When I started writing about wine, I met a lot of wealthy collectors. They had cellars in the tens, if not hundreds of thousands of bottles, almost always the usual suspects: Bordeaux First Growths, Burgundy Grand Crus, Yquem, and California Cabs that were popular then, like Dunn Howell Mountain and Opus One.
I would talk with these gentlemen, who seemed perfectly normal in every respect, except for the obsessive-compulsive disorder they seemed to suffer from in their mad accumulation of wine. But the fact was that they were crazy-passionate about wine, which was good. If they went a little overboard, well, that was their business, not mine.
It wasn’t until a few years later that I came to learn about collecting wine, not for the pleasure of aging and drinking it, but for investment. At first I was surprised, although maybe I shouldn’t have been. Then I came to see it as pernicious. Reselling wine to make a profit drives up the cost of wine, which is bad, but it also is responsible, at least in part, for the way so many people still perceive wine: as a snobby, elite thing. Every time people read about a bottle that costs $50,000 or $100,000, it reinforces that notion that maybe they better stick to beer.
During the Great Recession, investing in wine for resale seemed to drop off a bit. But now, it’s roaring back, in troubling ways. For instance, here’s Fox News reporting two days ago that an Italian firm is asking for a minimum investment of $50,000 to invest in a wine portfolio that’s pretty much exactly the same as a stock portfolio.
And here’s Forbes, that bastion of capitalism, writing on the same phenomenon, also from Wednesday, with the punchy headline, “Will More Collectors Turn Wine Into Cash?” Seems that rich collectors already are offering their wine cellars as collateral for loans, the same way they put their expensive art works and jewelry on the line.
Normally I couldn’t care less what the über-wealthy do with their Barolo, but it somehow seems wrong, in spirit if not in the law, to commoditize wine that way. It bothers producers, too. Last year, Nick Gislason told me how troubled Screaming Eagle’s ownership was by the aftermarket. Here Nick does his level best to produce a great wine, and some percentage of the people on the mailing list just flip it onto eBay or wherever, sending the price soaring ever higher, distorting markets, and placing, not only Screaming Eagle but, by some inevitable domino process, other wines (Harlan, for example) impossibly beyond the reach of ordinary people. And don’t think the domino effect stops with the cults. It trickles down.
Here’s another negative effect of investment-mania: It can result in grotesqueries like this one, in which a pair of “wine collectors from New York” are suing celebrity chef Charlie Trotter for selling them an allegedly counterfeit bottle of 1945 Romanée-Conti.
This sort of thing is no longer about wine, or pleasure, it’s about money, profit and fear. Nothing cool about it, and not what this industry needs, or deserves.
W. Blake Gray wrote, on his blog, a pretty good book review on Loam Baby: A Wine Culture Journal’s inaugural edition, so I won’t, not just because Blake did but because I’d rather comment on some of the remarks that Greg Brewer made in the author’s (R.H. Drexel, a pseudonym) interview with him.
Greg is, of course, the winemaker at Brewer-Clifton, Diatom, and Melville (did I forget any?). He’s also emerging as a sort of mentor to a younger generation down in the Santa, err, Sta. Rita Hills (although Greg’s hardly elderly; I don’t think he’s hit 40). I always liked Greg because he was one of the people who welcomed me to Sta. Rita Hills years ago when I first visited, driving me all around and telling me who’s who and what’s what. Reporters depend on the kindness of strangers like Greg, who is no longer a stranger but a friend; I profiled him in my second book, New Classic Winemakers of California: Conversation with Steve Heimoff, and I contact him from time to time with questions about wine, vintages and other things.
Greg has a reputation as an intensely thoughtful guy, a philosopher. He will go all esoteric on you, if you want, but won’t if you don’t. (I also dig his tattoos.) Anyhow, this R.H. Drexel (whoever he is) asked Greg a great question: “How do you stay relevant?”
The issue of staying relevant if you’re a winery or a winemaker obsesses me. The main place I look for clues is Napa Valley, because of all the wine regions in California, it’s (a) the hardest place to achieve relevance and (b) the hardest place to stay relevant.
This past February I wrote an article in Wine Enthusiast called “The Class of ‘72.” It was about the wineries who began life in 1972. They’ve had a tumultuous ride and not all of them have ended up for the better, sad to say. Some are stronger than ever (Diamond Creek, Caymus, Montelena) while others have languished. There’s no better illustration of “staying relevant” than to look at the Class of ‘72 and see that while some have, others haven’t.
Getting relevant in the first place if you’re in Napa Valley is difficult for multiple reasons. First off, competition is fierce. Does the world really need another $80 or $100 Cabernet Sauvignon (which is probably what you’re going to do if you have a Napa Valley winery)? The economy suggests that, no, it doesn’t. Wineries try to achieve relevance in all sorts of ways, from sending samples to people like me (to get a high score) to not sending samples to people like me (to foster the illusion of exclusivity) to hiring Famous Name growers and winemakers for bragging rights. (It also helps to get an important somm in your corner.) Sometimes it works. Sometimes it doesn’t. I never feel sorry for new Napa wineries that don’t really make it, because I figure that their owners are rich, and knew what they were getting into, although I’ve been around long enough to know that’s not always the case. Some of them may be rich, but they’re dumb as doorknobs when it comes to selling wine. Either way, I don’t feel sorry for them.
Even if you get relevant it’s hard to remain at the top. I’ll mention two names. Take Chappellet and Trefethen. Both are old wineries (by Napa Valley standards). Both make magnificent wine. Both are intensely relevant to me and to all serious writers. But I wonder if the collectors and showoffs, especially in China, who just want the latest new kid on the block could even be bothered to try Chappellet or Trefethen. That’s a mistake, of course, a big one. Their wines are better than ever. Winemakers learn from their experiences. They seldom make the same mistakes over and over again (well, some do, but not at the level of a Chappellet or Trefethen), and they learn new tricks to make their wines better.
I have no idea how Chappellet and Trefethen stay relevant, or if their owners even try to or care about it. Maybe they’re doing just fine; I hope so. But I’ve seen wineries that were stars for years before their ascent slowed and then they began the long, inevitable descent back to Earth. They couldn’t figure out how to stay relevant and so they didn’t.
In his interview Greg Brewer said he hopes to stay relevant by mentoring a new generation of talented young winemakers. If I were a 21-year old budding winemaker (oh, that would be nice!) I’d certainly hope that Greg would take me under his wing. But I also assume that Greg’s hardly ready to call it quits and just “mentor.” He and his wineries will stay relevant for just as long as he wishes to continue working. After that (and let’s hope it won’t be for many decades), his wineries will reach a turning point: all wineries do when their veteran winemaker dies, moves on or retires.
I was reading Asimov’s blog the other day at The Pour where he talked about a story he’d read in Wine Spectator (you can find the link on his blog) about how one rich collector-investor is suing another rich collector-investor over something or other. (Decanter actually wrote about it too.)
The more I read it, the more I thought, Who cares? And suddenly it hit me:
I AM SOooo OVER COLLECTOR-INVESTORS!!!
I used to cover them for the Spectator back in the day. There was the über-rich Palestinian from La Jolla, the Texan with one of the country’s most massive collections (he eventually became a born-again Christian and gave up drinking), the Chicago medical tool manufacturer who kept his own stash at Fleur de Lys, a clutch of wealthy Memphisites (Mephistos?), the Bay Area dentist who spent $30,000 on a party for his wine-drinking friends, the Central Coast guy who had every vintage of Mouton-Rothschild made in the last 150 years, the University of California professor who gave America’s greatest tastings, the Hollywood producer who shacked up with a major star, and so on. These guys loved getting their names and, better yet, their pictures in the Spectator, so they gave me access.
I respected their knowledge and passion, and most of them actually were very nice people. But when I left Spectator for Wine Enthusiast, they stopped returning my phone calls — literally overnight. I realized that whatever relationships I’d thought we’d had were fantasies on my part. They had no use for me once I couldn’t get them into W.S. They were, in the truest sense, snobs.
Those vestigial memories were resurrected, unpleasantly, when I read Eric’s blog. But something else left a sour taste in my mouth, and it was this: Not only am I over collectors, but the very notion of collecting for investment seems somehow anachronistic and vulgar to our times and sensibility. And so does covering collecting, in the journalistic sense, with those awful charts about auction bottle prices, as if wine were pork bellies. Maybe some people get off on that stuff, but I think most people read wine magazines to read about wines, winemakers, wine regions and so on.
Who cares what Lafite went for at the latest Christie’s auction? Have you ever bought Lafite at an auction? Neither have I. Do you think you ever will? Neither do I. Do you know anyone who has? Neither do I. I’m glad Christie’s and all the others exist and provide jobs for people, but the whole notion of wine as an investment commodity, which is repugnant enough, is made all the more distasteful for the state of the economy, when so many people are hurting. I’m sure conspicuous consumption will always exist, but why give it attention and even praise? These “collectors” are marginalized outliers, and the results of their venal activities need not concern the true wine lover.
Look: Collecting wine for the sake of properly aging it is a beautiful thing. Everybody should do it, to the extent they have the space and can afford to. But collecting for the sake of trading at auction isn’t really collecting; it’s hoarding.
Anyway, forgive the rant. Had to get that off my chest. Tomorrow, a more pleasant topic.
Great opinion piece in yesterday’s Times on counterfeiting expensive wines. Seems there’s a burgeoning market on eBay for empty bottles of luxury wines, like 1982 Lafite. The Times’ writer, Robin Goldstein, cites Günter Schamel, an Italian professor of (I think) economics, who wrote a paper called “Forensic Economics: Some Evidence for New Wine to be sold in Old Bottles.” (The paper was presented to the American Association of Wine Economists.)
Schamel wrote: “Online auctions [such as eBay]…may also facilitate the exchange of goods that subsequently can be used in fraudulent transactions.” He studied wine bottle sales on eBay for 6 months and concluded that “the incidence of sale and the price of an empty bottle” are based mostly on “the price a full and presumably authentic bottle could potentially fetch in the marketplace.” In other words, the more expensive the original, filled wine bottle would sell for, the higher the price, and the faster the empty one will sell on eBay. Which led Schamel to suspect that the reason someone would be willing to pay 100 Euros for an empty bottle of ‘82 Lafite is because “it is worth a lot more once it is filled-up again.” [Schamel’s abstract is available as a PDF link in Goldstein’s article.]
Filled up with what? This is where Goldstein carries the speculation a bit further. He argues, convincingly, that two conditions, both of which are easily fulfilled, could result in a thriving market for counterfeit wines. Having obtained an impressive empty bottle, you would need, first, “a separate black market for counterfeit corks” (which common sense suggests must exist, or be easily developed), and “regions where there’s a lot of demand for prestige bottles but relatively little wine tradition or wine education; China and Russia come to mind.” It might (or might not) be possible for discerning wine collectors in London or New York to determine that an ‘82 “Lafite” is nothing of the kind, but what about that “table full of businessmen in Hong Kong” whom Goldstein saw mixing their 1970 Haut-Brion with Coca Cola? “[C]ustomers in such situations would be easily duped,” and the restaurateur who sold them their wine might be less than scrupulous, if in fact he knew the wine was fake.
Needless to say, the possibility of widespread fraud, especially in this Age of the Internet when crooks around the world are perfecting their scams, has not gone unnoticed by the legitimate wine industry. In fact, just a few days ago a team of scientists, led by a researcher from the University of Burgogne, in Dijon, announced a new system “to help fight trade in fake vintage wines,” according to Decanter, which reported the story. The technique uses a mass spectrometer to analyze the thousands of compounds in wine and determine precisely where it came from.
I don’t think the world of collectible wine will ever be free from counterfeiting. For that to happen, the entire notion of “collectible” would have to go away, and that won’t happen; as we’re seeing, with the rise of wealth in developing nations, just the opposite is occurring. A new class of millionaires is vying to own that special bottle they then can mix with Coca Cola.
I guess you get what you pay for.
Wines & Vines Magazine (which is edited by my former boss at Wine Spectator, Jim Gordon, who in turn used to blog for Wine Enthusiast’s unreserved — it’s a small world out there!) has an interesting new article, Pros to Teach Tasting Room Management, explaining how Sonoma State University’s Wine Business Program is teaching a new class for tasting room staff. It will bestow on them what I believe is the nation’s first Tasting Room Management (TRM) Certificate.
Now, I’ve never been big on these certification programs. There’s too many of them. Whether it’s a mail-order divinity license that lets you marry people, or some fancy-pants piece of paper you get from taking a two-week course in wine appreciation, they make it too easy for somebody to become an instant expert. It’s like when the Wizard of Oz gave the Scarecrow a diploma, proving that he had a brain. But Sonoma State’s certification program is one I fully support, for the simple reason that tasting rooms — which have become vital customer centers for wineries — all too often have abysmal staffs. My biggest gripe is when a tasting room person can’t answer a simple question about the wine, such as where the grapes are from.
I do have one apprehension about the Sonoma State course: I hope they’ll let the tasting room employees be themselves and remain warm, friendly human beings, instead of over-educating them to become little marketing managers who see walk-ins as nothing more than dollars on legs.
As part of the Sonoma State program, Jean Arnold, president of Hanzell, will teach a course on “Marketing Wine as a Luxury Product,” which Hanzell certainly is. I’m of two minds on the wine-as-luxury thing. Part of me hates the elitism and snobbery that can accompany it. The other part of me totally relates to it. (So I’m vinously bipolar.) Sit me down to dinner and serve me up ‘61 Latour and I’m impressed! A course on “wine as luxury” flirts with the danger that it reinforces the notion you have to be rich and wearing black tie to enjoy wine, but Jean Arnold is the perfect person to teach it. She’s solid and down-to-earth, as has been everyone I’ve ever met who worked at Hanzell.
Incidentally, a Master of Wine by the name of Sheri Sauter Morano, who’s a spokesperson for the Wines of France campaign, is running a poll on her blog called “Which Wine Will You Open on Election Night?” Speaking for myself, next Tuesday I’ll have a bottle of Roederer Estate 2002 L’Ermitage in the fridge. Here’s what I hope and expect will happen. Shortly after the polls close in California, the national news outlets will declare Barack Obama the winner by a considerable margin. (I’m predicting a minimum of 340 electoral votes.) That’s when I’ll pop the cork, lift the glass high, and shout out L’Chaim! to toast President-elect Obama.
Please vote tomorrow, if you haven’t already. And if you live in California, vote against Prop 8, a vicious, mean-spirited and misguided attempt to deny civil rights to thousands of people. As Bob Dylan wrote, in Slow Train Coming:
But the enemy I see wears a cloak of decency
All non-believers and men stealers talking in the name of religion
And there’s a slow, there’s a slow train coming up around the bend.
I recently came across a new wine book that kind of bothered me.
“Investing in Liquid Assets: Uncorking Profits in Today’s Global Wine Market” is by David Sokolin, the third-generation scion of the well-known New York wine merchant, D. Sokolin Co. As you can tell by the title, the book is on how to invest in so-called “investment grade wine” and make a lot of money.
Sokolin’s basic thesis is that there are certain wines from Bordeaux, Burgundy, Sauternes, the Rhône, Champagne, Italy, Spain, Port, Australia and California that can out-perform the Dow Jones Industrial Average in bringing profit over time. As an example, he cites a man who bought ‘89 Haut-Brion for less than $200 a bottle. In 2007, cases of it sold for $12,000 each. (more…)