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More wine scams, this time in Berkeley

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We never saw this level of wine scam before. Now it’s Premier Cru, which had been a very well respected wine shop in Berkeley until their recent collapse. Coming on the heels of the Kurniawan scandal and others, Premier Cru’s problems raise a troubling question: Why so many of these wine Ponzi schemes and frauds?

My answer: The greed of some consumers, who see wine as a commodity investment.

Premier Cru was the go-to store in the East Bay for collectors who wanted that extra-special bottle. But, as so many of them are now learning, Premier Cru appears to have been selling wines they didn’t have, or selling the same wine twice, stalling buyers off who weren’t getting wines they had already paid for, and eventually ending up with “more than $70 million in unpaid debts.”

How the heck does a wine store achieve that dubious distinction? Simple: When it takes advantage of credulous customers who want to own trophy wines nobody else can get and think they have an inside track on getting them.

The regrettable seeds for this were a long time coming. I can speak only from my perspective of nearly 40 years watching the San Francisco wine market, of course, but in many respects the S.F. Bay Area has been the epicenter for this remarkable era of show-off wines. Even when I started, there was a cadre of collectors who wouldn’t touch anything but First Growths and Grand Crus. At first I thought it was because they were men of discernment and refined tastes, but I soon learned that that wasn’t it. They were label drinkers, pure and simple. I doubt if one in ten of them knew what he was talking about. But what they did know was that having a vertical of Mouton-Rothschild gave them a certain cachet in their crowd, and that’s the only thing that meant anything to them.

They weren’t bad people, just wine likers (I hesitate to say wine lovers) who’d gone astray. Something about the rarity and scarcity of these collectibles made them crazy with lust. These were the sorts of people for whom Premier Cru was a sort of nirvana. Whenever I was there—looking for some under-$20 value in Burgundy or Cabernet—I’d see them conferring with the floor staff over some missing vintage in their collection they just had to fill. They were the same sort of people I used to see at the old Draper & Esquin on Montgomery Street in the FiDi, back in the day. Snooty snobs—“snoo-snos,” I called them. I thought that was an unhealthy development in the world of wine, at least the world I inhabited, which was of people who truly loved and cared about wine, and had a curiosity about it that drove them to try new things from new places.

Sadly, this distorted psychological phenomenon concerning wine got worse during the Reagan years, when fast and easy money gave MBAs the ability to collect Bordeaux and Burgundy and cult Cabernets before their thirtieth birthdays. It seemed to level off in the 1990s, why I don’t know, but then, with the burst of wealth in San Francisco in the 21st century, it has returned, with a vengeance. People are not content simply to drink good, interesting wine anymore. They want the trophies, the bragging rights wines, the Fabergé eggs, and they’re willing to pay whatever it takes to possess them.

Well, that’s what happens when you have a critical mass of credulous buyers: unscrupulous dealers are perfectly happy to take advantage of the situation. The bubble gets bigger and bigger, until poof! It bursts, and the poor souls who entrusted these crooked businessmen get holding the bag.

Running a reputable wine shop is a wonderful career. Most wine shops are reputable. There are many I’ve been in that do a fabulous job. Unfortunately, this current atmosphere of show-off seems to be fostering some bad apples. But maybe, with the arrests, detentions and lawsuits ensnaring these Ponzi wine dealers, we’ll see less of this sort of thing going forward. I do hope so. I hope that everybody will come to see that wine isn’t an artifact for collection, much less investment, like a stock certificate. What a horrible way to see this noble, divine beverage, as the liquid equivalent of loot, to be bought and traded like pork bellies, or even worse: as the garish equivalent of a gigantic diamond pinky ring.

  1. Bill Stephenson says:

    I’ve been to this shop twice and both times declined to make a purchase. Their online catalog showed wines that were not on premises. Had I been able to purchase my desired wine in the moment ( I occasionally buy on impulse) they would have made a sale – but to be told I could pay now and they would ship it to me later – that’s no better than an auction site where I have no idea how it was stored and no control over how it is transported.
    The only thing I left there with was a catalogue and some wooden wine boxes from the back of the store.

    Side note, Steve. The cast ha thingy is screwing up again

  2. Dear Bill Stephenson, what is “The cast ha thingy”?

  3. My apologies for not checking the spell correct. (feels like a Monday)

    The “Captcha” code takes around 4-5 tries

  4. Yes, those Captcha codes are getting increasingly difficult to read. I guess it’s to make it harder for hackers, which is a huge problem. Sorry about that. But you wouldn’t believe the number of attempts hackers make to get into the back end of my blog–which would enable them to invade your computer! They’re from all over the world.

  5. I wonder if this isn’t an example of “affinity fraud” — where people who should know better fall victim to someone who exploits the trust engendered by their shared ethnic background, religion, social class, etc.

    Perhaps some “wine people” have a mistaken notion that other “wine people” couldn’t possible behave like common criminals?

  6. You are to be commended for writing a thousand words without ever mentioning the name of the proprietor who ran his store as an extension of his noblesse oblige lifestyle.

    As for Captcha, I now copy my replies because the first few attempts rarely go through and I have to start all over again. The Captcha is not hard to read, but either it or something else is making it hard to comment at times.

    OK, this is attempt two. The first one produced an error message and then went to place that said you were unknown even though I was here when I clicked on submit.

  7. Charlie, I hope you’re fine! I am so sorry for these hassles. I don’t know what to do about them. Before I had captcha, this blog was naked to hacking attempts. I didn’t want to go to a password but felt it was necessary. I hope you will always let me know if you have problems, and I will do whatever I can to resolve them.

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