British Columbia Wine

Wine Smackdown #2 | BC Wine

WINE REVIEW | WINES OF BRITISH COLUMBIA

In December 2010 I took a trip to British Columbia, Canada to visit friends and family.

desolate highway

1,700 miles in a day and a half

While I was there my friend suggested we pay a visit to a special wine shop located in White Rock called Mud Bay Wines.  This wine shop carries only VQA certified British Columbia wines.  The shop is fairly small, but it is well laid out and has a huge selection of BC wines.  The staff was friendly and helpful as well.  I found the purchasing process unusual in that I knew nothing of the wineries or  viticultural areas.  And very few of the wines had shelf talkers.  It was like being transported back in time to my first wine purchase.  So after much deliberation, we made our choices and headed home to critique. The wines are in the order that we consumed them.  I thought I would be able to find the technical information about each wine online, so I did not include them in my notes.  However, upon sitting down to write this post I have discovered that this information is hard to find! Note to less well known wine producers:  Consumers like to know as much as possible about your wines, the process and the technical information.

The first wine we popped open was Volcanic Hills, 2009 Gamay Noir from British Columbia’s Okanagan Valley.

BC Wine

Volcanic Hills Gamay Noir

After a quick decant we were restless and ready for a drink.  On the nose this wine came across  light with aromas of red fruit.  The palate was predominantly raspberry and cranberry. The finish was crisp and clean.  While this is not a complex wine,  it is a decent effort.  It’s a light and fruity, easy sipper and for only $15 it’s well worth it. 84 points

Next up was Domaine de Chaberton 2008 Pinot Gris, Okanagan Valley.

BC wine

Domaine de Chaberton Pinot Gris

This wine was nice enough, but I had a tough time discerning the aromas on the nose and the flavors on the palate.  It is a very light wine, although the alcohol clocks in at 13%.  I detected a little citrus on the nose. The palate displayed a very slight lemon profile with a hint of nutty butterscotch on the finish.  Once again, at $15, a decent wine, decent value but nothing to get too excited about. 82 points

Wine number three was Summerhill Pyramid Winery’s 2006 Riesling, Okanagan Valley.

BC Wine

Summerhill Pyramid Riesling

The nose was not as aromatic as I had hoped, I could detect minerals, but little in the way of fruit.  The palate consisted of  Grapefruit and Granny Smith Apple surrounded by a rather searing tartaric acidity.  Alcohol weighs in at 9% and the wine retails for  $22. A decent effort, however this wine is an acquired taste. I would only recommend this wine to wine drinkers who are looking for a Riesling which is not sweet. 83 points

Wine number four:  Church & State Wines, 2006 Quintessential red blend.

Quintessential

Church and State Quintessential

This wine is a blend of all 5 Bordeaux varietals, however I cannot find any information on the % breakdown.  The nose was pleasant enough, and displayed aromas of Cherries and leather. However, the palate is where this wine fell far short.   Immediately I was hit with an overwhelming unpleasant sweetness.  I was expecting something vaguely Bordeaux like but this wine did not deliver.  I thought maybe it was me and did not say anything, instead I had the other guests give it a whirl and they came to the same conclusion without my influence. At $50 a bottle I expected a lot more.  And even more confusing to me is how this wine could have won “Best Red Wine” at the All Canadian Wine Championships in 2009.  75 points

A couple of nights later my friends and I visited Salt Tasting Room in downtown Vancouver.  Upon being seated I asked our server, who also happened to be the inventory manager, for the best Bordeaux blend he had.

Wine number five:  Clos du Soleil Red 2007 Similkameen, British Columbia.

Clos du Soleil Red

This wine is a blend of 60% Cabernet, 22% Merlot and 18% Cabernet Franc aged for 18 months in 80% French Oak, 20% American Oak. The alcohol comes in at 13.3%. Production for the Clos du Soleil Red 2007 was only 450 cases.

This wine was by far the best wine of my trip.  It displayed a pleasantly aromatic nose of cassis and vanilla with floral notes.  The palate featured chewy plummy tannins, great structure and a nice long finish.  A well balanced wine with all of its components in check.  This wine retails for around $40 a bottle which may be a little pricey but considering the comparative quality, it is worth it.  88 points.

I hope to get back to British Columbia again in 2011 and to sample more of what British Columbia has to offer in terms of wine.  I will have to be a little more discerning in my selections in the future, maybe to a little more research ahead of time.  The Canadian dollar is currently at par with the U.S. dollar which can put a lot of pressure on the budget when buying multiple bottles of wine purely for review.  Have you tried any wines from British Columbia, have you tried any of the wines reviewed here?

What’s In a Name? Hedonic Pricing for Okanagan Valley Wines

This is a partial re-post (of a paper written by Hannes Edinger, Department of Economics, University of British Columbia, Okanagan. This material is copyrighted and approval was sought before posting.   Mr Edinger is a Master’s of Economics candidate at Queen’s University in Canada.  He is currently living in Ottawa, and actively pursuing Wine/Lifestyle Economics research. He recently presented this paper at the Canadian Economics Association Conference in Quebec and will be  at UC Davis for the American Association of Wine Economists Annual Conference  June 25-28th, 2010.

See the full paper HERE

Abstract
A hedonic pricing function is estimated for wines produced in the Okanagan Valley of British Columbia,Canada. We investigate implicit prices for objective wine attributes, as well as success at a local winefestival. In differentiating wine prices and wine festival success, we focus on the importance of naming, specically, trendy and geographically indicative names, grape appellation, and business association membership. Variables with a statistically signicant impact on wine price include: several objective attributes, vintage characteristics, as well as business association membership of the winery. While some aspects of naming are found to be unimportant with respect to differentiating wine prices, grape names are important, and several naming aspects are important for winning awards, as is business association membership, location, quality certication, and grape variety.

Part I
Introduction

The Okanagan Valley Wine Industry is relatively young; it’s current manifestation is barely twenty years old. Young wine industries must dene, and market themselves in order to compete with well established Old World, and New World wine industries. One method of marketing that has been adopted in New World Wine industries is a departure from traditional appellation in the naming of a winery, a wine or even a grape variety. California’s wine producers exemplify this practice, and wine producers in the Okanagan Valley have caught on. We investigate the marginal impact of naming attributes on the prices of Okanagan Valley Wines, and business association membership (which has been a complex and evolving part of the Okanagan Wine Industry), as well as a traditional vector of explanatory variables to determine which marketing and membership practices are helping wineries fetch higher prices for their products, and which practices are not. Rabkin and Beatty (2007) have investigated the marginal impact of the Vintner’s Quality Alliance (VQA) certication on the bottle of a British Columbia (BC) wine, however to our knowledge, no study has directly
examined Okanagan Valley Wines’ price determinants, nor has any study examined the impact of business association membership, or the subtleties of naming practices on price. We regress price on two continuous variables, and a vector of traditional, and novel dummy variables. We nd that two business associations
provide premia on the price of a bottle of Okanagan Valley Wine, while a third reveives a discount. We cannot identify any signicant effect with respect to naming practices except when a winery chooses to use the grape appellation “Shiraz” instead of “Syrah”  for which we nd a large, and signicant effect. In Part II, we review the history of the Okanagan Valley Wine Industry, including the evolution of the business associations therein. In Part III we briey summarize the background of wine’s hedonic pricing literature, in Part IV we present our empirical estimation and results, in Part V we conclude our discussion.

Part II
History

The Okanagan Valley, located in the interior of British Columbia (BC), Canada produces most of BC’s wine. Wine production in BC is expanding to include Vancouver Island, the Lower Mainland, and even areas north of the Okanagan, however the Okanagan Valley will remain the dominant producer for the foreseeable future.

The current state of the Okanagan wine industry is a response to the 1989 Free Trade Agreement (FTA) and the 1991 North American Free Trade Agreement (NAFTA). Prior to these trade agreements, Okanagan grape and wine producers produced inferior quality table wine for local consumption and low grade grapes for export to wine producers in the United States. The market for low quality table wine produced in the Okanagan persisted as a result of the BC Government’s trade regulation; specically, protectionist tariffs on imported wines and localized subsidies (Kingsbury and Hayter, 2005). Following the 1988 free trade agreement between Canada and the United States, Okanagan grape and wine producers faced an impending wave of superior quality products oered at low prices from the United States. The Okanagan grape and wine industry, and the BC Government, knew that the survival of this industry in the Okanagan rested on a shift to up-market wines. The BC Government intervened to create the British Columbia Wine Institute (BCWI): a business association that de-facto legislated the membership and nancial contributions of BC wine producers (Kingsbury and Hayter, 2005). The BCWI created BC’s own quality certication modeled on a certication established in Ontario, the VQA. This certication has been shown to offer premia on the price of a bottle of BC VQA certied wine (Rabkin and Beatty, 2007). The Okanagan Wine Industry has matured, the importance of the BCWI has diminished, and new business associations have arisen privately (Kingsbury and Hayter, 2005). The Okanagan Valley is colloquially known as “Canada’s California” due to its mild climate, desert-like landscapes, and proximity to water and agriculture, particularly viticulture. This has manifested itself in the Okanagan Wine Industry in several ways: following California’s lead, they have departed from traditional appellations, referenced characteristics of their surroundings in their appellations, and even followed California’s lead in occasionally adopting the Australian appellation of the Syrah grape: Shiraz. While branding the Okanagan “Canada’s California” has served the marketing of the area well, the same does not necessarily hold for the Okanagan Wine industry.

Part III
Background

A good can be considered as a bundle of attributes, and its price the sum of the implicit prices of those attributes. A highly differentiated good that fetches a wide range of prices in a competitive market, like Okanagan wine, is a candidate for a hedonic pricing analysis. Okanagan Wines are an interesting candidate for such an analysis because the Okanagan Wine Industry is a young industry, and as global climate patterns change, and wine production expands into newly receptive regions, many new wine-producing regions will have to face similar challenges in establishing themselves. Knowing how different characteristics of Okanagan Wines are priced may provide useful information for young wine industries in general. Waugh (1929) initiated the quantitative thrust of this type of study; he was able to calculate the implicit
prices for attributes (color, stalk size) of asparagus. Rosen (1974) developed the theoretical framework upon which much of the subsequent hedonic studies have been based. His paper also suggested an identication problem: are the implicit prices of attributes a reection of producer costs or of consumer preferences? Nerlove
(1995) tries to solve this identication problem in his study of the preferences of Swedish wine consumers. The Swedish wine market consists only of imports, and government importers x prices. Nerlove suggests that by using quantity sold as the response variable and treating prices as exogenous, under the conditions of

the Swedish wine market, he could isolate consumer preferences. We argue (like Schamel [2000] and Freeman [1992]) that the identication problem proposed by Rosen and raised by Nerlove does not apply in any signicant way to our study because a large proportion of Okanagan Valley wines are sold in BC (prices are chosen by the BC Liquor Distribution Branch to clear the market, reecting consumer preferences), and in the short run, due to the biological limitations of grape vines, and the various regulatory and scal hurdles that must be overcome, supply is effectively xed. Our argument assumes that the market for Okanagan wines is competitive and near equilibrium. Beyond his suggestions for resolving the identication problem, Nerlove also measures: acidity levels, sugar levels, and several chemical components, for which he nds some signicance with respect to their impact on prices. These objective measures are absent in most of wine’s hedonic pricing literature. The literature tends to disregards these types of chemical measurements for two reasons: because a vector of common objective and sensory attributes largely explain the variation in wine prices, and ultimately wine is an experiential good where consumers must make a purchase decision using attributes that are identiable before consumption. Chemical measurements that inuence taste or cellaring potential are expensive, and they are well proxied by sensory and cellaring potential ratings – ratings for which data are cheap and plentiful. Like many young wine producing regions, the Okanagan produces wines which comprise a segment of the wine market for which cellaring potential is not likely to inuence price. For this reason, we omit this measure in our pricing function. The most well known hedonic study of wine prices is Orely Ashenfelter’s study (1995) on the price of vintage Bordeaux wines. It was made popular by its results and implications: statistical methods can outperform experts in predicting future wine prices. Ian Ayres’ discussion of Ashenfelter’s ndings in Ayres’ book Supercrunchers (2008) and Robert Parker’s vehement denunciations of the use of statistical methods in wine price predictions have both contributed to the popularization of hedonic wine studies. In the Okanagan valley, as it is worldwide, wine is a growing industry of increasing importance. Even as some other agricultural producers in the Okanagan ounder or abandon their crops, wine and grape producers are expanding. While the price determinants of BC wines, and VQA certication specically have been examined (Rabkin and Beatty, 2007) there has been no attempt to identify attributes that differentiate BC wines with respect the nature of their appellation or their business association membership. Estimation of these attributes is missing from the literature in general. While any quantitative or qualitative measure that enters into a wine consumer’s purchase decision is a candidate explanatory variable in a hedonic pricing function, it has been established in the wine literature that objective attributes provide more explanatory power with respect to prices than subjective (experiential) attributes (Lecocq and Visser, 2006). The logic is clear: a consumer is unable to judge, on a first purchase decision, the experiential qualities embodied in the wines they are choosing from, so they must rely on objective qualities that can be gleaned from the wine’s label information, or reputational information that they know a priori. We follow this objective model in this investigation, and we focus on information thatis present on a wine’s label, including the naming information, the wine’s physical presentation (volume), and we include a variable reecting a winery’s performance at a local wine festival to proxy for colloquial reputation.

Conclusion
A hedonic pricing function is estimated for wines produced in the Okanagan Valley of British Columbia. Our model builds on the traditional models (e.g. Lecocq and Visser, 2006) that focus on objective attributes, by including reputation effects, aspects of name choice, and business association membership. While winery name choice is not found to inuence price, it is important in explaining a winery’s reputation score (medal winnings): departures from traditional appellations contribute negatively, while references to the locality contribute positively. Higher reputation ratings do not, on average, contribute to higher wine prices for a winery. Business association (BA) membership is a complex phenomenon in the Okanagan wine industry. In response the NAFTA, the BCWI, a government initiated and supported association, was created to help shift local wine production to up-scale products (Kingsbury and Hayter, 2005). Since then, two other BA’s in the Valley have arisen privately, the ABCW and the OWFS. While VQA certication continues to provide BCWI members with a premium (Rabkin and Beatty, 2007) on VQA certied bottles of wine, on average, wineries

aliated with the BCWI receive a discount while wineries aliated with the ABCW and OWFS receive premia. Interestingly, BA membership is also important in explaining reputation scores. BCWI and OWFS membership contribute positively, while ABCW membership contributes negatively to reputation scores. Location is found to be important for both price and reputation, though the marginal contribution of specic localities can be different (even in sign) with respect to price and reputation. Of particular consequence for local wineries, is a costless decision to label a Syrah grape in the Austrialian tradition: Shiraz – as many Californian wineries do – this creates a 39% discount over a comparable bottle labeled Syrah. Okanagan Valley Wineries, and young wine industries in general, should be cautions in the development of their industry. What has worked for one industry does not necessarily carry over to another, and what creates success at wine competitions does not necessarily create success at the checkout counter. The results of this research imply that a consumer’s purchase decisions with respect to wine are complex. The signicance of naming, awards
and geography suggest that selling wine is about much more than the wine itself, it is about trends and cache. Further investigation into the particularities that differentiate wine prices, beyond the wine itself, would be useful in an effort understand the complex package of attributes that consumers value when they purchase a bottle of wine.

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Wine Review: Orofino 2007 Beleza, Similkameen Valley, British Columbia

The Blend:  68% Merlot, 15% Cabernet Sauvignon, 13% Cabernet Franc, and 2% Petite Verdot

Great Wine, Bad Photo

Aging: 16 months in new French and American oak.

Alcohol: 14.3%

Price: $34 from the winery which is sold out.  I sampled it at The Salt Tasting Room, a wine bar for $75 a bottle/ $15 a glass

On the nose: Blackberry, Pepper, Vanilla

The palate:  Amazing rich dark fruit, blackberry, cherry.  Solid tannins with a cocoa, espresso vanilla finish.

I was very surprised by this wine.  It actually blew me away.  Complex and rich, solid tannins, good fruit structure without being too fruit forward or ripe.  Nice oak, without being over 0aked.  Very well balanced.  As a 2007 right now, it’s a little young and tight, but it opens up nicely in a relatively short period of time, you could probably hold on to this wine for 10 years, but as it tastes so good I doubt whether anyone will do that!  It paired well with my peppered salami and aged Parmesan Reggiano.  For those of you into points, I give it 92 points.  I really look forward to trying it if I can find it again next time I am in Vancouver.