In San Francisco, all that techie money is good news for wineries
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Regular readers of this blog know that I have expressed some puzzlement over the years at the proliferation of expensive, high-end wines–mainly Cabernet Sauvignons and Bordeaux blends from Napa Valley–that are “lifestyle” wines, that is, the creations of wealthy people who made their fortunes elsewhere and now want to join the most exclusive vintner’s club of all: those who can say that they own a Napa Valley winery.
My curiosity has been how these brand-new brands can possibly succeed when they cost triple digits and yet have no provenance at all–provenance being a known history of proven performance AKA a track record. I once counted all the Cabs I’d reviewed in a year’s period costing over $100 retail and by the time I reached 400 my eyes had glazed over. That’s a lot of expensive wine and automatically leads to the question: Who’s buying it?
The conventional wisdom is that it doesn’t matter who’s buying it: these proprietors are rich enough to go for years losing money. After all, what price lifestyle? There is, however, now a bit of a hint that the audience for these wannabe cult Cabs may be coming from an unexpected place.
The evidence lies in the newly-rich techies for which San Francisco lately has become famous. There’s a lot of money being made, fast, in Northern California. Last year, 2013, was “a banner year” for initial public offerings, the biggest since 2000 (immediately preceding the dot-com collapse); more than $54 billion was raised, more than twice as much as in 2008 when the Great Recession started, and believe me, a lot of that money is washing around San Francisco, which is enjoying (if that’s the right word) its greatest glory days since, well, maybe since the Gold Rush.
San Francisco know it well, and is trying to adjust to the news. Now, even New York City has taken note, a little jealously, it seems, since the Big Apple is not used to having its supremecy challenged as the nation’s leading financial and cultural center. This article, from New York magazine, even compares San Francisco to “West Egg circa 1922” (i.e. the Great Gatsby, the Roaring Twenties); Fitzgerald’s North Shore mansions and balls have become San Francisco’s downtown condos with split-level swimming pools and personal masseurs. What particularly has grabbed New York’s attention are the “Upscale restaurants [that] pop up at regular intervals, each with a more elite clientele” chowing down on “kombucha pairings with sustainable-seafood dinners.”
I don’t think one can say precisely when this Age of Surfeit started, but for me it was 2011 when the launch of Saison signaled that something was up. A few months later, Josh Sens, the restaurant writer at San Francisco magazine, wrote this glowing review of the $498-per person chef’s 22-course, 18-wine menu. (Confession: at that time the restaurant invited me for a full dinner. It was very, very, very good!) Josh wrote about the “hyperdevoted food pilgrims, IPO millionaires, and other assorted members of the city’s discerning gourmand club” who were flocking to Saison, proof enough that the Recession–which hit San Francisco hard in 2008-2010, forcing the closure of many restaurants–had ended in the City by the Bay, even as it was tightening its grip on other parts of the country.
It wasn’t just the price of a meal that caught my eye: it was Saison’s locale, in a disreputable Mission District neighborhood far from the glamour of the Financial District and even from the shabby-chic of South of Market. Saison seemed to glory in its downscale digs; the come-as-you-are dress code blared that, no, you’re not at Fleur de Lys anymore.
It is not difficult at all to conjecture that these newly-rich folks who can afford a splurge at Saison also are on the receiving end of these rare, limited quantity Napa Cabs that most people will never experience in a lifetime. Somebody knows somebody who knows the owner, and gets a bottle. Friends go out to dinner and drink it–perhaps at Saison. What began as a little story ends as buzz. Everybody wants a bottle–for now. But at this level, the consumer is incredibly fickle. Today, winery “X” is a star. Tomorrow, somebody meets somebody who’s friends with a different owner, and procures a different bottle; the cycle begins a new. Only a few of these rare and expensive wines will make it in the long run: this is Darwinian natural selection among wines, as it is among living things.
It’s increasingly apparent that well-paid Millennials, at least in San Francisco, are looking for upscale new drinking experiences and willing to pay for them. Check out this article, from the March 24 Bon Appetit, which argues that Milllenials “love wine…even more than their parents love wine.” They love it “because drinking it is classy and it makes them feel sophisticated.” Of course, a Millennial making $60,000 isn’t going to buy expensive Napa Cabernet. But lots of San Francisco Millennials are making a lot more than that: median family income in The City is $91,037, and keep in mind that a lot of those “families” consist of unmarried persons without kids, so they have a ton of disposable income. And their salaries are only heading higher: the San Francisco Business Journal reports mobile app developer starting salaries at $135,500-$195,120.
Thiis New Money has got to be a good thing for a local wine industry that, only a few years ago, looked teeter-tottery. If I were doing outreach on behalf of wineries, I would make San Francisco the Mecca of my evangelism, and I’d go after the Millennials where they live, play and hang out, starting with online.