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Suddenly, those rare wines aren't so rare

Jon Bonné

Sunday, February 1, 2009

 

I come from a long line of bearish investors, so in this grim time for selling expensive wines, it's my genetic duty to note that now is also the best time in years to buy 'em.

The economy has forced nearly everyone to take their drinking budget down a peg or four. But that hardly means wine sales are plummeting, although many retailers say liquor sales are taking a larger slice of business. Hard times favor the hard stuff.

Somewhat. Jon Fredrikson of research firm Gomberg, Fredrikson & Associates estimates most of us are shrinking what we'll spend on a bottle of wine by 20 to 50 percent for anything more than $10, with the occasional splurge. The thirst for $25 has dwindled to $15; $8 is the new $12.

That perilous midrange above $30 and below, say, $100? That's where the real fear lies if you make wine.

Christmas shoppers thought small - the $100 gift became a $50 bottle. And though the well-heeled clientele at Acme Fine Wines in St. Helena still seek out the impossible-to-find $150 bottles that owner David Stevens specializes in obtaining, he says his regular $50 shoppers have downshifted to around $30.

Wine auctions struggled through the latter half of 2008, slashing their projected hammer figures. Paul Hart, president and CEO of Chicago wine firm Hart Davis Hart, says lot prices have dropped between 10 and 30 percent since last summer, in part a correction of a runaway bull (wine) market in the past three years.

San Francisco's Vinfolio, which specializes in locating high-end wines, has a different worry. Its average bottle price remains around $170, according to CEO Steve Bachmann, but with fewer sales. Bachmann suspects some customers are drinking their collections instead of adding bottles: "It's like tapping the oil reserves in Louisiana," he says.

In other words, it's a buyer's market. If you have the money, now is the best time in perhaps a decade to start a collection or taste the unattainable. It's like finding Berkshire Hathaway at a three-year low.

For that matter, to you shoppers in the closeout aisle: Keep a keen eye out as the Great Inventory Dump of '09 commences.

Wines once nowhere to be found on store shelves have for months been making quiet appearances there, often because restaurants' allocations have been left adrift. Retailers are suddenly scoring bottles (and praying they'll get them again next year) of a litany of impressive California names - Robert Foley and Bryant Family, Hundred Acre and Kistler. An excellent barometer came several weeks ago when I spotted bottles of impossibly rare Jacques Selosse Champagne on a San Francisco shelf, the orphan of a restaurant's unclaimed allocation.

Even those who can afford the top stuff may be abstaining out of decorum. So suspects Steve Wallace, whose Wally's Wine & Spirits in Los Angeles draws a big Beverly Hills contingent. "The guy driving the Rolls-Royce, I think he's keeping it in the garage and driving a Prius," he says. "People don't want to be pretentious."

It's not just new wines. Wine-collection buyers who two years ago were pleading for any worthwhile older wines to broker are finding their voicemail boxes full - with offers of bottles that someone else has kindly taken the time to buy, store and age. Ditto at auctions, where prices are tumbling not only for blue chips like, say, the 1982 Latour but more mortal bottles too. The 1986 Leoville-Las-Cases averaged around $360 a bottle in the past two years, according to Vinfolio's Wineprices.com service. Now estimates are closer to $200.

All of this should give pause to wineries still playing in that realm over $30. (Beyond $100, you're either betting on a track record or blindly ambitious.) Brand loyalty? In a recession it has the life span of a housefly. Uniqueness sells wine, but there are oceans of not-so-unique wine around. Plus foreign currencies have weakened just enough to let us all drink astoundingly well from overseas. Even in Napa Valley, some of Acme's hottest sellers under $40 are wines like Vina Cobos, Paul Hobbs' Argentine venture.

Mercifully, this is all cyclical. As wine investment adviser Vic Motto recently pointed out, the industry rebounded from prior downturns of 2001, 1991, 1982 and 1973 once the supply-demand imbalance was fixed.

But part of survival is pricing to the market. Credit is due to folks like Walt and Joan Flowers, whose recent well-timed partnership with the Huneeus family leaves their Flowers label in the hands of a family that can sell wine at both $135 (Quintessa) and $11 (Veramonte). It's going to get interesting when the inevitable price correction for all those overblown $50 Syrahs and $80 Cabernets bumps up against California's fixed labor and grape costs. Vineyards don't tend to revert back into hay fields, but it's hard to muster tears for flailing projects that, when the tides of opulence ebb, are revealed to be the exercises in ego indulgence we imagined in the first place.

There is opportunity here. For a while, more California winemakers have needed to fill the gap between cheap table wines (we have plenty of those) and fancy bottles (plenty of those too) with honest under-$20 wine that looks and tastes sophisticated while speaking honestly of its origins. Now's the time. No critters. No California appellation. No stupid names. We'd like wine on our dinner tables, not a rubber-stamped product.

Read the article directly from SFGate