg » April 1st, 2019, 12:53 pm

For a product to be a true Veblen good, its demand must increase as a result of its price increasing because the higher price makes it a status symbol. Issues of supply are not relevant. This may be true of Cristal, for all I know, but it is surely not true for high end Burgundy where at least some part of the price, if not most of it, is due to the extreme scarcity of the wine. I'm willing to believe that first growth Bordeaux are Veblen goods given that they are made in decent quantities, but I'd like to see some studies showing that the price increases have caused demand increases rather than enhanced world wide demand increasing price. Even if the bordelais manipulate demand by aritificially reducing supply (holding much of a vintage back to release at a later date), I don't think this would be sufficient to make it a true Veblen good since if it were one, they wouldn't have to manipulate the supply. They'd just keep increasing the price.

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Re: Wine as a Veblen Good?

#18 Post by Marcus Goodfellow » April 1st, 2019, 1:37 pm

GregT wrote:
April 1st, 2019, 8:50 am
I don't, which is why I don't buy classified growth Bordeaux, high-end Burgundy, and allocated Napa Cabs. To me, the juice in the bottle is not that much better, if at all better, than many other wines and I'm not interested in letting people know what I'm drinking or conspicuous consumption. In some cases, the wines are quite good - I haven't had every one.

Things like Cristal also became fashion items. I suppose that doesn't really make any difference but I imagine that when a company has spent a lot of time creating a brand image of exclusivity and rarity, that making it available to just anybody with money isn't quite in the same spirit of things. A Veblen good has to be about more than just money, as every expensive thing isn't necessarily a Veblen good.
+1

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Re: Wine as a Veblen Good?

#19 Post by Mel Knox » April 1st, 2019, 1:38 pm

Jonathan
These things are hard to figure. Sancerre used to be cheap and now it is much more expensive and much more popular. Is this a Veblen good or a fad?
It is easier to say what isn't a Veblen good than say what is.
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Re: Wine as a Veblen Good?

#20 Post by Neal.Mollen » April 1st, 2019, 1:52 pm

Josh Grossman wrote:
April 1st, 2019, 9:15 am
I will never buy Sceaming Eagle, anything owned by LVMH (Château Cheval Blanc, Château d'Yquem, Dom Perignon, Veuve Clicquot, Ruinart, Krug), E. Guigal, M. Chapoutier, Groupe Artémis (Château Latour), Constellation Brands (Mondavi and Opus), or Penfolds Grange as the conspicuous consumption is one of my least favorite parts of wine culture.
I am not following. A $14 Mondavi or $15 Guigal CDR or $45 Ruinart is a badge of conspicuous consumption? I am obviously not doing this right.

This is a weird thread. I bought a couple of bottles of 2009 Cristal because it is a sensational wine and nearly $100 less than the 2008. Is that a Veblen good? If so, wouldn't I have bought the 2008? And if I was buying it as a signaling device, wouldn't it be counterproductive to drink it at home with my wife, for whom the only thing it signals is that I spent too f*ck much money on the wine? Again, I am obviously not doing this right. I need remedial social climbing tutoring

To answer the OP question, no, I don't because doing so is stupid. Not to put too fine a point on it
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Re: Wine as a Veblen Good?

#21 Post by Neal.Mollen » April 1st, 2019, 1:53 pm

GregT wrote:
April 1st, 2019, 8:50 am
I don't, which is why I don't buy classified growth Bordeaux
So, $30-40 is outside your strike zone?
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Re: Wine as a Veblen Good?

#22 Post by Jonathan Loesberg » April 1st, 2019, 2:11 pm

Neal.Mollen wrote:
April 1st, 2019, 1:52 pm
Josh Grossman wrote:
April 1st, 2019, 9:15 am
I will never buy Sceaming Eagle, anything owned by LVMH (Château Cheval Blanc, Château d'Yquem, Dom Perignon, Veuve Clicquot, Ruinart, Krug), E. Guigal, M. Chapoutier, Groupe Artémis (Château Latour), Constellation Brands (Mondavi and Opus), or Penfolds Grange as the conspicuous consumption is one of my least favorite parts of wine culture.
I am not following. A $14 Mondavi or $15 Guigal CDR or $45 Ruinart is a badge of conspicuous consumption? I am obviously not doing this right.

This is a weird thread. I bought a couple of bottles of 2009 Cristal because it is a sensational wine and nearly $100 less than the 2008. Is that a Veblen good? If so, wouldn't I have bought the 2008? And if I was buying it as a signaling device, wouldn't it be counterproductive to drink it at home with my wife, for whom the only thing it signals is that I spent too f*ck much money on the wine? Again, I am obviously not doing this right. I need remedial social climbing tutoring

To answer the OP question, no, I don't because doing so is stupid. Not to put too fine a point on it
Determining whether something is a Veblen good is not a matter of why you specifically buy it--you might wish it were cheaper and merely tolerate the price because you liked the wine--but of how the market treats the product. I agree with Mel that the concept is, by nature, going to make it hard to pin down in a lot of specific cases. That doesn't mean it doesn't describe something real and that for some people, at least, some well-known wines are status symbols, good because they are costly,and, in that sense, Veblen goods.

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Re: Wine as a Veblen Good?

#23 Post by Al Osterheld » April 1st, 2019, 2:13 pm

FWIW, I’m not sure Cristal is still a good example of a Veblen good. It was primarily rappers driving that status, and they dropped the brand when they felt the love was not reciprocated.

As far as Neal’s point, Cristal is not a Veblen good to him, whether or not it is still a Veblen good in the broader market (as mentioned, I doubt that it is).

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Re: Wine as a Veblen Good?

#24 Post by Josh Grossman » April 1st, 2019, 3:01 pm

Mel Knox wrote:
April 1st, 2019, 12:03 pm
Something I 've noticed is that academics from every field are sneaking into the wine world. Geologists are a natural fit. We've got the Society of Wine Economists, which can claim TV as one of their own, although sociology might make a claim. Climatologists are having a field day. There's always the history of wine. Political scientists can ruminate about how lines for appellations are drawn...our own version of gerrymandering.

For sociologists wine has got to be a goldmine of opportunity, Status seekers, label drinkers. I love how people will tell me something like, I buy my wine from Kermit Lynch/Scribe/Alice Feiring/France/Grocery Outlet..subtext I am cool.

Every time I read about a wine auction I think of Veblen. He talked about how charity balls were just another chance to show everybody how successful you were...maybe a fancy dress gown for your beautiful wife....a new chariot...I remember Wine Spectator pix of various auctions...yikes!

Owning a winery is the second best thing next to owning a sports franchise in terms of getting your name out there.Not so good in terms of making money.

I knew a woman who was a chain gang supply person for a big drinks company. She did not understand why anybody would pay more than $35 for a bottle of wine, but was proud of her collection of Jimmy Choos etc. Most people want to be cool. Buying expensive goods may not really help with this but that doesn't stop people. Does your Rolex tell better time than my Casio? Does your Ferrari get you through rush hour traffic better than my Honda?? Is your Tesla more ecological than my Prius or are you just richer?? (my soft spot: I want the expensive Tesla so I can be both ecological and cool)

Josh Grossman, are you boycotting Arbor Mist because of Constellation?? Don't do that. You are denying yourself one of the great pleasures of this planet, especially the Pink Moscato Raspberry.Word on the street is they are selling Arbor Mist, so everything will be ok as long as the new owners don t change the blend.
I do the same thing with watches, shoes, and really everything. I live by the motto of too poor to buy cheap and The Zen and the Art of Motorcycle Maintenance might have had an impression on me; I do love quality.

I do think that an automatic movement is superior to a quartz movement and a sapphire crystal face is certainly better than glass or plastic but I would never buy a Rolex (not just because they are ugly compared to Bauhaus styling but also that they are a Veblen good). I am tempted by some of the newer smartwatches especially the Withings/Nokia Steel. Digressing to shoes, it's probably hard to compare men's and women's as I don't think of the fashion aspect of mens shoes nor know much about the cordwaining techniques of quality women's shoes. I think I have six pairs that have a goodyear or Norwegian welt construction and prefer the uppers to be made of good leather or shell cordovan--but am never going to buy anything that signifies status. I did just get my grandfather's square dancing cowboy boots that I inherited resoled. On cars there too many details to discuss. I really like a manual with a straight six engine and hate a variable speed transmission. The half-life of lithium-ion batteries has still scared me too although the replacement cost has plummeted, so less so now. Looking forward to seeing what the new electric cars develop in terms of quality. As you can tell from above, I've given up on being cool long ago.


I guess with most things it's easy to discern what makes a thing have quality. Wine is harder. People spend their whole life trying to figure out the Je Ne Sais Quoi of making quality wine. Ohio (where I live) has a long tradition of making wine--but so far not much I would call quality. Evidently there is a small section of Ohio in Adams County that has identical soil composition to St. Emilion. The owner of Chehalem Vineyards and winemaker from Erath started a winery there based on this, Kinkead Ridge. It was making the best wines from Ohio, and doing the things I look for in quality wine. They were really doing everything right in terms of the vineyard and winemaking. Unfortunately, it was sold when the vines were still young and the new owners lost most of the vines in a hard freeze. It's now a soy bean field and I will never know if it's possible to make something comparable to Château Angélus from Ohio. The things I look for in a quality red wine are it seems you need: great terroir in the soil composition, dry farmed old vines not planted too close and properly trained, good canopy management, pruning, and thinning of bad grape clusters, a Mediterranean climate with cooler nights than most of the Mediterranean region. Biodynamic agriculture that you let be fallow for years between planting grapes. Some good rain, but no hail, and certainly no rain near harvest. Hand harvested grapes picked at night or early in the morning. A nice gentle press like a basket press. A temperature controlled fermenter, native wild yeast, gentle punch downs with no pumping overs but maybe a certain amount of stems, whole cluster, and/or grape skins. Not too much new oak for the elevage and maybe some of it that is in concrete tanks or amphora for a minimum of 18 months; I'm still learning.

I do think Constellation is moving towards becoming a luxury brand (they are going to need some strong marketing after being a plonk maker for so long). While there certainly is a class signifier from showing up to a party with Arbor Mist, I don't think someone buys Schrader, Mondavi, and Opus if you don't want to move in that luxury direction. I actually read they are going to stop making or sell Arbor Mist and all wine under $11, forlorn. I guess I'm trying to do my best not to be fooled by marketing and especially not the marketing aimed at conspicuous consumption. I hate that LVMH champagnes are so renowned around here and keep rooting for the récoltant manipulant (I have bought quite a bit of Comtes). I've never had a properly aged Dom or Cristal and probably never will though--so I don't know. Maybe ignorance is bliss.

Maybe I'm conflating Veblen goods with my egalitarian anti-Aristocracy view but I would prefer to never give a penny to anyone on similar lists as these: https://www.thedrinksbusiness.com/2017/ ... players/3/ (sorry it's a slide show)

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Re: Wine as a Veblen Good?

#25 Post by Josh Grossman » April 1st, 2019, 3:20 pm

Neal.Mollen wrote:
April 1st, 2019, 1:52 pm
Josh Grossman wrote:
April 1st, 2019, 9:15 am
I will never buy Sceaming Eagle, anything owned by LVMH (Château Cheval Blanc, Château d'Yquem, Dom Perignon, Veuve Clicquot, Ruinart, Krug), E. Guigal, M. Chapoutier, Groupe Artémis (Château Latour), Constellation Brands (Mondavi and Opus), or Penfolds Grange as the conspicuous consumption is one of my least favorite parts of wine culture.
I am not following. A $14 Mondavi or $15 Guigal CDR or $45 Ruinart is a badge of conspicuous consumption? I am obviously not doing this right.

This is a weird thread. I bought a couple of bottles of 2009 Cristal because it is a sensational wine and nearly $100 less than the 2008. Is that a Veblen good? If so, wouldn't I have bought the 2008? And if I was buying it as a signaling device, wouldn't it be counterproductive to drink it at home with my wife, for whom the only thing it signals is that I spent too f*ck much money on the wine? Again, I am obviously not doing this right. I need remedial social climbing tutoring

To answer the OP question, no, I don't because doing so is stupid. Not to put too fine a point on it
See the very end of my post just above. I am conflating some things. I do see LVMH as the worst offender of specifically marketing as conspicuous consumption and would especially hope not to support that (including Ruinart). While Mondavi and Guigal do make some plonk, they also unfortunately own To Kalon and the Lala's (in my opionion, lala's are a Veblen good), respectively. While I left Jadot out of this rant, as they certainly don't fit, those huge négociants seem to equally provoke my ire and hopefully never get a penny from me. If you're a huge negociant that also makes lalas...

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Re: Wine as a Veblen Good?

#26 Post by Anton D » April 1st, 2019, 3:23 pm

Al Osterheld wrote:
April 1st, 2019, 2:13 pm
FWIW, I’m not sure Cristal is still a good example of a Veblen good. It was primarily rappers driving that status, and they dropped the brand when they felt the love was not reciprocated.

As far as Neal’s point, Cristal is not a Veblen good to him, whether or not it is still a Veblen good in the broader market (as mentioned, I doubt that it is).

-Al
We can change it to Armand de Brignac.
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Re: Wine as a Veblen Good?

#27 Post by Larry Link » April 1st, 2019, 3:24 pm

While there is no specific price point that can be identified as the dividing line between a Veblen good and a normal product, it may be safe to assume that a Veblen good is generally priced exponentially higher than a basic product in the same category.

It's an interesting question and certain wines probably qualify as Veblen good's, demand has increased as prices have increased. In my world, I used to get more offers at lower prices, but now that the wines are "it" wines prices have doubled and tripled and I get offered less and less. My incomplete list would include mostly Burgundy:

DRC (across the lineup but especially RC and La Tache)
Rousseau Chambertin and Beze
Roumier BM and Musigny
Coche (across the lineup but especially the CC and MP)
Leroy
Jayer
Truchot
Raveneau (Le Clos is getting there)
Petrus but not necessarily all the first growths.

(Certain vintages of first growth Bordeaux qualify, but I'm not sure that as a blanket statement all the first growths qualify as Veblen goods.)
Last edited by Larry Link on April 1st, 2019, 6:43 pm, edited 1 time in total.

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Re: Wine as a Veblen Good?

#28 Post by Josh Grossman » April 1st, 2019, 3:26 pm

Al Osterheld wrote:
April 1st, 2019, 2:13 pm
FWIW, I’m not sure Cristal is still a good example of a Veblen good. It was primarily rappers driving that status, and they dropped the brand when they felt the love was not reciprocated.

As far as Neal’s point, Cristal is not a Veblen good to him, whether or not it is still a Veblen good in the broader market (as mentioned, I doubt that it is).

-Al
I posted something above about that and how much it's dropped in price as it's losing it's Veblen good status due to the boycott--therefore proving it was a Veblen good (less so now). It's funny that is the example given on Wiki as Roederer is one of the last négociant manipulant that is still family owned and has not been bought by a luxury products company.
Last edited by Josh Grossman on April 1st, 2019, 3:28 pm, edited 1 time in total.

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Re: Wine as a Veblen Good?

#29 Post by Neal.Mollen » April 1st, 2019, 3:28 pm

Josh Grossman wrote:
April 1st, 2019, 3:20 pm
Neal.Mollen wrote:
April 1st, 2019, 1:52 pm
Josh Grossman wrote:
April 1st, 2019, 9:15 am
I will never buy Sceaming Eagle, anything owned by LVMH (Château Cheval Blanc, Château d'Yquem, Dom Perignon, Veuve Clicquot, Ruinart, Krug), E. Guigal, M. Chapoutier, Groupe Artémis (Château Latour), Constellation Brands (Mondavi and Opus), or Penfolds Grange as the conspicuous consumption is one of my least favorite parts of wine culture.
I am not following. A $14 Mondavi or $15 Guigal CDR or $45 Ruinart is a badge of conspicuous consumption? I am obviously not doing this right.

This is a weird thread. I bought a couple of bottles of 2009 Cristal because it is a sensational wine and nearly $100 less than the 2008. Is that a Veblen good? If so, wouldn't I have bought the 2008? And if I was buying it as a signaling device, wouldn't it be counterproductive to drink it at home with my wife, for whom the only thing it signals is that I spent too f*ck much money on the wine? Again, I am obviously not doing this right. I need remedial social climbing tutoring

To answer the OP question, no, I don't because doing so is stupid. Not to put too fine a point on it
See the very end of my post just above. I am conflating some things. I do see LVMH as the worst offender of specifically marketing as conspicuous consumption and would especially hope not to support that (including Ruinart). While Mondavi and Guigal do make some plonk, they also unfortunately own To Kalon and the Lala's (in my opionion, lala's are a Veblen good), respectively. While I left Jadot out of this rant, as they certainly don't fit, those huge négociants seem to equally provoke my ire and hopefully never get a penny from me. If you're a huge negociant that also makes lalas...

Wow. Ok. Interesting perspective.
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Re: Wine as a Veblen Good?

#30 Post by Josh Grossman » April 1st, 2019, 3:58 pm

Anton D wrote:
April 1st, 2019, 3:23 pm
Al Osterheld wrote:
April 1st, 2019, 2:13 pm
FWIW, I’m not sure Cristal is still a good example of a Veblen good. It was primarily rappers driving that status, and they dropped the brand when they felt the love was not reciprocated.

As far as Neal’s point, Cristal is not a Veblen good to him, whether or not it is still a Veblen good in the broader market (as mentioned, I doubt that it is).

-Al
We can change it to Armand de Brignac.
I had to look that up. Wow! That has to be the ugliest and most gaudy wine bottle I've ever seen. If it tastes good, it could be top contender for this thread and the fugly label thread:
https://wineberserkers.com/forum/viewto ... l#p2651561

They should make a Cuvee Trump edition with a gold bottle, an orange spades, and yellow foil.

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Re: Wine as a Veblen Good?

#31 Post by Mel Knox » April 1st, 2019, 6:01 pm

First of all, Josh, are you saying that showing up at a party with a couple of bottles of Arbor Mist doesn't make me the coolest cat in the house?? Or should I just avoid the Blackberry Merlot?? Would I be more popular if I took my commemorative decanter of Apothic??

Second, isn't it the point of luxury brands to create Veblen Good?? Take some brass, some leather and make a bag out of it with an easily identifiable mark on it. Get housewives from Asia to line up at your boutique for their allocation and life is good! Why not wrap some leather and metal around a bottle and add $75 to the bottle price??

Third, I don't know if we can ever determine what wine represents Veblen Good, but we do know that if Thorstein were alive he'd have fun with the wine biz. I'd even go to a wine auction with him.
Finally, Anton D, are those names friends of Rudy the K or brands that Precept has cooked up??
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Re: Wine as a Veblen Good?

#32 Post by David Glasser » April 1st, 2019, 6:27 pm

Jonathan Loesberg wrote:
April 1st, 2019, 12:53 pm
For a product to be a true Veblen good, its demand must increase as a result of its price increasing because the higher price makes it a status symbol. Issues of supply are not relevant. This may be true of Cristal, for all I know, but it is surely not true for high end Burgundy where at least some part of the price, if not most of it, is due to the extreme scarcity of the wine. I'm willing to believe that first growth Bordeaux are Veblen goods given that they are made in decent quantities, but I'd like to see some studies showing that the price increases have caused demand increases rather than enhanced world wide demand increasing price. Even if the bordelais manipulate demand by aritificially reducing supply (holding much of a vintage back to release at a later date), I don't think this would be sufficient to make it a true Veblen good since if it were one, they wouldn't have to manipulate the supply. They'd just keep increasing the price.
Clearest, simplest description of a Veblen good I've ever seen.
Well done.

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Re: Wine as a Veblen Good?

#33 Post by GregT » April 1st, 2019, 8:43 pm

Neal.Mollen wrote:
April 1st, 2019, 1:53 pm
GregT wrote:
April 1st, 2019, 8:50 am
I don't, which is why I don't buy classified growth Bordeaux
So, $30-40 is outside your strike zone?
No and you make a good point - I painted with too broad a brush. But I don't have an interest in paying several hundred dollars for a bottle that is only costing that much because people want to own that wine and be known to own that wine. Those wines that are good and that are in your range are the antithesis of Veblen goods. They are just good wines and there's no status conferred in showing off the labels.
Something I've noticed is that academics from every field are sneaking into the wine world.
Mel - you're right, those bastards! We thought it was bad when it was only minerality and taste maps of the tongue.

Now we have wine sociologists!

Actually, it would be interesting to see some articles on the people who posture on wine boards. Like we all do! [soap.gif]
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Re: Wine as a Veblen Good?

#34 Post by Neal.Mollen » April 2nd, 2019, 4:15 am

GregT wrote:
April 1st, 2019, 8:43 pm
Neal.Mollen wrote:
April 1st, 2019, 1:53 pm
GregT wrote:
April 1st, 2019, 8:50 am
I don't, which is why I don't buy classified growth Bordeaux
So, $30-40 is outside your strike zone?
No and you make a good point - I painted with too broad a brush. But I don't have an interest in paying several hundred dollars for a bottle that is only costing that much because people want to own that wine and be known to own that wine. Those wines that are good and that are in your range are the antithesis of Veblen goods. They are just good wines and there's no status conferred in showing off the labels.
Something I've noticed is that academics from every field are sneaking into the wine world.
Mel - you're right, those bastards! We thought it was bad when it was only minerality and taste maps of the tongue.

Now we have wine sociologists!

Actually, it would be interesting to see some articles on the people who posture on wine boards. Like we all do! [soap.gif]
I thought that might be the case; just checking. You and I are in pretty much the same place.
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Re: Wine as a Veblen Good?

#35 Post by Richard T r i m p i » April 2nd, 2019, 6:08 am

Do you buy wine that is considered a Veblen good?
I don't buy wines that I consider to be Veblen goods. There's no widely approved list....although there're certainly prime suspects as you've mentioned, i.e.: Screagle and DRC. I'm not convinced about Cristal. The wine really can be exceptional (tasted the 2008 and 2009 over the past year or two). At $200 - $250/bottle it's pushing towards the curve....but it's not particularly high for world class champagne. On the other hand, Bordeaux First Growths are on the curve IMHO. I'm not convinced that Cristal would sell more briskly at $300 or $400/bottle...but I could be wrong.

Where is the line between scarcity and Veblen?
Not sure what you're asking. I think it's unknown. Demand and price are the only parameters, independent of supply. Scarcity may or may not contribute.

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Re: Wine as a Veblen Good?

#36 Post by Alan Rath » April 2nd, 2019, 7:41 am

I think the Veblen territory for wine is actually not at the top end, but in the mid-range. I really don't think there is more demand for high end burgs (for example) that astronomically in price. But you hear all the time about cases where the price point is felt to be too low to represent the "quality" that's in the bottle. So price is raised, and the wine actually sells better.
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Re: Wine as a Veblen Good?

#37 Post by Al Osterheld » April 2nd, 2019, 7:54 am

The argument for First Growth Bordeaux as Veblen goods really dates to the period when Chinese buyers first entered the market in a big way. The people with enough wealth to play had to have "the best" and the rising prices validated their choice as "the best" and drove demand and prices higher. Various factors contributed to the end of this period, prices dropped and then stabilized, albeit at high values. I think they are now simply luxury goods with the branding and demand to continue to support high prices, but no longer Veblen goods. Some of the Chinese buyers decided there was too much FG Bordeaux for them to really be "the best" and they turned their attention to certain high end Burgundy.

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Re: Wine as a Veblen Good?

#38 Post by Magnus Solhjell » April 2nd, 2019, 12:47 pm

I am an economist and I wrote my thesis about the market structure for wine in Norway. While the concept of Veblen goods is pretty easy to grasp, it's desperately tricky to quantify. I haven't tasted Armand de Brignac, but I suspect it has an element of Veblen. I agree with Al about First Growth Bordeaux as well..

And while cheap wine may be a Giffen good for an alcoholic, it certainly isn't for anyone here. Wine certainly isn't an inferior good for anyone here, which it has to be to be a Giffen good.

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Re: Wine as a Veblen Good?

#39 Post by Anton D » April 2nd, 2019, 12:55 pm

Al Osterheld wrote:
April 2nd, 2019, 7:54 am

...buyers decided there was too much FG Bordeaux for them to really be "the best" and they turned their attention to certain high end Burgundy.

-Al
Completely agree.

Looking forward to the genus in Burgundy who can jigger the names...


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Re: Wine as a Veblen Good?

#40 Post by R. Frankel » April 2nd, 2019, 7:51 pm

Wine as a status symbol is different from many such Veblen items in that it requires specialist knowledge to recognize the item in question. Only a wine geek would be wowed by a La Tâche, Leroy RSV, Henri Jayer anything, etc. Drive a Ferrari down any street and heads will turn. Not that flashing a fancy bottle doesn’t get you cred, of course it does. But only in certain places, among certain tribes. I don’t know, maybe all billionaires take a class on ‘top 20 wine brands you should be impressed by.’
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Re: Wine as a Veblen Good?

#41 Post by Neal.Mollen » April 3rd, 2019, 4:55 am

R. Frankel wrote:
April 2nd, 2019, 7:51 pm
Wine as a status symbol is different from many such Veblen items in that it requires specialist knowledge to recognize the item in question. Only a wine geek would be wowed by a La Tâche, Leroy RSV, Henri Jayer anything, etc. Drive a Ferrari down any street and heads will turn. Not that flashing a fancy bottle doesn’t get you cred, of course it does. But only in certain places, among certain tribes. I don’t know, maybe all billionaires take a class on ‘top 20 wine brands you should be impressed by.’
This is pretty much the case with all of these status signals, no? My wife sees (and disdains) signals in handbags I don't even notice. She won't notice a Patek or Paul Newman Daytona or Vacheron but I might. There are few marques that are instantly recognizable to the masses, and when a logo gets to that level of ubiquity, I suspect they lose some of their signaling power. Vuitton? Gucci?
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Re: Wine as a Veblen Good?

#42 Post by Richard Albert » April 3rd, 2019, 8:48 am

It seems to me the apex examples given above in Bordeaux, Burgundy and California are all small production relative to region and are contrarian examples.
Petrus second lowest production of the Big 8 with a 2500 average case production
Romanee Conti averages 450 cases a year.
Screaming Eagle is 550 to about 800 cases.

There appears to be some flexibility, or unique evolution in definition of Veblen goods in terms of supply, or these are not really Veblen wines.
I may need more coffee, or a more clear explanation.
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Re: Wine as a Veblen Good?

#43 Post by Doug Schulman » April 3rd, 2019, 9:33 am

I once talked to someone who had consulted for a Napa winery. One of the first things he told them was to raise the price of their top Cabernet dramatically. He said it wasn't priced highly enough for certain buyers to be interested. When the next vintage released, the same wine for much more money, demand increased a lot for that wine, which helped the winery's sales overall.
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Re: Wine as a Veblen Good?

#44 Post by Mel Knox » April 3rd, 2019, 9:52 am

I think Champagne is the best Veblen Good. Everybody knows that when you serve Champagne you're cookin' with gas. A lot of these expensive brands like Dom Perignon are made in huge quantities. I saw Gatinois for sale on line for around $45. This is made from grand cru grapes in Ay. Gatinois sells most of their grapes to a neighbor. So if you can make and sell Champagne with grand cru grapes for that amount, a bottle made with similar costing grapes retailing for $145 is a Veblen Good!! With still wine, once you get past Mouton and Lafite, regular people just know they make wine in France.
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Re: Wine as a Veblen Good?

#45 Post by Mel Knox » April 3rd, 2019, 9:52 am

Doug,

One time I had lunch with a grower in Lodi. He tried the same thing. Didn't work!
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Re: Wine as a Veblen Good?

#46 Post by CJ Beazley » April 3rd, 2019, 9:57 am

Neal.Mollen wrote:
April 3rd, 2019, 4:55 am
R. Frankel wrote:
April 2nd, 2019, 7:51 pm
Wine as a status symbol is different from many such Veblen items in that it requires specialist knowledge to recognize the item in question. Only a wine geek would be wowed by a La Tâche, Leroy RSV, Henri Jayer anything, etc. Drive a Ferrari down any street and heads will turn. Not that flashing a fancy bottle doesn’t get you cred, of course it does. But only in certain places, among certain tribes. I don’t know, maybe all billionaires take a class on ‘top 20 wine brands you should be impressed by.’
This is pretty much the case with all of these status signals, no? My wife sees (and disdains) signals in handbags I don't even notice. She won't notice a Patek or Paul Newman Daytona or Vacheron but I might. There are few marques that are instantly recognizable to the masses, and when a logo gets to that level of ubiquity, I suspect they lose some of their signaling power. Vuitton? Gucci?
So what you’re saying is you can’t recognize a Birkin when you see one?
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Re: Wine as a Veblen Good?

#47 Post by CJ Beazley » April 3rd, 2019, 10:01 am

Mel Knox wrote:
April 1st, 2019, 6:01 pm
First of all, Josh, are you saying that showing up at a party with a couple of bottles of Arbor Mist doesn't make me the coolest cat in the house?? Or should I just avoid the Blackberry Merlot?? Would I be more popular if I took my commemorative decanter of Apothic??

Second, isn't it the point of luxury brands to create Veblen Good?? Take some brass, some leather and make a bag out of it with an easily identifiable mark on it. Get housewives from Asia to line up at your boutique for their allocation and life is good! Why not wrap some leather and metal around a bottle and add $75 to the bottle price??

Third, I don't know if we can ever determine what wine represents Veblen Good, but we do know that if Thorstein were alive he'd have fun with the wine biz. I'd even go to a wine auction with him.
Finally, Anton D, are those names friends of Rudy the K or brands that Precept has cooked up??
I know I’m gonna regret this; what is the Arbor Mist thing you keep mentioning? Is it the current version of Boone’s Farm? Or is it like Falstaff and PBR so bad it actually cool?
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Re: Wine as a Veblen Good?

#48 Post by Mel Knox » April 3rd, 2019, 10:16 am

ArborMist is probably closer to Boone s Farm than to PBR. Falstaff is cool?? I haven't seen Falstaff since 1966.
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Re: Wine as a Veblen Good?

#49 Post by Neal.Mollen » April 3rd, 2019, 10:16 am

CJ Beazley wrote:
April 3rd, 2019, 9:57 am
Neal.Mollen wrote:
April 3rd, 2019, 4:55 am
R. Frankel wrote:
April 2nd, 2019, 7:51 pm
Wine as a status symbol is different from many such Veblen items in that it requires specialist knowledge to recognize the item in question. Only a wine geek would be wowed by a La Tâche, Leroy RSV, Henri Jayer anything, etc. Drive a Ferrari down any street and heads will turn. Not that flashing a fancy bottle doesn’t get you cred, of course it does. But only in certain places, among certain tribes. I don’t know, maybe all billionaires take a class on ‘top 20 wine brands you should be impressed by.’
This is pretty much the case with all of these status signals, no? My wife sees (and disdains) signals in handbags I don't even notice. She won't notice a Patek or Paul Newman Daytona or Vacheron but I might. There are few marques that are instantly recognizable to the masses, and when a logo gets to that level of ubiquity, I suspect they lose some of their signaling power. Vuitton? Gucci?
So what you’re saying is you can’t recognize a Birkin when you see one?
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Re: Wine as a Veblen Good?

#50 Post by R@y.Tupp@+sch » April 3rd, 2019, 10:19 am

Anton D wrote:
April 1st, 2019, 9:13 am

If there were no Veblen wines, would we have ever had the bozos in the "heavy lumber" wine tasting crowd?

It takes a Veblen good to generate something like a self-referential frat of winos...Hollywood Jef, Big Boy, King Angry, The Punisher, The Bone Collector, The Pope
King Angry, The Hillbilly, The Big Ticket, Bad Boy Bruce, and The Don.
That's a funny list of names.
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