Vol 3 No 4 How many wineries fit on the head of a pin?

Now that ole TB has got your attention, the real question is how many wineries are there in the U.S.? Answer: 8,702! That’s an increase of 5% over last year. As one would expect California leads the pack with 4,207! That should not be surprising – except the number is huge! Back to the totals: 7,061 are bonded wineries that make the wine on site, but there are also 1,641 ‘virtual’ wineries. Wine Institute

A bonded winery is licensed by the feds and has to have a specific space to store wines that have been taxed, so they can be open to inspection. A virtual winery is not in cyberspace as one might think, but make their wine in other wineries, especially ones that specifically make wine for several brands. Don’t scoff at these as many ‘cult’ wineries that produce a small number of cases, do this in order to make the operation feasible. Frankly, I was amazed there were that many, mostly in California, I am sure. Licensing is less strict for these although they have to keep the same records as other wineries.

Consider that going back to 1900-Prohibition there weren’t much more than 100 wineries in Napa Valley. Here is some data from the cited article for number of California and U.S. bonded wineries:

California       United States

1940                   474                  1,090      Just before start of WWII

1970                   240                     441      Beginning of Wine Boom

1997                1,011                  1,988      1st time Cal. >1,000

2004                2,059                  4,356      More than 2,000

2010                3,364                  7,626      More than 3,000

2014                4,285                10,417      1st time >10k for the U.S.

2017                4,202                  8,702      Likely some consolidation

If you find this interesting and would like to see more interesting facts, see  Wine Business data

Most of the increase in the 1970-1997 period, I believe, came from development of new growing areas in California (Sonoma County, Central Coast, North Coast, etc.), as well as Oregon and Washington.

Hope you found this interesting. TB started out just looking for a current number and look what he got!

Does anyone remember the wine theft at the French Laundry just before Christmas? They were caught due to an honest collector becoming suspicious after buying the wine and then going to authorities. Well, the main guy was sentenced in March, and, he admitted to another wine theft from a restaurant. So…what was his sentence? FIFTEEN Months jail time…and make restitution on $600,000. Good luck on that. I thought the punishment was supposed to fit the crime? What if he stole $50,000 from a bank? That would have been at least a ten year sentence!

Also, you may recall the fraudulent sale of wine futures by Premier Cru, an Oakland, California wine shop that has had trouble in the past. The wine inventory was sold from the store and received lower bids than expected. Now they have to divide up the proceeds between the victims…and you thought wine people was good people. Think again!

Think I’ll go have a couple of glasses of wine…my head is spinning!

TB

 

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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

Vol. 1 No. 3 …French Laundry update; Wine ‘Investment’ Clubs

According to the Napa Valley Register and other sources, most of the wine stolen from the French Laundry on Christmas Day was recovered in…of all places…Greensboro, North Carolina? Don’t have the details on how, or why it was there, OR how they located it. Those of you who have had property stolen know the frustration of having the property held pending trial – which in this case may or may not occur since they have no suspects in custody, or even identified. So where is the wine now? In the ‘safest’ place the authorities could find: the French Laundry’s OWN wine cellar. Wait…wasn’t that where it was stolen from? Worse, they cannot sell it until the investigation is complete. (Why does the evidence have to be held when there are so many ways of authenticating evidence today…and it is not ‘unknown’ for evidence to disappear even while in police custody (aren’t you shocked?)

Unanswered:

First and foremost: was the wine damaged? How was it cared for after the theft and AFTER the police recovered it? Would you buy the wine if you were dining there? Not TB, no way! Keller most likely would have done better had he been able to collect the insurance and buy more wine like it!

Next item on the agenda: According to the January 23, 2015 issue of Financial Advisor magazine, “more than half a dozen firms peddling wine investments, in the U.K. alone went belly up last year. “Why have there been so many flops?” There are lots of reasons…the article cites one fund, The Wine Trust, in the U.S., where investors put their money for eight years, but here’s the rub (at least to TB): they have $15-20 million in assets. When something goes wrong what can they do? Sell? To whom?

Another fund, Belgium-based, had wine assets worth 102 million Euros ($115 million in today’s market – $125 million according to the article which illustrates yet another risk: currency – at the end of 2012, then someone questioned their valuation methods! Like a fire in a theater, investors headed for that small ‘doorway’, and the fund could not meet ‘net redemptions’ (a not uncommon problem of any mutual fund – stocks, bonds, options, etc.

Besides ‘questionable’ appraisal methods (remember they use last price at auction…and there could be just one fool…or there could be trading among several holders…it happens in small stocks…and especially penny stocks, so why not wine? This is not to imply that the fund managers are dishonest (talking about wine), but they wouldn’t know why the price was being bid up if the ‘group’ consisted of several high-profile members.

Why would they do that? Why would a known billionaire and expert on wine have created counterfeit bottles and attested to their authenticity? Why did Cruse, a famous French wine negociant (not to be confused with a California firm with the same name), would risk, and eventually destroy the firm’s long-established  reputation by bottling cheaper wine as Pouilly-Fuisse? They were eventually charged, convicted and heavily fined. There have been several scandals, the worst being when methanol was put in Italian wine, killing six and injuring at least 30. The point is that wine prices are especially susceptible to scandal. To TB it is like people who don’t trust the U.S. Dollar, so they are investing in Bitcoins!

Back to investment clubs and the FA article. They discuss a 2009 bottle of Chateau Smith Haut Lafitte which rose by 143 percent between June 2010 and December of the same year! Meanwhile, French first-growth wines rose by 345 percent between 2005 and 2011 before falling 41 percent through November 2014. Let TB clarify this for you: that 41% decline is off the 345% which would reduce the gain to 203% – which means you had better have gotten in very early! Conversely, to get back to the high would require a 70% increase (something even stock investors fail to understand!).

But the real catalyst for price escalation was the Chinese, who shifted their attention from first growth Bordeaux to premier cru Burgundy, causing a reversal of fortune. Worse yet, the Chinese government cracked down on bribes of public officials (TB is SHOCKED), thus slashing demand. Recall TB’s comments in the first blog, citing Red Obsession, which stated that all of the great wine would be bought by the Chinese? TB’s response was: the same was said in 1988 – the year before the Japanese economy imploded and hasn’t recovered since then. Even diamonds aren’t forever, right Mr. Bond?

So TB will close with the same advice that he began this blog with: drink what you like, and buy what you like…not what some industry-anointed expert says you should…you will be happier and you will have more money in your pocket.

Until next time: don’t ‘stay thirsty my friends’ – drink up! This ain’t no library! (said by the bartender at an enlisted men’s club when TB was in the Navy).

TB

©Copyright 2015 TBOW, all rights reserved.

 

 

Vol. 1, No. 1…a new beginning…

“Wine is the answer. What was the Question?” – Anon

Trader Bill is a news junkie…before it was all about financial and political matters…this blog, however, will be entirely wine and travel related to wine.

The blog will be published every other Monday (hopefully).

Here is a nice kickoff story… well, interesting anyway:

On Christmas Day, some creep(s) crept into the cellar at the three-star Michelin, French Laundry, owned by the famous Thomas Keller (also Per Se in NYC). The restaurant was closed for remodeling and these guys knew what they were looking for: la creme de la creme. They only took the highest valued wines: Screaming Eagle, Domaine Romanee Conti (DRC), and other prized wines. The Napa County Sheriff’s Office put a value of $15,000 on it…low ball! Keller estimated it at $300,000. One bottle was reportedly worth $16,000 (let’s make this clear: to TB, no wine is worth that price…TB’s just sayin’). TB counts 77 bottles (that’s an average of $3,900 from the list provided on his blog by Keller…wonder why they didn’t fill up the last case? (Correcting as originally I thought there were 57 bottles but then found more on the list and forgot to remove the comment on 3 more bottles, mea culpa). Think this is rare? Try googling ‘wine theft’ and you will be amazed at the number…but should you be? It’s big and easy money!

Most, if not all, of these bottles have serial numbers so Keller and wine experts say they will be hard to sell. Hard to sell? Pullease…how many art thefts have we read of that are never seen again? Imagine owning some Picasso and not being able to show it to any for fear it would be reported to the authorities. Now with a bottle of wine from some well-heeled collector…or perhaps a wealthy Chinese…there are a lot of them out there and they are craving these names as they have been ‘speculated’ out of view.

According to the wine documentary, Red Obsession, Bordeaux futures of the top crus are purchased in the futures market (see TB can’t get away from his other blog), and when delivered stored in warehouses where they may be ‘flipped’ several times and it is not uncommon for the ‘owners’ (brief as that may be) to never even see them, let alone drink them!

Let’s say the wine is released in the futures market by the estate at $500. The buyer can then sell that for say $700, then to another for $900…in what could be a daisy chain, which succeeds in elevating the price worldwide. What a scam!…and you wondered why TB said that ‘no wine is worth that’. TB can’t even imagine what Trader Vic Bergeron would have said, after he picked himself up off the floor!

So to TB, those serial numbers aren’t worth the ‘label’ they are printed on. Besides, if they do recover them, who could attest to how they were stored? As for poor Keller, he posted the story first – on his Facebook page. Sadly, some of the responses mocked him which is really a cheap shot at one of the finest restaurants in the world…TB can attest to that having lunched there…although we did go to Burger King afterwards to sate our appetites due to the size of the portions. (For the record, TB favors Bistro Jeanty, just down the street in Yountville from the ‘Laundry’ and Keller’s bistro Bouchon…Philippe, no need to thank me for the plug…you have the bistro that people search for when they travel in France…but can never find!)

This brings us to another issue: celebrity wine auctions. While they serve worthy causes, they are merely places for the wealthy to ‘see and be seen’, and as for the bottles, TB has seen some with more than one sticker on it from the Napa Valley Wine Auction. By the way, at the auction, it is not uncommon for one winery owner to bid up another’s and then for that owner to return the favor…hey, it’s good advertising…not cheap, but good, just like the wine.

TB started buying Bordeaux in 1973 in Los Angeles. He had been buying California wines (note one of his 1969 Mondavi cabs, still had a price tag on it of $4.95!). The impetus was seeing Bordeaux priced at $20-30. This down from significantly higher prices just a year earlier. Why? Because there were a couple of scandals…one where some Italian winemakers were putting in ‘additives’, some of which turned out to be poisonous and resulted in a few deaths. As for French wines, a highly-respected wine negociant, Cruse, created a frenzy with the hot, Pouilly Fuisse, by selling bottles with ‘vin ordinaire’ inside and thus causing them to sell for as much as five times more than they really were worth. What is remarkable about this is Cruse was a well-respected broker. Furthermore, the family was in the process of trying to sell the brand, so they ended up ‘killing the goose that laid the golden egg’ – and they didn’t even get the foie gras!

Moving right along, counterfeiting of labels has occurred…hey if they are willing to do twenties, why wouldn’t they do it with wine that can cost several times more? One of the counterfeiters was a very respected wine collector who used his reputation to peddle the wine at auction to unsuspecting buyers. He even counterfeited some of the famous Jefferson wines…guess he figured that even if they tasted it they wouldn’t know if it was the real thing since the taste would have changed so much, right? For this reason, the restaurants…some at least…have taken to breaking the bottles so they cannot be reused, but how would you know if your prized bottle wasn’t ‘refilled’ and sold at auction?

Well, since I am approaching 1,000 words, it is about time to go but TB wishes to make one point: he abhors wine snobbery. Wine is food, wine is agriculture, and made to be enjoyed with food…of course it is also great on the side…especially with good friends. This point was made to TB decades ago by legendary Napa Valley vintner, Joe Heitz, at a delightful brunch on the deck his home and winery with some of his family…but that’s another story…after all, there are a ‘million stories in the Naked City and this is just one of them.’

a sante!

Trader Bill

©Copyright 2015 TBOW, all rights reserved.