Why Business is Like ... Wine Tasting

Or more specifically - Ashenfelter's formula linking the weather with wine vintages.

by Jennifer Harris
Last Updated: 31 Aug 2010

More than 20 years ago, wine enthusiast and economist Orley Ashenfelter made a discovery that greatly improved the quality of the wine he bought, but left him with few friends to drink it with. By analysing weather data from the wine-producing regions, he could predict the quality of the vintage before the grapes had fermented.

Britain's Wine magazine intoned: 'The formula's self-evident silliness invites disrespect,' and the wine industry's view of Ashenfelter ranged 'somewhere between violent and hysterical'. Dealers hissed at his presentation at Christie's. But the stark accuracy of his predictions could not be ignored and, gradually, his approach was accepted.

There are still business disciplines where intuitive expertise reigns over data analysis. Perhaps, like Ashenfelter, we should start asking if we can do better? Could the music industry talent scout be paired with a maths geek manipulating Excel models? Could we number-crunch our way to the next fashion industry trend? The data miners are already active in many parts of the business world, with Tesco's Clubcard and hedge fund managers' systematic models good examples.

There's plenty for statophiles to chew on, as many companies are drowning in numbers they haven't looked at yet. They might find a host of improbable relationships - like that between wine and weather.

- Jennifer Harris is director of JRBH Strategy & Management, www.jrbh.co.uk

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