How Wine Critics Killed Australia

Over the past two years, there’s been a great deal of discussion about the crisis facing Australia’s wine industry. In each of the past two years, overall exports fell around 10% per annum with the premium segment collapsing and counting for the bulk of that decline.

Some of this discussion has attributed the decline to the inevitable downside of a boom and bust cycle (for which Australia has been a poster child) and the effects of the negative impact of an appreciating currency (which Australia has undoubtedly experienced). Some of this analysis, including that from Michael Veseth’s blog, ┬áhas been very good:

http://wineeconomist.com/2010/10/31/vineyard-plague-the-dutch-disease/

Much, however, has been completely off point, including that from the wine drinker’s bible, Robert Parker’s Wine Advocate.

Though this back some, the most offending passage (offending to common sense and intellect) came from the Advocate’s resident wine critic, Jay Miller. Now Jay Miller (he writes under the title Dr. but I refuse to perpetuate that idiocy) is a dreadful wine critic, regularly lavishing mediocre wine with absurd praise. He seems to have taken his cue from Parker, who had previously reviewed Australia’s wine very favorably then passed these duties to his acolyte.

In a 2009 Wine Advocate piece, Miller cited statistics showing that in 2008 Australian exports to the US had fallen 12%, but startlingly, according to his statistics (the overall trend is not in dispute), this overall decline included under $10 wine increasing by double digits and over $20 wine declining by 50%. It’s this premium category I care about.

In trying to explain the hit the over $20 wine was taking, Miller quotes importers saying “the market got bored…there was no excitement…[there was] a surreal expression of corporate dominance and Frankenstein-like expressionism.” Now I have no idea what that last clause means, but I can see the boring part. Miller then tried to get all economic and approvingly quoted another importer who reasoned (wildly incorrectly) that the fall was the result of “quick buck Australian investment schemes encouraging the planting of vast vineyards…Collins Street [rich guys] throwing mounds of cash at wineries trying to emulate the styles that the Wine Advocate championed in the early ’00’s.”

So the reason Australian premium wine became so unpopular was because people threw capital at it? Like the internet? Like social networking companies? Um…No. The reason the high-end of the Australian wine market collapsed is because critics like Parker and (more egregiously) Miller created an unsustainable phenomenon by wildly overrating the wine. When a publication as influential as the Wine Advocate drops 93, 94, and 95 point scores on a wine, the price of that wine will rise to something close to an international level, meaning around $40 to $60. But this won’t go on forever, and the fall will be most pronounced when the economy turns.

In Australia’s case, wine drinkers could get similarly styled, and much tastier, syrah, grenache, and mourvedre blends from the south of France for around $25. So it really is Jay Miller’s fault, and he has neither the self-awareness nor the courage to acknowledge it.

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Lose Billions, Get a Raise

I find the Dick Ebersol firing fascinating. Today’s WSJ says that in spite of losing “hundreds of millions of dollars” per year, Ebersol threatened to quit if not given a new contract with compensation that Ebersol himself described as “incredibly high.” Brian Burke, Comcast’s president, said see ya.

So it’s not just Wall Street executives who are allowed to lose billions and prosper, entertainment executives can as well.

I’ve long heard the saw TV sports is not expected to make money, which of course raises the question of what the fuck it’s supposed to do. Years ago the major networks rationalized this money losing as providing viewers and raising ratings in shows which followed extremely popular sporting events. Some said it even – gasp – raised the profile of the network.

These rationales have long lost any grounding in reality. First, forty years ago, someone invented this really cool device called the remote. Suddenly we could change channels and remain on the couch. Second, over the last ten years, our TV viewing options increased to oh… around a hundred. It is only exceedingly old people – the same, no doubt, who keep AOL in business – who are unaware of this fact.

These sports rights should best be viewed as trophies for network executives and their corporate parents. Comcast believes it will manage NBC differently, as, no doubt, did GE when it made the idiotic decision to buy it in the first place.

May 2011

Succinct summation of YTD events:

  1. The search remains in place
  2. Squash
  3. So many Words
  4. Alta
  5. Egypt
  6. Events related to Egypt
  7. Punta Cana
  8. Alta again
  9. Twitter
  10. NBA playoffs
  11. Liquidations
  12. Litigation support
  13.  Santa Ynez Valley
  14. OSB
  15. DSK