Wine has been a part of my family life for as long as I can remember. At our nightly family dinners, my parents always shared a bottle of wine. There are even stories of me drinking wine from the wine bottle around age 3. (I’ll assume that my age, and not the amount of wine that I drank, is the reason I don’t remember this happening.) Over the years, my dad grew even more passionate about wine, and his wine collection grew concurrently with his passion. This resulted in more opportunities for us to taste fine wines at holidays, birthdays, or really any visit home, and each tasting inevitably came with a conversation about the tasting notes as well as a brief history of the region. I quickly grew to love and appreciate wine, but what’s not to love when nice wine is lovingly poured for you at no cost?
Whatever foundation of wine appreciation was built by my dad quickly dissipated when I faced the $8 magnums of Yellowtail that garnished our party tables in college. Wine was cheap and plentiful, albeit sweet and somewhat gross. Fast-forward to when I got a job after college, and I felt empowered again to drink slightly more expensive, higher quality wine. But even with a job, paying “too much” for a bottle of wine in a restaurant never really seemed worth it. How could I be sure that paying 2x would result in 2x (or even 1.2x) the pleasure?
This trade-off, between value and quality, is one of the biggest questions that I am eager to explore in this class. As an investor in the consumer and retail industries, I appreciate both the power of brand equity and the ability to get sucked in by a brand with little real reason to pay more for it. I want to understand how branding and pricing work with wine. Where is the inflection point that allows me to maximize value and quality together? Am I better off paying $30 for a bottle of wine from the store, or will $15 suffice to get the quality I want? What is it about the wine value chain that results in such a broad spectrum of wine prices overall? These are the questions I want to answer, and though it might take me a lifetime to do so, I might as well start my learning in a classroom, especially if it means I get to taste wine in class.
Part of the answer to "value" is about regional source of the product: lower land/labor costs often yield lower price products, even when exported to complex/highly regulated distribution networks like the US, China, etc. It will be a great question to ask our speakers, particularly Pete Mondavi, Jr. and Courtney Kingston, how they determine the pricing of their products: how much is driven by COGS vs. "brand" equity they strive to capture.
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