Vol 2 No. 20…wine tidbits

Here are just a few things TB has observed since the last missive:

BPA’s – no longer a health hazard in wine due to the amount you would have to consume to have a negative health effect, this from the FDA. BUT TB advises those of you who drink from box wine encased in plastic to observe expiration dates, they are there for a reason, and if you see a lot of boxes with them, find another wine merchant as it shows their lack of inventory control and attention to wine products.

Corks – a lab has been able to isolate different phenol’s in corks. IF they can nail this down and why not? They did it with gene’s afterall. It would then be possible for a winemaker to isolate and use corks that would enhance the taste of their wine but also to make that taste more consistent in both the same and subsequent vintages.

Wine Theft – Having lived for nearly 30 years in the S.F. Bay Area, I have visited many of the wine shops around San Francisco, and weeded out the ones that did not meet my expectations. The main one I eliminated was Premier Cru in Oakland, but on the basis of snobbery prior to their arrest on multiple criminal charges that has not been adjudicated yet, but a lot of customer money was lost and will not likely be recovered – they better watch their backs though because one group they preyed on was Chinese wine buyers of Bordeaux futures and California wines for export to China…one never knows.

One I respected was Beltramo’s in Palo Alto, which sadly is going out of business after more than 50 years. Just before the last day theives broke in and stole $55,000 worth of wine in a case similar to last year’s French Laundry winery (not the same perps as they were caught and the wine recovered although the condition will only be known by tasting it). Foe their closing sale the owners had brought their library wines out and put them on display making the theft a ‘piece of cake’. Let’s hope they catch them and throw the proverbial book at them!

WTSO – in No. 19 I talked about www.winetillsoldout.com. I have now made two purchase from them. I wrote to customer service on both issues. The first was on the retail price shown first. I asked this because I was seeing prices well below that. It was explained that they use the one provided by the winery at time of release, but also list the ‘best’ online price, so you can compare. This satisfied me fully! The second was on a delivery problem that I won’t mention because they handled it ethically and I don’t want anyone to get the idea and try to get wine for free. I will only say it was a slipup that they stood up for and offered me a full refund or more of the same order. That was very responsible and I don’t know many online companies that would do the same. The point is: if you have a complaint write to them immediately. I was amazed at how fast they responded allowing us to resolve the problem to my, the customer’s satisfaction.

Meiomi Pinot Noir – originally, it was an extremely good value and available at Costco and other retailers who stocked it after tasting it and noting the quality. I wasn’t aware of this but it was owned by the Wagner family who makes Caymus, Conundrum, and other brands. This is from the Wine Spectator and is shocking but not surprising to me:

“Aiming to become an even bigger player in the California wine business, Joe Wagner has agreed to sell his Meiomi brand to Constellation Brands for $315 million. The 33-year-old Wagner told Shanken News Daily that he’s selling Meiomi—one of the U.S. wine market’s hottest brands—because the deal will give him the liquidity necessary to become a much larger landowner. Wagner says he hopes to amass 2,000-3,000 acres of California vineyards over the next five years.

“Constellation is paying a hefty price for Meiomi. Wagner told SND, a sister publication of Wine Spectator, that the deal price was roughly a 24 times multiple against the brand’s present and future earnings.

In striking the deal, Constellation adds a brand whose recent performance has been nothing short of astonishing. Wagner developed Meiomi in 2006 while he was a winemaker at Caymus, which is headed by his father, Chuck, and the wine was released in 2009. In 2010, the brand sold 90,000 cases. Last year, the California wine brand won Impact “Hot Brand” honors after advancing by 41 percent to 550,000 cases and was named Wine Brand Of The Year by Impact sister publication Market Watch magazine. Wagner told SND that Meiomi, which retails for around $25 a 750-ml., is on pace to sell more than 700,000 cases in 2015.

In other words, it went from a limited production wine to a mega under Constellation which nobody even heard of (unless you were a wino who drank Wild Irish Rose), and only gained ‘credibility’ by buying the Mondavi brand then going on a shopping spree which has made them one of the top three wine companies in the world. Wagner noted that “no vineyards were included in the sale.” It’s cheaper now…and now YOU, the consumer know why. What next? Boost production to 1 million cases to compete with Fred Franzia’s ‘Two Buck Chuck’? For those not aware his company is Bronco Wines, which owns 40,000 acres of vineyards in California, and bottles as Charles Shaw (an interesting story in itself), and is sold almost (?) exclusively through Trader Joe’s. For the record, Franzia is a convicted felon for using inferior grapes and bottling them as varietals. He didn’t go to jail but instead paid a several million dollar fine (the prosecutor said not sending him to prison like the others involved was the biggest mistake of his career…why didn’t he? Franzia convinced him that the town where it is located, Ceres, Ca., would suffer economic disaster without him). Oh, and about those 40k acres: the longest rows of any winery. Why? So the ‘tractor’, not hand pickers, doesn’t have to waste time turning around, but note you get unripe grapes, stems, and an occasional poor rodent in the mix, but hey at $2.99 or so, who cares? Not the people, mostly seniors, that drink it. There have been efforts made to elect him to the California Winemakers Hall of Fame, which will lose all credibility if it does and shame those who deserve it. Franzia is not a winemaker, but he isa a marketing genius whose only  claim to fame is getting rich…but isn’t that what Constellation Brands as done off Mondavi’s reputation? Wonder what’s in the Woodbridge these days?

Last week I attended a telecast with the Wagner Family at Total Wines, discussing their brands followed by a tasting of their full line, sans Meiomi obviously and all were great.

Sorry for the rant, but TB is about people with passion who make REAL contributions to the wine industry and are not in it merely to enrich themselves or use their fortunes to bid up Napa Valley land (and other places..including Bordeaux), to make small lots of wine with a flying winemaker, get a 90 point rating and sell it at absurd prices due to the small volume. That is wine snobbery at its worst. Not saying these wines aren’t good, just ridiculously priced!

If you are still with TB…thanks for reading…I know I feel better now!

TB

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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

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