Alcohol monopolies: Friend or foe?

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Alcohol monopolies are in the news again in Canada.

A recent piece in the Montreal Gazette has argued that it is time to end the alcohol monopoly in Quebec. Why? Because consumers are being gouged while the government-run monopoly lines its pockets.

For those of us from the Great White North, the alcohol monopoly is something that we love to hate. We love it because it’s like an old friend; familiar, always there, and always reliable. This is ignoring the fact, of course, that to at least a certain degree, prices are tightly controlled, access to product is limited and regulations are much tighter and more restrictive.

And this is what makes it a foe. Even though Canada is one country sharing a single constitution and national identity, there are strict rules about shipping wine over provincial borders. Moreover, because liquor laws vary from province to province, there is the belief that some people get a bad deal.

Then there is the service side of things. Consumers get limited access to the market (in British Columbia, consumers often can only buy a bottle or two of their favourite Bordeaux because BC Liquour Stores work to tight allocations), staff knowledge can be pretty poor in the stores and much of what is sold on the shelves can be viewed as generic dreck.

The Montreal Gazette article reads:

As Quebec’s only buyer and vendor of most alcoholic products, the Crown corporation brings in over a billion dollars to the province annually, about 1 per cent of its revenue. It’s the government’s most profitable venture, with margins over 48 per cent. As a comparison, Liquor Stores N.A. — a company that owns liquor stores in Canada and the U.S. — only had a profit margin of 1.9 per cent.

The argument, however, is not that the entire system should be privatised and the government distribution department be scrapped. Instead, it argues that the buying power of the government corporation be retained and the market opened up to private retailers.

In ending the monopoly, the SAQ would retain its duties as the sole distributor of alcohol in the province. There is a cost advantage of buying alcohol in bulk and the SAQ is one of the world’s largest buyers of wine and alcohol. This could be made to work in favour of consumers and businesses. Privately owned retail outlets would purchase their products from the state at a low cost and sell the alcohol at a price determined by supply and demand.

Such a plan could be a decent solution, but is the alcohol  monopoly necessarily a bad thing?

Ending the monopoly, sacking the employees at all the stores and opening the market to private competitors, as the Montreal Gazette piece recommends, might result in good things for consumers. But it seems to gloss over an important issue: it could put 8,000 people out of work and, very likely, result in lower wages for those who end up working in a privatised alcohol retail sector. This would need to be managed to ensure that unemployment and underemployment as a result of the process are kept to a minimum.

All of this makes me think back to a piece I wrote earlier this year about alcohol monopolies.

In it, I concluded that alcohol monopolies help to keep sales low and therefore the negative problems associated with consumption. But I also concluded that it was detrimental to consumers in terms of offering choice of product and value for money.

I used to be firmly in the ‘government alcohol monopolies are good’ camp simply because they offered a good shopping experience, seemed to have low prices and tended to maintain a clean image.

But the evidence, coupled with my experience living in the UK, has made me change my mind. These days it seems to be that the best thing…would be a free and open market for alcohol retailers.

My argument remains the same. But I’m not entirely sure the argument put forth in the Montreal Gazette piece is entirely realistic. And I’m not in favour of closing a retail system that would result in 8,000 job losses. That end of things would need to be managed carefully.

Most of all, though, I’m not sure having private retailers buy directly from the sole, state-run distributor makes any sense over the long term. One of the best things about the UK wine market is the competition in the distribution market, with small and large players striking deals with producers around the world.

In addition to the importers who handle the large brands and the prestigious estates, there is a litany of small wine merchants who travel far and wide to find undiscovered producers that have never before been available on these shores. Could a single, giant, government distribution branch achieve that? Probably not.

Wine tastings: Everyone for themselves

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In theory, the wine tasting is a wine lover’s utopia; dozens of bottles of (potentially) great wine free for the taking. So when an invitation arrives on my doorstep asking if I’ll attend this tasting or that, turning it down would be a sign of insanity, surely?

Well, yes. And, well, no.

The decision to go to any wine tasting is often made under the assumption, and anticipation, of how good it is going to be. Endless tastes of wine! Fine Bordeaux, Burgundy and everything else! Every sip a winner!

And so along I go, effervescent with excitement.

Seldom, if ever, does the mind consider the reality of many big public tastings:  a room of punters packed in tighter than the Northern line at rush hour. The Lingering Larrys who hover over the bottles, preventing anyone else from receiving a sample. And then there is that inevitable crowd of people who arrived drenched in a fog of cologne.

So what do I do? As a newly anointed British citizen, I do what everyone else in my adopted home does: I tut and mutter under my breath.

I have learned, over time, that there is a critical mass for wine tastings. Too few people and it can be sparse and awkward, particularly if a proprietor keeps hovering over your left shoulder, curious to know what you think following every sip. Too many people and it can seem as though you’ve waited 10 minutes just for a thimble full of wine (the retailers Naked and Virgin spring to mind).

A wine tasting needs to be just the right size. One in which you can lose yourself in the crowd but not feel as though you’ve waited so long for a sip that when you return home you’ll find your children have grown up and left for university.

The reason I write about this is because there is one tasting that I’ve been meaning to write about for more than a month now. Back in September I found myself at the Berry Bros & Rudd Wine Club tasting, held — where else? — in the Long Room at Lord’s Cricket Ground. It was a warm evening, the room looked onto the pitch and the late-summer breeze could be felt through the open windows. It was a very Berry’s crowd, too, which meant that my Canadian twang and lack of red trousers almost certainly marked me as an outsider. But no matter.

The list of wines was generous — 24 in all — and the group was big but not heaving. Perfect.

A British wine critics recently said that there is no venue better for a wine tasting than Lord’s Cricket Ground. I would tend to agree, even if it means my journey home is slightly convoluted.

And so what of this tasting? Much to my long-suffering girlfriend’s chagrin, this was one where I wrote detailed notes for each wine. I loved the Old World white wines, from the Le Caillou Blanc de Chateau Talbot 2012 (grassy, light and floral with a hint of caramel) to  the Bianco dei Colli Della Toscana Comitale 2013 (bright flavours of lychee and passion fruit with wet stones).

Then there were the Old World reds, such as the Domaine Jean Fournier Marsannay Clos du Roy 2011 (brambly fruits with a great mid-palate and a long finish) that ticked nearly every box for a good pinot noir, or the Celler de Capcanes Cabrida Garnatxa Vinyes Velles 2009 (deep, dark, black fruits with notes of cedar and a broody complexity) that showed how much great wine can be found in Spain.

Perhaps the most interesting wine on tasting was Chile’s Bodegas RE Chardonnoir 2012. This is a white wine made from 60% chardonnay and 40% pinot noir that smells like a Champagne, giving off nutty aromas of yeast and biscuits as a result of spending two years on its lees, while the mouth is lush and full, offering subtle hints of oak and a well-rounded finish.

These were but a few of the two-dozen wines around the room. And even though I didn’t like everything I tried (the Santa Celina Torrontes 2011 and Mullineux Kloof Street Chenin Blanc 2013 both left me wanting), I walked away happy in the knowledge that I found at least six that I loved without having to partake in a rugby scrum to try them.

Wine investing: Time out of the market

It’s time in the market that counts the most when trying to make a decent return on an investment, the experts say. This may very well work for equities and bonds, but when it comes to wine I’m inclined to say that not being in the market at all has been one of my best investment decisions to date.

If anything, I consider it redemption following my decision several years back to invest in a gold mining fund at a time when it was near its peak. One quickly learns the phrase ‘throwing good money after bad’ when faced with losses that exceed your age by a distressingly wide margin.

Considering that during my day job I’ve spent much of this week observing a bit of a meltdown (I’m sure I’ll eat my words over this) in the world’s financial markets, I decided that it might be fun to see how bad equity investors have fared compared to wine investors.

(Coincidentally, over at Sediment Blog there was also a feature on investing in wine this week, but you can rest assured that their piece is much more entertaining than mine and, mercifully, does not contain any charts.)

With my financial hat on, I decided to pull up some charts using data from Wine Owners and take a closer look at the situation.

The nifty chart below shows the performance of the S&P 500 (green line), FTSE 100 (orange line) and Wine Owners First Growth Index (blue line) in the three years to 4 October 2014 (the latest date for wine data). In terms of recent wine investment performance, it speaks volumes about how the market has responded to those over-inflated en primeur campaigns in recent years.

chart (2)Source: Wine Owners as at 10/10/2014

What we see here is a three-year loss in the region of 25% for investment-grade Bordeaux wine. This is in contrast to the approximate 18% gain for the FTSE 100 and 56% rise for the S&p 500.

I know where I’d rather have my cash socked away. And I know what I’d rather be doing with my wine: drinking it.

Of course, a little perspective does help with things and, as everyone knows, wine investment stretches beyond just three years. So here are the same indices over a five-year period.

chart (3)

 Source: Wine Owners as at 10/10/2014

Things still aren’t looking good for wine then.

See that little peak in the blue line? That looks eerily similar to the point at which I invested in that gold mining fund all those years ago. Lo, I have learned much of these many passing years.

But what if we looked at the data in a way that made it tell an entirely different story?

Thanks to the benefits of hindsight, we can all look back into the past and find a chart that will make us want to kick ourselves for not wagering everything on Lafite and Latour.

Like this chart, for example, which shows the performance of those same three indices between 31 January 2007 and 4 October 2014.

chart (4)

 Source: Wine Owners as at 10/10/2014

Thanks to its lower correlation to global markets during the financial crisis of 2008 (millionaires cut staff but not wine budgets, perhaps?) wine has grown by 110% compared to the rather weedy 5% for the FTSE 100 (not including the most recent meltdown) and the slightly more respectable 37.7% return for the S&P 500.

So what does this tell us? Well, if you’re an equity investor who has been sweating bullets this week as markets around the world have dipped, rest assured that you’ve done better in the past few years than someone who invested in wine.

If you’re a wine investor lamenting your losses, hold in there and hope for the best. I’ll be sure not to tell you about how cheaply I’ve been buying 2010 Bordeaux lately.

Guigal Côte-Rôtie: How much is that bottle in the UK?

IMG_20140928_153439Last week my sister was visiting the UK for the first time and I felt duty-bound to introduce her to all that these shores have to offer. And so I took her to Paris rather than expose her to the crumbling mess that is the British railway system.

Apart from the permanent cloud of second-hand smoke wafting through the air, the aloofness of the average waiter, the erratic opening hours, the stench of urine in the streets and the frankly homicidal drivers, Paris is a fairly ideal holiday destination.

No gourmand can be taken seriously if he or she has not made the pilgrimage to France to see what all the fuss is about. It’s why we use the French term ‘sous-vide’ for the cooking method rather than the simpler but much less elegant English translation of ‘under vacuum’. Similarly, no romantic can live life without having travelled to the top of the Eiffel Tower or walked over the Pont des Arts, which is heaving with so many padlocks that its railings are beginning to collapse.

For both of us, it was a journey of discovery. For my sister, it was a first visit to France and the European continent. For me, it was all about wine – and noticing just how much less the Parisians pay for it than we do.

IMG-20140923-WA0000Case in point: E Guigal Côte-Rôtie Brune et Blonde 2006.

Now, Côte-Rôtie does not come cheap. Today it is one of the most famous wines of the Rhône, but this was mostly the work of Guigal in the 1980s. For years, Hermitage was the leading appellation in the northern Rhône and Côte-Rôtie, thanks to devastation caused by phylloxera in the 1800s and dwindling vineyard area following the war, barely presented itself as a serious competitor. But revival came in the 1970s and this led to praise from critics (Mr Parker arguably being the main catalyst) along with greater attention from wine drinkers.

And so, if you want a bottle of E Guigal’s Côte-Rôtie in the UK, it will run you around £40 or more. That’s about four times more expensive than Guigal’s basic Rhône wines, such as their Crozes Hermitage or Côtes du Rhône bottlings.

Things are little bit different en France. While not everything is a bargain in France – you won’t find a discounted bottle of Haut-Brion at the LeClerc, for example – I can’t help but wince each time I visit a wine merchant.

Last week was no different. An initial trip to Monoprix, the upscale retailer whose apostrophe-shaped logo I constantly confuse with Vodafone’s served as a constant reminder that the Parisians pay a lot less for their wines than we do. I took little solace in knowing they are being fleeced every time they order a coffee.

I am not talking about an insignificant savings either. That E Guigal Côte-Rôtie Brune et Blonde 2006 at Monoprix? €32.35 or a little more than £25 at today’s exchange rate.

How about Miraval Rosé Côtes de Provence 2013? €14.90 at Julhe’s on Rue du Faubourg Saint-Denis, while here in the UK it runs nearer £20.

And then there were the bottles of water. During one trip to a Montpellier outlet of Lidl back in August, my girlfriend came back with a 1.5-litre bottle of spring water for which she paid just €0.09.

It appears no matter what they are drinking, the French are always getting a bargain. Well, except when it comes to the coffee. The price for the average cup is obscenely expensive.

Gruner veltliner: I still don’t get it

DSC_0189It used to be the height of fashion, but these days you’d be hard pressed to overhear anyone who doesn’t work in the wine trade ordering it at a bar or restaurant.

In fact, there was a time, not too long ago, when it was the sommelier’s darling, a grape few people outside of Austria understood that offered up refreshing wines and something different from the monotony of sauvignon blanc and chardonnay.

Then, as quickly as it ascended to popularity, the sommeliers of the world moved on to the next big thing (Assyrtiko? Torrontes? Albarino?). And so gruner veltliner fell to the wayside.

But why?

Maybe it was the name that did it. Gruner veltliner. Can anyone pronounce it? Is it ‘grooner velt-linger’, ‘grunner velt linner’ or ‘grooner velt linner’?

Then again, I can’t pronounce gewürztraminer properly either, but that doesn’t stop me buying it.

Whatever the case, the more I read about gruner veltliner, the more I feel obliged to love it. The only problem with this is that I simply don’t.

A while back I droned on about how I didn’t understand Chilean wine. What we have here is a grape-specific discussion in the same vein, a confession of my confusion when it comes to this particular example of vitis vinifera.

I drink gruner veltliner infrequently, but not by design. For instance, when I’m at a bar or restaurant and the other options by the glass consist of water sauvignon blanc from New Zealand, an over-oaked Californian chardonnay or something that was clearly incinerated by the heat of the Languedoc’s midday sun, my eye diverts to the gruner veltliner in a hopeful attempt to drink something that won’t sear my epiglottis.

Rarely does this extend to buying an entire bottle, either at a restaurant or from a shop. For the most part, it’s because gruner veltliner simply leaves me bored.

Yet there is plenty of evidence to suggest that I am missing out on something. If it was good enough to become the sommelier’s choice once upon a time, surely this is a grape worth noticing?

Jancis Robinson has described the grape as being “capable of producing very fine, full-bodied wines well capable of ageing”  that “produces very refreshing, tangy wines with a certain white pepper, dill, even gherkin character.”

The wines are spicy and interesting and in general this is because of the grape’s own intrinsic qualities because the great majority of them, unlike chardonnays, see no new oak. — Jancis Robinson

Similarly, Jamie Goode has described it as being food friendly, versatile and able to gain complexity as it ages.

So what have I been missing? Well, it seems that I haven’t exactly been on the wrong track all along. Even Jancis Robinson used to consider gruner veltliner to be a “poor second” to riesling that can lack character when it is over-cropped.

The example of gruner veltliner that I’ve been drinking is Josef Ehmoser Grüner Veltliner Hohenberg 2012. At £16.50 a bottle from Berry Bros & Rudd, this isn’t a weekday wine for the average consumer, but this bottle came to me as a sample bottle in a mixed case.

Now, this is a good gruner veltliner. Who could say it better than Berry Bros themselves?

Finely detailed with delicate, floral and white pepper/stone aromas, there’s a broad, soft, pulpy undercarriage, with salty/sweet, white peach stone flavours that echo those of Sarotto’s Bric Sassi Gavi di Gavi. Very pure, generous, with a distinctly sapid finish; one that cries out for a sea fish platter. — David Berry Green – Wine Buyer

My overly simple way of describing it is that it is floral, has some peach and apricot aromas, tastes of stone fruits (again, peaches) while also being fairly delicate, and finishes quite surprisingly dry despite giving the impression that it might be off-dry. This is definitely a seafood wine, which is to say that it almost tastes salty at times.

It’s good. Very good. And yet it hasn’t exactly made me a gruner convert just yet. In fact, it’s just made me even thirstier for a glass of sauvignon blanc or maybe a Chablis. What am I missing?

Big Mac vs Dead Hippie: On junk science and fine wine

Can you tell theID-100261094 difference between a £2.59 Mcdonald’s Big Mac and the £8.50 Dead Hippie burger from London’s MEAT liqour, purveyor of fine but pricey burgers?

Of course you could. One is anaemic and flat in flavour, clearly the product of mass production and cheap ingredients. The other is literally dripping in flavour, is handmade and cooked to order, and most important of all, loaded with expensive ingredients.

Few would dispute the vast differences between these burgers. So why is the opposite true when it comes to wine? The flow of news stories telling us that seasoned wine experts, from Masters of Wine and some not, who are unable to point out the cheap, £4 wine out of a group containing some of the world’s most expensive wines is practically interminable. But recently it seems that the volume of these articles has been on the increase — helped along the way, no doubt, by publications like the Daily Mail.

If you thought it was safe to progress through the summer without encountering a news article that dismissed wine tasting and wine critics as being entirely useless, well you were wrong.

Back in July the Mail, our favourite sensationalist newspaper and purveyor of mindless twaddle designed only to stoke rage among anyone remotely reasonable in character, proclaimed that its taste test of cheap wines from Lidl and expensive wines from top Bordeaux chateaux resulted in ‘hilarious’ results.

The article featured Oz Clarke, the expert, and two people who, shall we say, are more likely wine ‘experts’ insofar as they are expert at drinking it.

The only thing hilarious about the article, from what I could surmise, was that Oz Clarke pretty much nailed the entire tasting and yet the Daily Mail still tried to convince its readers that no one could ever tell the difference between a £4.99 Aldi Bordeaux and a £514 bottle of Chateau Haut Brion. Except Oz Clarke for the fact that Oz Clarke clearly could and in fact did.

This is a topic that gets more than its fair share of coverage, both in the anti-wine snob national press and among snooty bloggers like me. Politics has the debates over taxes and the welfare state; the wine world has the debates over natural wines and whether or not critics can do the one thing they have spent their careers doing: picking out the good ones from the bad.

Newspapers love a good headline. The Daily Mail knows this better than anyone, but it isn’t alone. The New York Times has been known to weigh in on the debate. So too the Guardian, which more often than not prefers to make absolute declarations in order to drive more traffic to its site more than it probably cares about the topic itself.

Then there is one of my favourite media outlets: NPR. It could, just like the others, spice up its stories to more sensational levels to drive traffic. But this is the house of reason and analysis we’re talking about. Sensationalism doesn’t  register in a radio network where the newsreaders sound as though they are whispering the news to you while sitting in a wing back chair by a roaring fire.

NPR also has a reputation for analysing a topic at a level much deeper than most other media outlets, so it came as no surprise that their discussion about the validity of wine tasting (Is wine-tasting junk science?) briefly veers into discussions philosophy rather than the mechanics of comparing a £5 bottle of wine with one worth £500.

The article also sums up wine tasting in a much more eloquent manner than my burger analogy above:

If you know English, then you are expert not only at discriminating significant English sounds, but you also spontaneously and reliably appreciate their meaning. Someone with no acquaintance with English can’t do any of this, even though his or her sensory organs may be in fine working order.
— Alva Noë, NPR, 8 August 2014

So is wine tasting junk science? The question I ask is, who ever said it was a science? I think the Daily Mail article provided us with all the conclusions that we need, even if it was unintentional.