Musings and Memes

Alex over at Usable Markets is suggesting a wine rating system that would mimic the P/E system used with securities, called P/T.

He mentions that "One solution might be to faithfully display ratings for wines that have been evaluated, including those with bad ratings. Sellers, however, are unlikely to do this."

Actually, Amazon displays rankings for their products, good or bad. Stock brokers that provide quote data on securities display analyst and Morningstar ratings, good or bad. As a business owner, I don't want to hook you up with a product that you (or apparently many others) aren't happy with anyway, so it's just good business. You wouldn't recommend a bad wine to their face, would you?

The Grapes of Math

The proposed P/T system would divide the price of the wine by its rating with the thought that a lower ratio would be better; i.e. a $10 bottle of wine with a 92 rating would be a better value than a $100 bottle of wine with the same rating.

Problem is, a $10 bottle of wine with a 60 point rating would still have a lower P/T ratio than a $20 bottle with a much higher score. I don't know about you, but I'd shell a few extra dollars to get an "Outstanding" wine vs a "Below Average"

Cheap Donuts

Extending this example back to securities, its the same as saying Krispy Kreme is a better value than FedEx. KKD has lower reviews, but its a 10th of the cost.

Also, FDX has the lower P/E in this example.

Securities also get ratings and reviews, similar to wine, however they're done by analysts. These reviews are aggregated on a 5 point scale (1 is "buy", 5 is "sell").

If a particular wine scored highly across 3 reviewers, its average review would score higher than other wines having mixed reviews. Having this data available would be helpful for online shoppers. If retailers hope to sell more wine online they need more ratings and reviews, if not provided by publications, at least by the users themselves. I've requested that Peapod add ratings to the wines on their site, as all you have to go by is price alone (no vintages listed either)

Drinking and Driving

The other thing to keep in mind with this comparison, is that unless you're a wine investor, in which case you actually would be interested in the true "value" of your bottle of wine, drinking wine can be lumped in with certain luxury goods. People purchasing $100k cars (depreciating assets) with 10 MPG are hardly interested in value, unless they are car collectors.

More Resources

• Wine-rating system is not improving with age, IHT
• Are ratings pointless? The highs -- and lows -- of the 100-point scale, SF Chronicle
• Cork'd
• Wine Library TV (think Jim Cramer meets Joe Pesci)