Phd Wine Education

Dear Mr. Buffett,

Congratulations on your purchase of Empire Distributing, and roughly 25% of the wine and spirits distribution business in Georgia and North Carolina that came with it. And welcome to the wine and spirits world — we need more enlightened business people in this industry.

I can’t say that I’ve followed your career with precision, but I’ve read a decent amount about you, and try to read the Berkshire Hathaway Annual Report every year. After all, I’m one of your shareholders, and I learn a lot from you and Charlie Munger.

In everything I’ve read, you strike me as someone who appreciates fairness, competition, and above all, the power of the marketplace to improve everyone’s situation if it is left alone to work well. Given the choice between heavy handed regulation and deregulation, you strike me as a deregulation kind of guy, especially when it frees consumers to vote with their dollars.

I’m sure it hasn’t escaped you that the wine and spirits distribution marketplace that you just bought into is seriously screwed up. For instance, we can start with the fact that you can’t get any more than 25% of the market share in Georgia because of their particular state liquor franchise laws — regardless of whether you offer better products, better service, and better prices to your customers.

Likewise you’ll find yourself hobbled as you move into other states, and completely prevented from moving into others, thanks to state-run monopolies on liquor distribution, sweetheart deals that are designed to keep out competition, and all manner of regulations that will keep you from being able to serve wine and spirits drinkers that would certainly like to broaden their horizons and have access to different kinds of products that you might offer.

Of course, those facts can’t have escaped you any more than the fact that in the past 20 years we’ve gone from roughly 7000 different wine and spirits distributors in this country to only 700. I’m not sure whether that was part of the growth potential you saw in Empire when you picked it up this week, but I imagine it factors in somewhere.

So let me get to the point. I think you now have the opportunity, and the obligation, to get on board with those of us who think the time has come to throw out the prohibition-era, antiquated laws we’ve got on the books and put something rational in place that benefits both consumers and business owners like yourself.

In short, I urge you to renounce membership to the Wine and Spirits Wholesalers of America, and instead support the efforts of those like Free the Grapes and the SWRA who are trying to turn this country into a real wine and spirits marketplace. We need a marketplace where companies can compete to meet consumer demands without meddling by state bureaucracies and cronyism. We need businesses more interested in growing the overall market, than using scare tactics and BS to protect their little slices of it.

All the analysts say that with this purchase you’re betting on the Millennials as the largest wine drinking generation in decades. That seems like a pretty good bet to me. And since these young wine drinkers are more interested in a diverse, wide range of products and services, I hope you’ll join those of us who want to expand choice and buying opportunities in the market.

Raising my glass to you,

Alder Yarrow

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I consume a lot of wine news. When I say a lot, I mean literally almost everything that’s published for free on the Internet about wine “passes by my desk” courtesy of Google Alerts, Technorati, a massive collection of RSS feeds, and more. Increasingly I get the opportunity to see how wine stories develop and spread through the Web’s news outlets, and it’s quite amazing to watch.

Recently I’ve been watching with fascination as the mainstream press does its usual unraveling of some recently released research results focused on wine drinking in women and weight gain. Specifically, I’ve been giggling at the complete lack of understanding we seem to have of the difference between correlation and causation, combined with the creative liberties of headline writing:

Moderate Drinking 'Can Keep Women Slim': The Chosun Ilbo

Glass of wine may keep women from gaining weight: New York Daily News

Bottoms up for skinnier bottoms: Independent

Women Who Consume Alcohol Gain Less Weight: Study: Huffington Post (blog)

A drink a day could help keep the pounds away: Globe and Mail

Cheers, Ladies! A Drink A Day May Keep the Pounds Away: ABC News

Moderate Drinking Linked to Weight Control: WebMD

Red Wine Lessens Obesity Risks In Females: Oneindia

Moderate drinking may curb pounds on women: Boston Herald

Women who drink moderately less likely to gain weight: USA Today

Glass Of Red Wine A Day May Keep Pounds At Bay: NPR (blog)

Study: Women who drink are less likely to gain weight: CNN

Study: Women who drink moderately tend to gain less weight in midlife: Los Angeles Times

Study: Women Who Drink Tend to Be Thinner: TIME

Why a glass a day WILL keep the doctor away…: Daily Mail

Women who drink more gain less weight: Washington Post (blog)

Alcohol 'can help women stay slim': The Press Association

Women who drink wine gain less weight?: Toronto Sun

Light Drinking Might Help Keep Women Slim: BusinessWeek

Wine may help women keep weight in check: Reuters

Moderate drinkers gained less weight than abstainers: Boston Globe (blog)

A tipple a day keeps obesity at bay: study: AFP

Women who drink wine 'less likely to gain weight': BBC News

Women who drink gain less weight than teetotallers: CTV.ca

Cheers! Wine refines the waist: Herald Sun

Wine isn't fattening, ladies!: Hindustan Times

Red wine drinkers 'gain less weight': Ireland Online

Wine doesn't make women fat, report claims: Telegraph.co.uk

Female wine drinkers at lower obesity risk: Times of India

Drink up girls: wine isn't fattening: Times Online

Wine: The new weight-loss miracle?: The Week Magazine

Wine Doesn't Make You Fat: That's Fit

Cocktails ward off the bulge: Science News

Light-to-Moderate Drinking Keeps Women Slim?: ShortNews.com

Alcohol & Weight Gain In Women: NewsChannel 9 WSYR

Regular and Sensible Alcohol Intake can Curb Obesity: Recent Study: eYugoslavia.com

Red alert: A few glasses of wine are good for your hips: CultureMap

Study shows women can control weight with alcohol: Examiner.com

Drink wine for slim waistline: ABH News

Women Drinkers Less Likely To Gain Weight: Visit Bulgaria

Another addition to Moderate Drinking Benefits: Weight Control: NY Breaking News.com

Moderate Drinking Could Control Weight: Tech Jackal

Daily Buzz: Want to Stay Thin? Have a Drink.: Woman's Day (blog)

Occasional drinking may help women keep weight down: 6abc.com

Study: Some Drinking Women Less Likely To Gain Weight: Ozarks First

How could boozing help you lose weight?: New Scientist (blog)

Female Drinkers Less Likely To Gain Weight: WBAL Baltimore

Females Who Drink Moderately, Gain Less Weight: Study: TopNews United States

Study: Women who drink some may weigh less: WHDH-TV

Study Shows Women Who Drink Wine Lose Weight: Portfolio.com (blog)

Drinking alcohol prevents overweight/obesity?: Food Consumer

Moderate drinking keeps women slim–study: The Money Times

Wine isn't fattening for women, study finds: decanter.com

Female Moderate Drinkers Gain Less Weight Over the Years: TestCountry.com (blog)

Drinking Alcohol May Keep You Slim: dBTechno

Alcohol Keeps the Weight Away: ToTheCenter.com (blog)

Light To Moderate Drinking Linked To Less Weight Gain In Middle Aged Women: Medical News Today

Womens' obesity risks lowered with daily drinks, study finds: McClatchy Washington Bureau

Alcohol May Help With Weight Control: FitSugar.com (blog)

Women Who Drink Moderately Gain Less Weight Than Abstainers, Study Shows: AHN | All Headline News

Wine Does Not Lead To Obesity, Research Reported: TopNews United States

Lose Weight…By Drinking Wine?: CNM News Network

Moderate alcohol link to less weight gain: Irish Health

Wine consumption reduces fat accumulation in females: TopNews

Female wine drinkers have lower obesity risk: Celebrities With Diseases

Drinking Alcohol Can Slow Weight Gain In Women: Best Syndication

Wine Keeps Women Slim, Study - Red or White Diet?: National Ledger

Moderate Drinkers Gain Less Weight, but Not Advised for Diet Plan: eMaxHealth

To your health! Women who drink red wine less likely to get fat: Examiner.com

Women who drink: Investor's Business Daily

Women Who Drink Gain Less Weight: Bru Direct

Drinking Alcohol May Help Women Stay Thin: AOL News

Women Who Are Moderate Drinkers May Gain Less Weight Than Those That Are Sober: BETTER Health Research

Study Finds Women Who Drink Wine Gain Less Weight: WDIV Detroit

Red wine may help women shed pounds: 14WFIE.com

Drinking Wine May Help Women Keep Their Figure: eFitnessNow

Alcohol can affect woman's ability to lose weight: ABC7Chicago.com

Alcohol May Help Fight Weight Gain In Women: Wine Spectator

Women Who Drink Gain Less Weight: PsychCentral.com

How to Lose Weight While Drinking: Tonic

Wine and women's weight: NHS Choices

Study Finds Wine Won't Make Women Fat: RedOrbit

Women Who Drink Moderately Seem to Gain Less Weight: CalorieLab Calorie Counter News

Women Who Drink Moderately May Gain Less Weight than Non-Drinkers: The Ledger (blog)

Moderate Drinking in Women Linked to Less Weight Gain: Medscape

Study: Red Wine Keeps Pounds Off: myGLOSS

Women Who Drink Gain Less Weight: New York Times (blog)

Wine 'unlikely to make women gain weight': Netdoctor

More good news for wine drinkers: The Economic Voice

Less weight gain by moderate-drinking women: CBC.ca

Laughable. Strange. Scary. I don’t know who said it, but it’s true that a little bit of information can be dangerous.

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Apparently, organic wines taste better but consumers don’t think they’re worth as much money as conventionally produced wines. At least, that’s a plausible interpretation of a study conducted by a UCLA professor and her graduate student that was recently published in Business and Society, the official journal of the International Association for Business and Society.

Professor Magali Delmas and PhD candidate Laura E. Grant conducted an analysis of 13,426 wines from 1,495 California wineries for eight consecutive vintages from 1998 to 2005. The two tracked correlations between the scores of the wines, their prices, whether they were made from certified organically grown grapes, and whether the wineries broadcast their organic certification on the label.

An overview of the study published last week in Science Daily suggests they found some very interesting results. Wines made with organic grapes during the time period they studied scored higher in the Wine Spectator by a point, on average, than wines made with conventional grapes. Whether this means, in fact, that organic wines taste better is open to some debate, but the statistics seem quite clear.

Perhaps the more interesting finding, however arose when the researchers looked at the price of those wines that were “eco labeled” and those that were not. The wines that chose to prominently display their certified organic status sold for 7% less than those that didn’t. The prices used to define this gap were the suggested retail prices published alongside the scores in Wine Spectator magazine.

Assuming you believe in the economic principle that prices are set in the marketplace and reflect supply and demand, the conclusion you might draw here is that there is a significant negative value to labeling your wines as organic. Meaning, in short, that consumers don’t want to pay as much for wines labeled as such.

Economists are often let of the hook, understandably, for explaining exactly why things are the way they are. Exactly why an eco-label is a penalty rather than a plus hasn’t been determined, but I think some of it may have to do with the residual damage that early organic wines did to consumer perceptions when they hit the market in the 1980s. Many of these wines were very poorly made, and then their quality was further compromised by the lack of added sulfur dioxide, which meant that many consumers opened their bottles to find the wine fermenting for a third time. A rash of lousy wines prominently labeled as organic created a sweeping set of negative connotations that apparently the wine industry nor the American consumer has yet to leave behind.

For now, the right approach as an organic winemaker seems clear. Farm your grapes organically to make better wines, but for heaven’s sake, don’t tell your customers.

The study summarized in Science Daily was originally published about two years ago as a working paper by the American Association of Wine Economists.

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