Vol 3 No 2.3 visiting some old Napa favorites

To those of you who dream of owning a chateau in Napa Valley try this and Dream.  Keep in mind what I said in the last blog about valley floor land going for $350-450,000 and acre. I saw this right after I posted and wanted it to share with you.

While Napa Valley was able to avoid the Santa Clarafication that Silicone Valley caused, it has developed its own problems of traffic and a cost of living that means workers must come from more than an hour away. Agricultural minimum-sized plots were 10 acres in 1969, when we could have bought land for $5,000 an acre (of course good wines from here were selling for around $5 a bottle). As the boom developed they raised the minimum to 20 acres which prevented the conversion to residential and commercial properties. Now, even one acre would eliminate the problem.

The original landmarks on the highway remain with few major changes in appearance: B.V., Louis Martini, Inglenook (now Francis Ford Coppola Winery). Beringer’s Rhine House, Christian Brothers Greystone, and some visible from the highway. These are interspersed with the new wineries. The Robert Mondavi Winery was the first to change the character which further changed with the OPUS joint venture with Rothschild. One that is missing is the little red shack on Hwy 29, that was for decades the Heitz tasting room. It has been replaced by a nice stone building with vine-covered trellises that blends in with the environment and provides surprises when you enter the tasting room.

Through friends, one of whom unbeknownst to me was related to Joe Heitz, a group of us,  made a pilgrimage to Napa Valley with me doing the planning. The year was 1978, and his nephew said his uncle had a small ‘mom and pop’ winery there. I said sure we can go there and shrugged it off. His uncle was Joe Heitz and on a beautiful Napa Valley morning I was surprised to find out that that was our destination. As we sat on the deck with Joe and his wife Alice, drinking a riesling and enjoying sausages with it, I abandoned my wine snobbery. There was something about this man and following a guided tour, I was hooked on Joe and his wines. So much so, that when I tried his 1974 Martha’s Vineyard Anniversary bottling, I purchased a case at $25 a bottle; the most I had ever paid at that time. Consider that most of the name brands were still well around $5 a bottle. It was also the most luscious cabernet I had ever had. Joe kept saying we didn’t have to buy anything but we wanted it that time and enjoyed it over the next several years – until I was down to the last bottle.

Whenever I visited the ‘little red shack’ and Joe was there he would smile and greet me with “hi, Bill”. Thus I had a strong relationship with him and his wines that lasted. Joe was a smart man with simple, sound values. He had learned under Andre Tchelistcheff, and then went to Fresno State College to set up a viticulture program, where later his son would graduate: they had classes but not a major. He was there for six years then bought the land for his winery. This is background for something he told me that day: “people think of wine as romantic but owning a vineyard is nothing more than agriculture…it’s farming.” That thought stuck with me all these years. One last thing about the tasting room: it is perhaps the last in the valley with no tasting fee. When some charge $25, $50, or even $100, that is amazing and they still make good wines.

I drove over to the Silverado Trail and up Taplin Lane to the winery and the old home. Going inside the building, Kathleen Heitz, Joe’s daughter and the business manager, sat down with me to discuss Joe and the winery. Her brother, David, is the winemaker, and she told me that her dad had been hospitalized when that ’74 was made and he guided David through the process and never failed to give him credit for the wine. That is some kind of a winemaker and man! It’s nice to return to a place and although it had physically changed, what you liked about it is still the same. The wine was named one of the top 10 wines of the century by the Wine Spectator, and President Reagan took it to a 1982 State dinner in Paris.

Just down the hill on the opposite side of the road is the Joseph Phelps Winery. I decided to visit it and while no one from the family was down I saw that much had changed of the winery which is perched on a hill overlooking the vineyards and the valley floor. The two Joe’s were good friends and while Heitz’s specialty was his cabernet’s, Phelps produced the first Bordeaux blend of cabernet in the Left Bank style, under the name Insignia.

My final stop of the day was with an old friend, George Hendry. George is the only ‘rocket scientist’ in the wine business. In fact, he had just completed consulting work on a cyclotron. His father was a professor at U.C. Berkeley and purchased the land on Redwood Road, just above Hwy 29, north of Napa. Originally they had farm animals and grapes which when George took over became all vineyards. We met at ZAP, Zinfandel Advocates and Producers at their annual tasting event in San Francisco when I was pouring for Lamborn Family Vineyards. Each year I would seek him out because I enjoyed talking with him but also because his zin’s appealed to my taste like no other besides the Lamborn.

I also visited the winery for tours and tastings with friends coming to the Valley. George conducts all the tours personally, and as for thoroughness, I recall standing in the hot sun for what seemed 20 minutes explaining the vineyard and its characteristics as well as his philosophy. The tastings were also unique as George would describe the wines with you and loved to use ‘experiment’s’ to make his points. These tours were always the highlight for friends I brought to the winery. No one ever had a bad wine at those tastings. All were beautifully made and very good examples of each varietal.

When George walked in for our meeting, he didn’t seem to have changed. His charm, humor, and the inevitable taste experiments, were still there. We discussed the longevity of the winery and he proudly said, “I never quit my day job.” He understood what many, especially those who only consume wine, don’t know: it is all about cashflow. He never brought in partners because their time horizon might be different than his and he wanted to make wine his way. He had watched many wineries fail or change hands because of a lack of understanding that stuff happens. When that happens, partnerships sour, banks call loans, and much more. Thus his conservative way of running the business has paid off. He also sells his excess fruit in some years, but whereas payment is usually made after the wine is made and sold, he requires a partial payment with the sale, which attests to the quality of the fruit he produces. It was George who told me about land prices around Yountville running from $350-$450,000 an acre. Such is the lure and lore of Napa Valley.

His advice to those who want to own a winery or be a winemaker is “forget about a 40 hour week,” and “the hours are not always when you want them to be.” He also said, what Joe Heitz told me over four decades ago, “wine making is farming.”

We finished tasting our wine and I drove home…into the traffic…and glad that I had visited him again. The drive back to Calistoga took 20 minutes longer than in the middle of the day but I had a lot to process during the drive. The only person I had wanted to visit was Mike Grgich, who was unavailable.

TB

 

 

 

Advertisements

Published by

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

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s