Wine Talk

Snooth User: MarioRobles

Price/Score Ratio Formula for Wines

Posted by MarioRobles, Oct 13, 2009.

I am not a mathematician but I wonder if there is a formula to obtain a value rate using price and scores (100/100).
I.e. Wine A costs $20 and gets a score of 90 points and Wine B costs $45 and gets a score of 90 points as well; is there a formula that can tell me (mathematically) that the value of Wine A is higher?

I am sure one of you may have your "home-made formula"

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Replies

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Reply by dmcker, Oct 13, 2009.

Ah, but you are assuming that the 'ratings' are mathematically pristine, precisely standard and on a universal scale for every different type of wine... ;-(

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Reply by Jimmy Cocktail, Oct 13, 2009.

Unfortunately, dmcker is correct. Ratings are highly subjective, based on the perceptions of the individual tasting the wine. The best formula out there is still taste, taste, taste.

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Reply by Philip James, Oct 13, 2009.

Snooth uses a formula like that for the recommended wines (it uses snoothrank and is weighted by price), but some people value the $'s higher than the rating, and vice versa, so its quite subjective. We'd make something like this prominent if we thought everyone would agree on the formula.

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Reply by chadrich, Oct 13, 2009.

Yeah, have actually tried this while helping some friends launch a wine consulting business. Virtually impossible. In your example above, it's clear that A is a better value. But what about when A costs $20 and gets a 90, but B costs $45 and gets a 95? How much are those extra points worth? Is the extra $25 too much, a good bargin, or just right? And I'd suggest the difference isn't linear (ie moving from 85 to 90 is likely worth less than moving from 90 to 95).

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Reply by dmcker, Oct 13, 2009.

But, chadrich, isn't that the nature of luxury markets in any line of goods? Moving from 95 to 99 always costs much more than moving from 75 to 95...

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Reply by chadrich, Oct 14, 2009.

Oh, I completely agree. I probably wasn't clear in what I was trying to say. Was just pointing out that it makes designing any sort of comparison/price:value formula that much more complex. In addition to somehow correlating points to dollars, you'd also have to devise a sliding scale, as a point of movement in the high end of the range would need to have a higher dollar value than a point of movement in the low end of the range. (Hmmm...not sure if that made it any more clear or not...)

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Reply by Gregory Dal Piaz, Oct 15, 2009.

I am always surprised at how much those last 3 points can cost. 98,99, the magical 100.

One thing that I find fascinating is that different markets value these ratings differently, and it's not necessarily demand driven.

For example take a look at three Robert Parker 100 point wines, and I'm not talking about any of his associates which are also valued differently.

The 2005 Deus ex Machina Chateauneuf du Pape = +/- $400($75 0n release) 540 cases

2004 Chapoutier Ermitage le Meal Blanc= +/- $ $250 ($250 on release) 266 cases

2005 L'Eglise Clinet =+/- $700 ($260 on release) 1000 cases.

So there are 100 pointers and there are 100 pointers.

C'est la vie. I have always said that I am most impressed with wines that got 88 to 90 Parker points. With grade inflation that may mean 88-93 points, but I am lucky that way I guess.



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Reply by kylewolf, Oct 15, 2009.

It is still in the works, but I am modifying a version of Baye's Theorem, an equation used to measure statistical significance. While it still needs tweaking and modifications for vintage vs region, I have put it through a few examples, and the only exception in the equation is for 100pt wines.
I have a meeting to go to, but I will try to post some of the examples later if anyone is interested.

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Reply by kylewolf, Oct 15, 2009.

Baye's Theorum
p(H/E)=(p(H)*p(E/H))/((p(E/H)*p(H) )+(p(E/notH)*p(notH) ) )

p(H)= 1/price (ex. $45, 1/45=.022)
p(E/H)= average rating as a decimal (ex. 95pt=.95)
p(E/notH)= 1-p(E/H) (ex. from above, .95, p(E/notH)= .05)
p(notH)=1-p(H) (ex. from about, .022, p(H)=.978)

For our purposes, this can be equated to

probable value=((1/$)*(pts/100))/(((1/$)*(pts/100) )+((1-1/$)*(1-pts/100) ) )

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Reply by kylewolf, Oct 15, 2009.

for example, lets take the situation put forth by chad rich, a $45 95pt bottle and a $20 90pt bottle.

the equation will give you a number between 0 and 1, the closer to 1, the better the value.

the $45 bottle, comes out to a value of .3174
the $20 bottle, comes out to a value of .3214

now, while the two bottles are VERY close to being the same value, the $20 bottle is a slightly better deal when compared to the $45. My next step in altering the equation is to give a gradient where the consumer can make a difference in the value based on their preference of price vs pts.

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Reply by MarioRobles, Oct 15, 2009.

Kylewolf,
can you substitute the formula with values? I can get it right to the .3174 & .3214 values that you have there...

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Reply by kylewolf, Oct 15, 2009.

bottle #1,

p(H)= 1/$45, or .02222
p(E/H)= 95/100, or .95
p(E/not H)= 1-.95 or .05
p(notH)= 1-.02222, or .978888 (I put the equation into a graphing calc, so the rounding could change slightly)

value= (.02222 * .95)/ ((.02222*.95) + (.97778 * .05))
value= .021109/(.021109 + .048889)
value= .021109/ .069998
value=.3016
(sorry, I don't have my graphing calculator with me now, so my rounding is slightly different)

Bottle #2

p(H)= 1/$20, or .05
p(E/H)= 90/100, or .9
p(E/not H)= 1-.9, or .1
p(not H)= .95

value= (.05 * .9)/((.05 * .9) + (.95 * .1))
value= .045/(.045 +.095)
value= .045/.14
value= .3214
(numbers were easier to deal with, so it didn't require the rounding)

Now while this is good to compare wines next to each other to show which is the better deal, I do not know if this equation can say that a wine is a certain level of a deal by itself...like bottle two, .3214, is it a good number? I can't really say. according to Baye's Theorum, it would state there this is a good value, 32.14% of the time. but that doesn't really go with what we are looking for.
But to make sure, lets compare this to a wine I purchased today, Yalumba Shiraz/Viognier 2006. Price $13, 91pts
(also if you have more than one value for pts due to different scorers, you can either avg them, or you can do them separately and do a standard deviation).

p(H)= 1/13, or .0769
p(E/H)= 91/100, or .91
p(E/notH)= 1-.91 or .09
p(notH)= .9231

value= (.0769 * .91) / ((.0769 * .91) + (.9231 * .09))
value= (.067) / (.067 + .083)
value= .067/.15
value= .447

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Reply by Gregory Dal Piaz, Oct 16, 2009.

Wow, what a strange, yet fascinating, way of thinking about wine purchases.

Of course if you don't like Shiraz/Viognier your SOOL.

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Reply by kylewolf, Oct 16, 2009.

I think this would be an easier application if you plugged it into an excel spreadsheet. there you could just put in the pts and price, the rest would be taken care of.

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Reply by dmcker, Oct 16, 2009.

Hate to repeat the obvious, but who's giving those ratings??? Not every rater is the same, so one person's ratings can't be worth the same as any and all others. And any of them can be inconsistent even within the set of their own ratings of similar, or even the same, wines.

So you're playing with arbitrary, inconsistent, constantly-massaged-and-manipulated, subject-to-inflation, extremely subjective numbers...

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Reply by kylewolf, Oct 16, 2009.

so do you not consider points at all when selecting new wines?

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Reply by kylewolf, Oct 16, 2009.

apologies, I realized that sounded a little flippant. I have to agree that yes, these numbers can be inconsistent, and perhaps massaged, but I would not go so far as to say arbitrary. There are guidelines (albeit, ill-formed and vague), so there are reasons why wines get certain numbers.

The recent inflation of scores, I believe may have to do with the increased technology used in making wines and that may be evening many of the playing fields, so I don't know how you want to look a that.

Theoretically, the tasters are ranking these wines blind, so manipulated numbers, ideally, would be minimal.

Unfortunately, this is currently the only unified (and I use the term loosely) rating system we have. So we have to use what is made available to us
.
Now what would be interesting is what everyone here thinks WOULD work for a more consistent, accurate and fully encompassing grade scale for wines. I won't hijack this thread with that line of thought, but perhaps a thread sometime soon.

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Reply by Philip James, Oct 16, 2009.

Wine Blue Book's whole model is about comparing wine scores with price: http://winebluebook.com/

I dont know it that well, but think there's some utility to comparing a rating to a price. If I like California Cabs and i can get a well ranked one for $20, then thats useful to me

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Reply by gregt, Oct 16, 2009.

Not really and FAR more important is the person doing the rating and the region.

For example, I am not a math teacher. I look at some math textbooks and I state with certainty that book A is better than book B. What are my criteria? Well, maybe it's got fewer diagrams or it's less complex or it has more examples or the font is bigger. Regardless, if you apply your analysis to my scores, you will come up with a result. Whether it's worth a damn or not is a different question.

So let's say you apply your analysis to a critic's reviews of Bordeaux. Let's stipulate that he knows Bordeaux as well as any other critic. So he might know for example, that some wine will not be showing well right now but he knows the region and understands that it will be great in 10 years, and scores it accordingly. In fact he stated precisely that about Haut Brion yesterday. You buy it based on your formula. Do you know to hold it? He gave the 2005 something like 98 points but a couple weeks ago in a blind tasting, gave it 85 because it's not good right now.

Now let's say you're happy with the scores, whatever they are made of. You apply the same formula to his ratings of Bierzo, of which he knows nothing at all. Can you have any confidence in any prediction for ageworthiness? If that's worth 10 points, you have to discount it entirely. Do you know to do that?

Then let's say you pick another critic. Parker is accused of only liking certain types of wine, but I think his tastes are far more catholic than are the tastes of 90 percent of his critics. So let's say the critic you're choosing to evaluate doesn't like some style of wine and consequently rates it low all the time. Maybe you like that particular style. What do you do?

And then let's throw in the question of tasting method. Did the critic evaluate the wine blind or was it poured for him and was he talked through it by his good buddy Ivan Importer, who incidentally treated him to a great meal the week before?

I'm lucky. I taste more wine than you do so I'll select based on something I've tasted. However, if I don't know the wine, I'll pick it up based on my curiosity regarding the area, the vintage, the producer, or the grape. Sometimes I buy based on the recommendation of someone I trust and sometimes that person is actually a critic. But even if I trust the critic, it does me no good at all to parse his scores and ratings if they apply to wine I just don't like. So if you really don't like the wines of Tuscany, what good does it do if someone gave those wines scores of 98 and they only cost $20?

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Reply by kylewolf, Oct 16, 2009.

GregT, you do make exceptionally good points. I want my equation to evolve eventually to include aging. But that will take a great deal of time and patience. And yes, I was basing my analysis off of blind tastings. I wasn't sure if critics gave increased pts for aging potential. I am also probably green about this, but I just kinda assumed that critics, who do this for a job, could give accurate representations of wine they do not enjoy, because they are judging the wines off what that particular type of wine should taste like...

My analysis is only a quick reference, I wouldn't expect it to be any more precise or be held to be any more accurate. I am simply working with what we have.

I apologize if you thought I was meaning that this is a perfected equation...It simply is a tool to utilize as a quick judge.
And you are right, it wouldn't matter if a Tuscany got a 98 at $20 if I didn't like Tuscans, I mean, I would buy it because it is a good deal, only to cellar until I have company who do enjoy Tuscans, but I wouldn't bother for myself.

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