Thursday, October 01, 2009

The Acid Test

In the wine business, we have come upon the sacred time known as O-N-D. The 4th quarter (October-November- December) has traditionally been a period when wine sales head into high gear. But walking the halls recently, talking to salespeople at month end, I am hearing other stories. People are just not picking up the Kool-Aid like they used to.

CNN recently had a story about the glut of high priced wine. The following, lifted from that piece: “If I buy a bottle for $100 from Napa Valley -- and believe me, there are hundreds -- I'll mark it up to $225. But no one is buying those," says wine director Rajat Parr at RN74 in San Francisco. As a result, Parr is saying no to all Napa Cabernets until customers drink what's left.

Bordeaux vintages are backing up. Established importers are backing away from future commitments. There is a tsunami of classified growth wines hovering. Not quite the perfect storm, more like a scene from Cloverfield. It’s fixing to get ugly.


And our Italian winemakers, let’s take Tuscany: how are they responding to these climes?

Two publications recently have brought out their reviews for the Tuscan reds.

The Wine Spectator – here’s how some of their top rated wines flesh out – simply by rating, price (per bottle) and availability

Tuscany
98 points $100 -500 cases made
98 points $120 -450 cases imported
97 points $285 -6,250 cases made
96 points $319 -150 cases imported
95 points $70 -1,335 cases made
95 points $75 -200 cases imported
95 points $95 -1,250 cases imported
95 points $110 -2,515 cases made
95 points $118 -500 cases imported
95 points $125 -370 cases imported
94 points $89 -1,000 cases imported
94 points $102 -300 cases imported
94 points $215 -3,000 cases imported
94 points $240 -30 cases imported
93 points $95 -29,165 cases made
92 points $165 -50 cases imported


The Wine Advocate – some of their finds- just ratings and suggested retail (per bottle).
Tuscany
99 points $435
97 points $360
98 points $320
95 points $283-349
95 points $275
97 points $233-365
92+points $230
98 points $210
94 points $190
(94-96) pts $175
97 points $163
95 points $161-199
93 points $160
96 points $157-194

There are some good, even great, wines here. Which makes this all the more of a quandary. But the lowest priced wine in the group is $70, with many at $100-$200-$300. And there are back vintages of many of these wines still lingering in importers and wholesalers warehouses, retail shops and restaurant wine lists.

And here we find ourselves at a crossroad. At the busiest time of the year. Who is going to drink these wines and at what price?

Good news: Most of these are red wines from very good vintages that will age. Bad news: That's not good enough news.

I go back and look at the Bordeaux example - how they dig out of uncertain economic times. They’ve done it more often than any other region, made an art out of it. And at this time they are at one of the epicenters of the luxury wine meltdown, Napa and Champagne being vigorously tested as well. Many folks are watching, searching for a passage.

The Italians likely imagine their situation is different, particolare. The emails have been streaming in lately, especially since Gambero Rosso has released their latest tre bicchieri list of winners.


It was much pleasanter at home, when one wasn't always growing larger and smaller, and being ordered about by mice and rabbits.
-Alice (in Wonderland)

It’s a tough situation. You don’t want to tell the winemaker that their baby is ugly. And it is less about beauty than perception. But it boils down to value. You want how much for a bottle? You only made 1,200 bottles? Surely there are 1,200 people we can find to pay $250 a bottle for your baby? People are still buying Ferraris and Pradas, yes?

And so if I talk them down to make their wine sell, not at $250, but at $125, what will it matter? So what are we to do?

I don’t know where I heard it recently, but someone was talking about the “recovery” and compared it to a saucer. Flat bottom. Slow rise. Short peaks. Long ride.

Sayonara, from the abyss, to the Long Tail effect, when it comes to small quantities of highly rated, hard to get wines at ultra-premium prices.

We’ve crossed over into black swan country facing a defining acid test.




3 comments:

Wine Splodge said...

Yes it'll be interesting to see how Bordeaux responds. Presumably they're sitting on an awful lot of unsold wine? During the last downturn, I recall very good wine appearing in merchants & supermarkets generically labelled Medoc, etc. The producer was a closely guarded secret. It was a great time for claret lovers on a budget.

Mark Norman said...

I just actually published a piece on this yesterday...too many people are looking & talking to "experts" in the industry, all trying to out guess each other..the problem that I see is that few seem to focus on the consumers...unfortuantely here in the US many will be looking at hard times for at least two more years..real estate (which provided a substantial base of wealth for many here) will be going down again, unemployment which is high will be heading higher, the jobs that are available are mostly low end, corporations are still cutting head count...we will get through this but I am warning those from the wine industry that will listen to get creative and prepare for another two years of tough times.

With all this considered even those who can afford a $250 bottle of wine seem reluctant to buy because who knows what is around the corner....

BK said...

So, what was the electric Kool-Aid rated at?

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