Vol. 1 No. 26 …not what I want to write about!

…BUT, I must. This website is about a passion for wine: winemakers, wine shops, wine enthusiasts, and of course, TB.

I read a blog yesterday that bothered me. Won’t go into who it was, but it was praising someone who runs completely counter to what we are about here. I will continue to read the blog because it is of interest to me, but have stopped reading another one that says you should never pay more than $20 for a bottle of wine, and developed a rating system (although the writer/author admits he has never taken a wine course, never participated in a wine tasting, which he is critical of, and to TB’s way of thinking is comparing apples to oranges – or should I say ‘wine’ to ‘plonk’).

While there are many good wines at less than $20, and some ‘passable’ ones (but lacking character), below $10, that is not what we are about here. Instead, we are about learning more about wine by trying new wines and most importantly, trusting your own palette as you are your own best wine judge. If you don’t like it, so what if Parker or some other wine writer gives it a 90? To do otherwise makes you a wine snob, not an aficionado.

The last three updates have been on, in order of appearance:

  1. the buyout of SAB Miller by ImBev, creating a global monopoly in Beer, and the corporate giants that are absorbing smaller, high quality wineries, which will ultimately result in lowering the quality of the wine due to the emphasis on ‘the bottom line’. The top three of these are Constellation Brands (virtually unheard of and with no quality label before acquiring Mondavi), Gallo, which is another of the top three globally, and Bronco Wines, maker of Two-Buck Chuck;
  2. a book, Tangled Vines by Frances Dinkelspiel, which covers the dark side of the wine ‘industry’ (don’t you hate that word?), and also the first California wines which were in Los Angeles in the 1800’s; and
  3. Dr. Konstantin Frank and the winery bearing his name. A true innovator, as was his friend Andre Tcheleschieff (the great California legend who trained so many well-known winemakers), and who collaborated with Doctor Frank.

TB hasn’t said boycott the brands of those big wine companies (although he did suggest doing so with the breweries), especially Two-Buck Chuck. Instead, he took a positive approach: drink your ‘Chuck’ or other inexpensive wine during the week but experiment on the weekends with at least one new, quality wine.

So what made TB feel the urge to crusade today? the blog mentioned at the top of this edition which was about a wine event to be held in January, the Unified Wine and Grape Industry Symposium, the largest wine industry trade show in the U.S. Bet you won’t see a lot of the small wineries represented there, and if you do it will be to keep their presence known, perhaps looking for a buyer?

Now to the meat: the blogger noted that Fred Franzia, CEO of Bronco Wine Company will be the keynote speaker. Franzia is a super-salesman and innovator, having bought Charles Shaw, and turning it into Two-Buck Chuck with the help of Trader Joe’s (no relation to Trader Bill but along with Trader Vic part of the inspiration for his pseudonym). This winery produces 20 million cases (240 million bottles!) a year and has produce over 6 billion, yes billion bottles since inception in the 1970’s. It no longer sells for $2 but more like the $4-5 range, but Franzia has said “never pay more than $10 for a bottle of wine”. Is the fact that he didn’t say $5 a warning of a price hike ahead? Time will tell…always does.

The blogger had visited Bronco’s operations in Napa (distribution center), Lodi (some vineyards of the 40,000 total in their portfolio), and Ceres in the San Joaquin Valley where the bulk of the grapes come from. He commented on the cleanliness and attention to detail. That however, is disputed at http://www.snopes.com/business/market/shawwine.asp

In addition, as I pointed out to the blogger, Franzia was convicted of a felony for blending inferior grapes with zinfandel and others, resulting in a huge fine of $4 million, but allowing Franzia (no longer associated with the box wine company of the same name), to not go to prison as several others did. Don’t just trust Snopes on this, Tangled Vines, talks about it in length including comments by the investigator and the prosecutor.

Having the distribution center in Napa, Bronco called it Napa Valley wine, until the AVA objected but they can still say, Napa, California. Does that sound like a high quality wine to you?…or one that is out to make money on volume? Sadly, I find people, mostly seniors, that only drink, Two-Buck Chuck. As reported everywhere: good wine is forcing out bad all over the world. That, however, does not mean all wines are high quality, just no serious defects, i.e. you get what you pay for.

To TB, despite all the efforts by those truly interested in making high quality wine, not simply making money, these wines thrive but people are reaching ‘up’ according to a wine industry study which saw the most growth in sales in the $10-20 range instead of stagnating in the <$10 range.

Now let’s look at the profit: Gallo Hearty Burgundy, once a darling the late Robert Lawrence Balzer, the pioneer wine writer, who seemed to equate it with the best California Cabs, in his reviews, is sold in magnums, 1.5 liters, instead of the normal 750 ml bottles. The price of a magnum is considerably less than two bottles of TBC. Also, there are wines sold by the gallon or in boxes of 2 liters or more, that are as good or better and cheaper.

Trader Joe’s acts as distributor and retailer (except in New York which prohibits it). This may have been the impetus for Total Wines to do likewise. A normal discount to a distributor is 30%, so Trader Joe’s is making a nice profit, as Total does with its ‘bin’ wines where it too buys direct from the winery resulting in profits of 30% or more, while making small profits on high quality wines – which are actually the best value to you, the consumer. Keep that in mind when you are looking for ‘bargains’.

Now let’s look at this from an environmental standpoint. The San Joaquin aquifer is the second largest in the U.S. Believe or not in climate change, that aquifer has been largely depleted by well-drilling by farmers, largely grape growers in an area that was and is not a natural agricultural area (oldies like TB will recall the 1986 book, Cadillac Desert by Marc Reisner, and last revised in 1993, one of the first ‘green’ books, as was the documentary movie, The Sea Around Us by Rachel Carson written in 1951, and we didn’t learn from that either).

The depletion by wells deeper than the height of the Empire State Building, is causing the land to sink, and arsenic levels to rise; not a good combination. In fact, there has been at least one class-action lawsuit over arsenic levels in wine from the valley. To TB’s knowledge, all have been dismissed as the levels, while high were not serious in wine do to the low consumption relative to water. The valley is very heavy in Almond trees and grape production, both of which consume large amounts of water, and in the case of wine, for what? To enrich the winery owners?

That is now off TB’s chest so he will get back to the New York and California wine pieces discussed far too long ago.

Best,

TB

©Copyright 2015 TBOW, all rights reserved.

 

 

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traderbill

How did Trader Bill originate? It was conceived by me as a way of providing information summaries of global financial markets so that friends and associates could bring themselves up to speed on events and changing market conditions upon their arrival at work. In addition, it provides information on speakers and economic releases that day with consensus estimates and level of last release so that the reader is prepared to react, or knows how the market might react upon the release of information. Who is Trader Bill? Initially any reference to me was as ‘i’. This is to remove the aura of ego and to suggest that i am but a humble reporter, albeit with 35 years of investment experience. Investments are demanding of ego, however, or one would not feel that he was qualified to manage someone else’s money in the first instance. Therefore i needed an ‘alter-ego’. Like Winchell and Mahoney, Edgar Bergen and Charlie McCarthy and especially Trader Vic and Mai Tai’s! Why Trader Vic? Because he was a likeable man who delivered pleasure to his customers and knew exactly what their desires were. The reason for the alter ego became obvious once I introduced Trader Bill into my commentaries: people started asking what Trader Bill thought. They had never asked me what I thought before, but suddenly they wanted to know what TB thought! Now mind you they KNEW that I was Trader Bill but for some reason he became bigger than life. Maybe it was the small ‘I’? What does Trader Bill try to do?His goal is to educate from his years of experience. Consider that most of the traders and people managing investments weren’t even around in 1987 for the crash! Consider that Graham and Dodd, and even Warren Buffet are not relevant to them, too old hat. Their historical perceptions of markets and fundamentals (earnings, price/earnings ratios, bonds, debt service coverage) are irrelevant in this fast moving world. This is the NEW ECONOMY, or is it? How did your style originate?Years ago i found that i had a knack and talent for writing. In addition, i developed an ability to analyze market news about 15 years ago. It took the Crash of ‘87. Prior to that i was just listening to what others said about the economy. But bond yields had been soaring in ‘87 yet the stock market just kept hitting new highs. That was when i began to learn about markets. i have both a dry and witty sense of humor (some call it inane!). Therefore i attempt to make even the worst news somewhat amusing: whether it is the absurdity of an economic release, or the comments of a CEO. This is trading desk humor (or gallows humor). It isn’t politically correct but it does ease tension. Ironically, it is seeing the light at the end of the tunnel (in the Navy they say: it’s always darkest before it’s pitch black!), that allows you to be more objective in your analysis, as bad as a situation is there will still be a tomorrow! You will see that i practice three-dot journalism, a style made famous by San Francisco reporter Herb Caen, whom i idolized. At least to me it is effective. What is so special about your analysis?Frankly, i don’t know that it is special, but at least it beats “the market closed down today on profit taking.” What i do know is that most of what you read is spat out without considering whether or not it is rational, like the above statement. Is it right? Sometimes yes and sometimes no, and that is the key to what is different about my analysis: it is meant to make you think. Is Dan Rather right or is Trader Bill right? If it causes you to stop and think about it, regardless of whether you agree, i win! Because THAT is my goal…not to have you think i am a guru, got that? Bet you never heard that ANYWHERE before in my business! Instead they want you to think just how smart they are but remember in this business if you are right 60% of the time you ARE a genius! Another thing that is different is when i am wrong on an analysis i will tell you, not hope you forget what i said. So now you have the tools to do what the speculators and hedge funds do: challenge authority, and if you make money it is because YOU did it not me. i was just a tool, your flunky to do the grunt work and let you decide…course you could be wrong too but at least you looked at the big picture. But the goal is also to have fun! This shouldn’t be a business of hushed tones and grim faces. It is a living, breathing thing and nowhere else in the world do you have the odds as much in your favor as here. Just beware of the guy who wants to put his arm around you and tell you he is your friend. So there you have it. I hope you select me as one of your sources for market information. If you do I promise to work my best for your financial success. Trader Bill

One thought on “Vol. 1 No. 26 …not what I want to write about!”

  1. Well said. I would also like to add that while I don’t know of any legit 2 dollar wines there are MANY that fall under 10 bucks that are varied and quite beautiful.

    Like

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