The most interesting part of Silicon Valley Bank’s new report on the future of the wine industry concerns its predictions about Millennials. As Baby Boomers age and die off, Millennials will become the U.S.’s dominant wine purchasers, but “The big issue with millennials is they’re the largest buyers of international wines. They’re also really good with buying the discounted bottles,” said the bank’s founder, Rob McMillan.
International wines and discounted bottles. Hmm. That’s good news for South America, Australia and old Europe, and also good news for California companies like Cameron Hughes, Gallo, Bronco, The Wine Group and others who sell inexpensive wines. But what are the implications for high-end wine, particularly Napa Valley Cabernet Sauvignon?
They can’t be good. Millennials didn’t grow up worshiping at the shrine of Bordeaux, which is the model that Napa Valley mimics, and so far they [Millennials] haven’t given any indication they’re in the thrall of the cults. And why should they be? Millennials pride themselves on their independence. They’re not as hidebound as their parents, and they’re a lot more open to new experiences. Nor are they as hung up with matters of prestige and conspicuous consumption, which are two phenomena that–like it or not–are associated with the allure of cult Cabernet Sauvignon.
There are so many anecdotes about high-end Napa wineries having difficulty unloading product. Like the old saying goes, where there’s smoke, there’s fire. Triple-digit Cabs took a real hit during the Recession, and there’s no evidence that they’re recovering now. What I hear through the grapevine is remarkably consistent: retailers who traditionally dealt with expensive Napa wine tell me they can’t even give it away anymore.
Here’s a bullet quote from the Silicon Valley Bank report: “Today we find ourselves at a crossroads, one in which the younger consumer is being trained to believe luxury purchases should come with a discount, and wine is as good or even better coming from foreign sources. With Boomers hitting retirement age, we have a real question about the ability to increase wine sales when older generations who are willing to pay for a good bottle simply can’t consume the volumes they used to, and younger generations can’t afford a good bottle but could consume more.”
That’s an uh-oh moment for the cults. But there is a potential bright spot: “But as Millennials age if they develop the capacity (income) to buy wine, and if their appreciation for wine is strong as reported in the press, they will be the long-term growth opportunity we can anticipate in the business out past 2020,” McMillan writes.
That’s a big “if.” Actually, two big “ifs.” It means that a generation that grew up on Madonna, Pixar movies, Friends and the Internet is suddenly going to turn 40 (starting around 2022) and then develop an infatuation with Screaming Eagle, Colgin and Bryant. Exactly how is that supposed to happen? Why? Isn’t it easier to think it won’t? Besides, even if their income rises so high that they can afford triple digits for wine, why should Millennals restrict their appetites to Napa Valley? McMillan repeatedly stresses the “international” orientation of Millennials. They would look abroad for prestige wines, further eroding the market for high-end domestic wine.
Ever since I started visiting Napa Valley, in the late 1970s, it’s been clear to me that the vintners up there, who are a smart bunch, looked to Bordeaux as their model and inspiration. They wanted their wines to have the worldwide prestige of Bordeaux–and they also wanted Bordeaux prices. That tendency only grew more pronounced in the 1980s and 1990s. Today, it’s the prevailing model in Napa Valley.
But could it be based on a false assumption? That assumption was, if Bordeaux could do it, Napa can, too. However, history (and markets) are replete with singularities. Bordeaux came of age when good wine was scarce. Because the Bordelaise, and the Englishmen who drank their wines, were masters of the export trade, which was then a virtual monopoly of the English by the 18th and 19th centuries, Bordeaux became the lingua franca of great wine, for the wealthy white landowners who could afford it,
Do any of those conditions exist today? There is no monopoly of trade. Instead, we have free trade across the world, making it much more difficult for any one product or region to dominate the market. A few gatekeepers can no longer influence whatt everybody else drinks. And good wine is no longer scarce. It’s ubiquitous. You can’t swing a dead chicken without hitting a bottle of something tasty. Nor are most consumers any longer wealthy, white, or landed gentry. There also is the problem, in Napa Valley (to which I alluded the other day in this post) that Napa is not proving to be adept at new forms of communication. There’s a growing hideboundness affecting the culture up there. Of course, we do hear from the “Next Gen” of Napa winery families that they’re concerned about this or that, and intend to craft a message that relates better to average people. But this article, which appeared last week in the San Francisco Chronicle (and has been widely ridiculed, even in Napa Valley), suggests that the Napans may have an uphill battle in their quest for Millennial credibility
Have a great weekend!
“I know never to take a wine for granted. Drawing a cork is like attendance at a concert or at a play that one knows well, when there is all the uncertainty of no two performances ever being quite the same. That is why the French say, There are no good wines, only good bottles.”
This quote, from Gerald Asher, is pretty alarming, if you think about it: it means that you can take a bottle of whatever you think is the greatest wine in the world–I don’t care what it is, Romanée-Conti or Petrus or whatever–and be completely underwhelmed by it. How could this be?
The explanation is that wine is among the most psychologically complicated of all the world’s consumer products. By which I mean, subjectivity enters into your perception of it more than with anything else, with the possible exception of modern art. (The most subjective perception of things is, of course, a parent’s view of her child, but then, children are not consumer products.)
I’ve always been fascinated by the psychology of the enjoyment of high-end wine. I’ve tasted enough of the world’s most famous ones to assure you that there’s not that much of a difference between a fabulous, high-scoring wine and one that’s “merely” very good. The producers of fabulously expensive wines–in Napa Valley, Bordeaux or wherever–don’t want you to know this. They go to great lengths to prevent you from knowing it, and they go to equally great lengths to persuade the wealthy people who buy their wines that there really are quantum qualitative differences that justify their prices. And in this dual quest, they are aided and abetted by certain critics, in what we might call the producer-critic complex, in which both sides stand to gain by the perpetuation of the existing system. (I adapted this term from Pres. Eisenhower’s “military-industrial complex” remark in his Farewell Address.)
But really, most of the heavy lifting in this persuading is done by the buyers themselves. When they put so much money on the line, they have a psychological investment in finding the wine incredible. And, most of the time, they do. Notice I didn’t say the wine is incredible; I said they find it incredible. Big difference. In fact, what the wine is, is impossible to discern or define. The “thing in itself,” as Kant observed, is unknowable, because, even if it has a real nature, that nature is obscured in a welter of human expectations, thoughts, emotions, motives and conflicts.
This is precisely why alleged crooks like Rudi Kurniawan are able–for a time, at least, until they get caught–to get away with their counterfeit bottles. Even though the stuff being passed off as Romanée-Conti and de Vogüé obviously wasn’t, the suckers who bought it thought it was, because after all, (a) the labels said so and (b) they paid so much money for the bottles that their pride could not admit they’d been bamboozled. The kind of men (high-end “collectors” usually are male) who buy these rarified wines tend to have out-sized egos; they don’t suffer fools gladly, but neither do they suffer many intrusions into their inflated view of their own discernment. So Rudi was able to prey on them with their willing cooperation.
Thus we return to Gerald Asher’s wise dictum to “never take a wine for granted.” Each bottle in and of itself is a complete, indivisible reality. But, like all fragments of reality that we experience, it is nearly impossible to separate out what we, the perceiver, bring to the phenomenon, as opposed to what it is “in and of itself.” When I explain to wine novices how best to appreciate wine, the first thing I do is dissuade them from the stereotypes they’ve heard all their lives concerning “great wines.” There are no great wines, only great bottles. So lesson no. 1: Never take a wine for granted. Not a $700 one and not even a $7 one.
Am I part of the producer-critic complex? I have been. In this job, you can’t help but be part of something larger than yourself, unless you go entirely off the grid–in which case, my friends at UPS and FedEx couldn’t find me to deliver those samples. So, yes, I’m culpable. But I recognize it–I see the perniciousness that can result when critics who have given ultra-high scores to certain wines year in and year out feel that their reputations are on the line unless they continue doing so. What makes me different, I think, is that I give high scores to wines that aren’t on the A-list of cultdom, and so-so scores to wines that are. And the reason I do so is because in every case, they deserve them. Like Gerald Asher said, never take a wine for granted.
Grub Street, the San Francisco food blog, is reporting that “Masa’s, the fine dining staple opened by chef Masataka Kobayashi in 1983, is closing after 30 years.”
Masa’s is, of course, the Michelin-starred, legendarily expensive ($154 five-course wine-and-food tasting menu) restaurant, north of Union Square, that’s lured in generations of foodies. For sheer luxe, it’s had few rivals.
Founder Masataka worked at Auberge du Soleil before launching his eponymous restaurant. He was found murdered in 1984, a crime that has never been solved; subsequent chefs have been a who’s who of culinary superstardom (Julian Serrano, Ron Siegel, Gregory Short). Masa’s wine list was as celebrated as its food.
Why is Masa’s closing? Grub Street blames it on “formal, tablecloth’d fine dining [that] has gone out of fashion.” The San Francisco Chronicle’s “Inside Scoop” food columnist, Paolo Lucchesi, reports that the building’s owner “wants to install a more casual restaurant in the space.”
In San Francisco, many high-end restaurants have shuttered their doors over the years: Trader Vic’s, Stars, Charles Nob Hill, The Dining Room at the Ritz-Carlton among others. All were hit by changes in taste that made them victims in the highly-competitive restaurant world, which depends on fickle customers always looking for the next hot spot. In the case of Masa’s, the Great Recession provided the coup de grace that finally put Masa’s out of its misery.
In fact, the continuing effects of the Recession are hurting restaurants nationwide. On Friday, Nation’s Restaurant News reported, via Lewis Perdue’s News Fetch, that “Restaurant operators [are] downbeat as sales, traffic soften.” Of course, this doesn’t mean that high-end restaurants are on the verge of extinction. For every Masa’s that closes, a replacement opens: Hakkasan, The Sea by Alexander’s Steakhouse, Katsu. Local reviewers go wild, and those able and willing to afford them flock to their doors.
Yet you have to wonder, how long will they last? Ten years? Fifteen? Or, like Masa’s, thirty? These numbers seem highly unlikely; a restaurant’s life span is getting shorter, not longer.
Which brings us to the subject of cult wines.
I would imagine that the proprietors of cult wines, especially Napa Valley Cabs, like to think their brands will be around for a long time. After all, Lafite is still here after, what? 700 years? (“the estate was the property of Gombaud de Lafite in 1234” – Alexis Lichine)
But many a Napa cult winery is no longer as culty as it once was. We must assume that some of the famous names in Napa were hit hard during the Recession, and that it was only the owners’ deep pockets that enabled them to hang on. Their hope was that, with recovery would come improved sales, at traditional prices.
Yet are these expensive cults not the wine equivalents of Masa’s, “formal, tablecloth’d” wines that just may be out of step with today’s more casual approach? People, especially younger ones, are looking for things other than show-offy wines: they want wines of interest, of deliciousness, from all over the world, wines that are different and unique and that tell a story and are easy to drink with food. Above all, they want wines that are affordable. I believe that the weltanschauung of wine has shifted irrevocably, due not only to the Recession but to changes in America’s demographics. We are rapidly becoming poorer and less white, changes that cannot bode well for super-expensive wines. In a sense—and I don’t mean to get political here, but it’s just the truth—some of these cult wines are like the Republican Party, out of step with the mainstream of where America is going. That’s why they lost so badly in the 2012 elections, and that’s why cult wines may be endangered in the next ten or twenty years.
Some will survive and even prosper. Brands as powerful and embedded as Screaming Eagle and Harlan Estate likely are the Lafites of Napa Valley, and will be with us for a very long time (assuming their family ownership wishes to continue them). But I have to tell you, there are a lot of Masa’s in Napa Valley—wines that were hugely popular in their day, but are now increasingly anachronistic.
One of the things I’ve been puzzled about is how slow to embrace social media the so-called cult wineries have been in California.
I ask just about every cult proprietor I meet what they’re doing online, and the usual response is a shrug. Sometimes they’re not doing anything. Sometimes they don’t know what they’re doing, because they hired somebody to do it for them and they never even check it out. Maybe they have a web site that hasn’t been refreshed since 2009.
As far as I can tell, too often the proprietor’s attitude toward social media is sort of “I can’t be bothered.” It’s like they feel that going online is a form of peddling — a vulgar hawking of their product, like a late-night infomercial or a cheap clip-out coupon in the Sunday paper.
We now have some insight into this mindset via an article, “Luxury Brands Still Tread Lightly With Social Media,” that appeared in yesterday’s Forbes.com.
The headline telegraphs the main point. I love this quote from a fellow named Jean-Claude Biver, ceo of Hublot, a luxury watch producer (how about $19,500 for the Limited Edition 715.CI.1110.RX for men?). “When you are online,” M. Biver observed, Gallic nose upturned, “you are not exclusive anymore.”
You might wonder why a watch that costs nearly twenty grand wouldn’t be exclusive no matter where you buy it. As it turns out, there’s a reason. It’s provided by a Brit, name of Matt Rhodes, who is described as the social media director for the firm, FreshNetworks London, which advises “high-end travel and fashion companies.” Rhodes explains that people who are going to drop a bundle on a product want more for their money than merely the thing purchased. A lot more. “If you’re going to spend $1,000 on a pair of shoes, you want to have a glass of wine going around, the attention of staff; you want an experience as well…”.
In other words, when the lady is yearning for a pair of Manolo Blahnik Rhinestone Buckle d’Orsays, she doesn’t want to look them up on amazon.com and have them sent in a box through the mail. She wants to walk into Bergdorf’s and be treated right — in an experience that feels “less like [a] sales room and more like [an] intimate venue,” says Rhodes.
Now we get to the nub, not only of why luxury wine producers are reluctant to go online, but why, in fact, people treasure luxury wines in the first place. We need to understand snobbism, or perhaps elitism is a less loaded word. Lots of people who live to show off their cult wines are not…quite…comfortable with the multitudes, who don’t hold their forks correctly and may not have perfectly manicured fingernails. The people who can afford cult wines like to be around other people who can afford cult wines. That implies exclusivity, and what could be less exclusive than social media? Social media lets everybody in, whereas the objective of snobbism is to shut people out. As Rhodes says, pointedly, “[O]n Facebook, you are opening the gates to discussions you don’t [necessarily] want.” Who wants to have a conversation with the underclass? If Rhodes’ fashion designer clients have a new Fall line to present, they’d much rather do it through “[their] own catwalk show where [they] control the invites,” not through some common public platform.
Thus the notions of exclusivity, controlling the environment and maintaining insider status lie at the heart of cult wines. But those notions are inimical to the soul of the Internet. That is why cult wine proprietors are slow to embrace social media. It smashes exclusivity, demolishes the ivory tower, bridges the moat and throws open the gate to anyone who wants in.
So I entirely agree with the reporter who wrote in the Forbes.com article, “…it’s odd that so few resources are invested in reinventing how that product is marketed and delivered on the web…in the luxury sector.” Odd, indeed. And sure to change.