Robin Goldstein on the Economics of Wine

DESCRIPTIONRobin Goldstein

We are delighted to welcome Robin Goldstein to our family of Freakonomics blog contributors.

We’ve blogged in the past about Robin’s research involving blind wine tastings, as well as his research on whether people can tell the difference between pate and dog food.

Robin recently started a really excellent blog called Blind Taste: A Critical Review of Food, Drinks, Culture, and Cognition.

In his most recent post, he asks why in Sweden, but virtually nowhere else, all wine stores are organized by price. (The answer clearly has something to do with the fact that the government has a monopoly on retail wine sales in Sweden.)

Earlier, he blogged about abuses on the part of information intermediaries in the wine industry and how most drinkers prefer cheap wines to expensive ones.

Going forward, we’ll be cross-posting Robin’s Freakonomics-relevant blog entries here on the blog.

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  1. ChuckB says:

    I’m sure you’ll now hear about all of the places that do organize wine by price. Allow me to chime in for New Hampshire – our state liquor stores do so. There are sections for each common varietal for American vintners, and sections for important international regions, and within each section the sorting is by price. I find this very convenient.

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  2. rafa says:

    Well, I don’t see why is that a problem, because, given that the State have the monopoly of alcohol, if you are looking for somethin particular, you’ll know a bit about its price rank. Unless you don’t, but then, given that you’re looking for something in particular since before leaving your house, you could have checked the prince from home (www.systembolaget.se), and know where to look.

    As Per, who seems to be a Swede, answers in the comments, normal (non-Swedish, non-monopoly) shops have an interest in having an intelligent consumer who is more likely to buy better (and more expensive) wines.

    He just answered the question, because, as you can read in their webpage, “Systembolaget exists for one reason: To minimize alcohol-related problems by selling alcohol in a responsible way, without profit motives”

    So: They’re not trying to sell more. Also, in the wikipedia entry (sorry, couldn’t find it in their webpage) says they can’t favor any mark, so, I guess they’re forced to sort them in the most neutral way (see, we’re not putting this mark first because we want to sell this kind of wine, it’s because it’s the cheapest / it has the less alcohol)

    I can also confirm that, when I lived there as an exchange student, I was regularly asked for ID (I was 23 at the time), and that people (at least students) regularly bought the most alcohol per krona they could get their hands on, and in student parties, you could clearly see everybody was drinking the 2 or three same brands. (And it still was much more expensive than in most European countries).

    I also remember that, while living there, I also read an article saying that most of the strong alcohol people drank in Sweden was brought there from their travels abroad. There were also some night boat trips to neighbour countries, like Finland and the Baltic states, which some people did only in order to buy alcohol in the duty free (the ticket was very cheap), and people who went to germany only to fill their car with beer and come back (then sell some, drink the rest).

    So, this monopoly created a huge oportunity for black market, a culture of “it doesn’t matter what you drink, it’s just a way to get drunk”, a cripple for local breweries, and missing a lot of tax money for the state. Yay Systembolaget!

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  3. Dan Lufkin says:

    Sweden has long had an ambiguous relationship with wine. When I lived there in the 60s, wine was considered a little effete, real men drank akvavit or brandy. We still had spirits ration books based on alcohol content. You could get huge quantities of really bad beer, but only a couple of liters of the hard stuff.

    Then Systembolaget started importing tankers full of cheap Algerian wine, partly to support the new Algerian government. The wine was pretty bad, but it was better than the beer and the System shops had big posters of sad-eyed little girls saying, “Buy wine instead, daddy.” (Instead of the hard stuff, naturally.) It was pretty nearly physically impossible to binge on Algerian red, so the campaign actually worked fairly well.

    One of the saddest sights I know of is the hordes of Swedish teenagers on the ferry from Denmark with handcarts loaded with beer, zonked out of their skulls, throwing up all over the place.

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  4. and by says:

    Anyway wine stores are poorly organized. Duh. I am not so sure that has anything to do with up selling so much as how hard it is to cross catagorize grape, varital, blend, country, maker, year, bottle size, alcohol content, popularity, and demand plus determined price. Not to mention trying to stock beer and liquor. Personally I think that it would be more adventagous for the consumer to have each wine, beer, and liquor have seperate stores greater variety, wider price range, more organized, more specialty products, hopefully increased staff knowledge. Although fully stocking a party would require multiple purchases.

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  5. Tim says:

    The dogfood test only had 15 samples?? How hard would it have been to get more samples? The error bars on that study have to be huge. What wouldn’t have looked like random data with only 15 samples?

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  6. Katheryn says:

    Goldstein’s research sounds really interesting! I can’t believe people couldn’t tell the difference between pate and dog food. That has to be one of life’s typical ironies.
    I really like your style of writing.
    Your book was recommended to me a while back and I’m really glad as I just found it on http://www.audiobooks.net/ which I’m really pleased about as listening better suits my lifestyle than reading.

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  7. Robin says:

    I go to a totally different kind of wine store. It isn’t organized by any system, and what they have changes all the time. They have tastings every Friday, usually with a theme, where we discover new wines. The owners keep track (in their minds and in a notebook with a pencil) of what we like and make other recomendations, which we follow. When we’ve asked about other wines we’ve found on trips or whatnot, they order them for us, sometimes add them to the tasting rotation to introduce to all our neighbors etc. Many things in our neighborhood are organized in a similar anti-modern throwback way, and it seems to be thriving economically while few others are.

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