Some lessons learned from the first decade of the 21st century
Hard to believe in just 37 days the first decade of the 21st century will end. Seems like only yesterday we were partying like it was 1999 (wait, it was 1999) and in a panic about the Y2K meltdown. Now here we are on the verge of 2010. In the blink of an eye, a decade has flown by.
It’s been ten years of discontinuity and discombulation for everything in America, and that includes the wine industry. I went back to review some things I wrote for Wine Enthusiast back in 2000, to see what we were thinking and talking about then. The wine market was, of course, robust in 2000, coming off the previous decade of up, up and away. In August of that year I wrote a column that reflected on the historical swings of the Bordeaux market over the preceding, well-documented two centuries. “Switch now from Bordeaux to California, and especially Napa Valley,” I said. “Many of the top wines, particularly Cabernet Sauvignon, have doubled in price since 1990…the price of many, if not most, expensive wines has got to come down, and will…If you don’t believe that the world’s most prestigious wines can suddenly, exuberantly collapse in price, just read ‘The Wines of Bordeaux’ and find out.” That book, by Eddie Penning-Rowsell, traces the sine curves that Bordeaux prices always have described.
The dot-com bust and Sept. 11 dealt blows to the wine industry, but nothing like the staggering knockdown that the Great Recession of 2008-2009 delivered. I still see “suggested retail prices” of $100, $150, $250 for certain Cabernets, but frankly, I don’t believe them. A winery owner can claim to be asking (and getting) triple-digits for his wine but that doesn’t mean he is. So I was right that prices would collapse, but it’s a prediction anybody can make, at any time, because sooner or later, prices always tumble. But that has never stopped certain people from trying to talk prices back up, as for example this article from Investors Chronicle, which argues that “the market for quality wine has enjoyed a rapid turnaround” and cites somebody from something called The Wine Investment Fund as saying that fine wine “has earned it[s] place alongside gold, equities, bonds and other assets in an investment portfolio.” We may forgive The Wine Investment Fund, which is based in London, Bermuda and Hong Kong, for hyperbole, since it’s hardly a disinterested party.
I asked, also in a 2000 column, the following question: “Have you noticed that wine is getting sweeter and softer?” Apparently, I had, although 2000 was a little before I remember actually becoming convinced that California wine had a real problem, namely lack of acidity and excessive residual sugar. Later that year I wrote a little story about Jess Jackson stepping down as Board Chairman of Kendall-Jackson, and quoted him as saying, “I’m seventy. I’m retiring.” Some retirement! But along less happy lines, at the end of 2000 I reported on the news that Robert Mondavi Winery had “extended its reach to a fourth continent, Australia,” with its announcement of a joint venture with Rosemont. In retrospect we can see that this really was an early warning sign of the winery’s impending demise, caused by the hubris of exalted ambitions. RMW’s actual death dragged on for another four years, but finally occurred in December, 2004, when the company was sold to Constellation.
Several conclusions can be drawn. Wine prices are down now, but unless this is the End of History they will rise again, pace Penning-Rowsell, although it could take a while for the high end to recover; there were eras when Bordeaux took decades to come back. Softness and sugariness remain stubborn problems in California wine, but there’s evidence that that trend-line has peaked, thankfully (although it’s a Dracula that threatens always to rise again from the grave). Jess Jackson happily remains with us, at the helm of a great wine company. And the unhappy experience of Robert Mondavi should be a warning sign to ambitious empire builders. What are its lessons? Be careful what you wish for because you might get it. The Devil’s in the details. The bigger they are, the harder they fall. Dot your i’s and cross your t’s. The fundamentals still apply as time goes by.
And speaking of the second decade of the 21st century
The world will have heard by now that Gary Vaynerchuk has won Wine Enthusiast’s “Innovator of the Year” Wine Star Award for WineLibrary TV. I am personally thrilled by the prospect of finally meeting Gary when we all gather, in black tie, at next year’s gala ceremony, at the New York Public Library’s 42nd Street branch. I feel like I know Gary from his comments on my blog, and he is obviously a force to be reckoned with as we head into the two thousand and teens. Congratulations to Gary and to all the Wine Star Award winners!