Saturday, October 20, 2012

The Best President for the Wine Business is ....

I Lied .........

Think Its a Tight Race?
I admit it. I said last week that SVB on Wine would be going on hiatus until January while we are producing the Annual State of the Industry report. Well .....I guess I lied. Shocking! A banker who lied? I guess that makes me eligible for public office though. ....hmmm....upon further reflection ....nope .... unlike President Clinton who never inhaled but he did lie, I did inhale ... once ... as an aspiring musician but it was a job requirement. Nonetheless, that makes me unfit for public office and as a colorful Senator once said, "If nominated, I shall run to Mexico. If elected, I shall fight extradition." I mean really, who would want to run for public office these days and endure the mud-slinging and digging into the mistakes in your life? We've made office fit only for people who never made a mistake, or were never caught in a mistake.

Moving on to the topic at hand, many people seemed pretty engaged on the piece we wrote last week that discussed Argentina and the negative impact their Government has on the wine business. After watching the feisty Presidential debates this past week, I said to myself .... "Self? Which of the two candidates is best suited to help the wine industry for the next four years?"  'Myself,' predictably didn't answer me, so I've decided to go against my better judgment and toss it out for a discussion topic this week.

Before you start trying to guess where my bias lies, let me just say in the past four elections I've voted for both parties in the Presidential elections. I'm a fiscal conservative and social moderate if that matters.

So let's see if we can reason this out, and lets see if we can do it without resorting to all the B.S. and negativism and misleading commercials foisted upon us by the far right (I hate Sean Hannity on Fox) or the far left (I hate Rachel Maddow on MSNBC). Lets see if we can be rational by advocating for the positives of our preferred choice instead of tearing down the alternate candidate. After all, we already know Obama is a liar, a Socialist, and will add trillions more in Federal debt. Its also a given that Romney is a liar, a religious zealot, and he will overturn Roe vs Wade. There: We have that out of the way. Yes wont be easy but give it a shot by commenting below and voting on the Presidential Poll down on the right hand column:

Let's start with what is important for the wine business. In my view, its:
  1. Perfect weather and sufficient water
  2. Improving the growth in GDP.
  3. Help the middle class with improved job prospects. 
  4. Slow the growth in the Federal Deficit 
  5. Bring more certainty to the debate on taxation and the debt ceiling.

Democrats Will Increase the Deficit

If you are already democratic leaning, you would argue that President Obama is the right candidate because he inherited the country's problems, things are better than they were when he took over, the economy is continuing to improve and there are more jobs now that have been created since he's taken office. Separately, it probably resonates with you that the President has stuck to his word and delivered on several social programs including Health Care reform, and has properly pointed the finger of blame at corporate excesses and abuses on Wall Street. Along with former Fed Chairman Volker, he instituted the most comprehensive set of new regulations on the financial system since Glass-Steagall. You probably feel as though the democratic agenda better supports the middle-class and narrows the gap between rich and poor. You might say to yourself the upper class wage earners aren't doing their fair share of shouldering the tax burden and appreciate his plan of trying to balance the deficit by increasing taxation on the wealthiest among us thus slowing down expected growth and stabilizing the Federal Deficit. In terms of 'likability,' the President seems more like the average Joe and more approachable than his challenger. And ..... you hate PBS news anchor Jim Lehrer.

Republicans Will Eliminate the Saftey Net

If you are already republican leaning, you probably see Governor Romney as better for the business environment and might point to his successful rescue of bankrupt Bain & Company as an indicator. You might say he would be better for the economy based on his education, his history of balancing budgets in Massachusetts and the other executive positions in which he's served. Most people in the US place Washington politicians even below bankers in terms of respect, so you might see Governor Romney as coming from the outside of Washington politics and feel hopeful for positive change and better compromise. You might appreciate his conservative views on many social issues as well. On tax, you probably agree with his approach of lowering the tax on everyone, making the Bush era tax cuts permanent, but having those making over $200k a year still pay 60% of the country's tax burden by reducing/eliminating their deductions. You also probably see Romney's tax and proposed program cuts as being more likely to add up to stabilizing the deficit. And ..... you hate CNN commentator Candy Crowley.

What if there is a tie?

With a couple weeks left before the election, the polls have the President and challenger in a statistical tie on the popular vote.; a site that sets odds on anything, has the odds of Barack Obama winning at 67%. In the electoral vote, Obama has a current lead in most polls but the trend is toward Mr. Romney. MSNBC has a piece running right now talking about the many ways in which we can have an actual tie in electoral votes. Going to my favorite site Politico yields a pretty convincing argument for the current president winning, but given Fridays 200+ point drop in the DJIA fueled by softness in top line revenues, and an emerging foreign policy black eye with the Benghazi situation, actually predicting who will win is still a total crap shoot. Besides, the blog is about who is the best candidate for the wine business versus who will win or who you want to win.

Lets all acknowledge neither candidate will produce perfect weather or have much influence over sufficient water. Further, if you read independents who review both the fiscal policies proposed, both are presenting campaign distortions and neither will reduce the deficit as they say. But if you don't expect the deficit to improve, GDP better improve so,  surprise ... its the economy stupid, to cite former President Clinton.

And the Winner is .....

My view on the best candidate for the wine business is consistent with the CNN poll that has Romney with a strong lead over Obama on the question of who would do a better job with the economy. Since that's the most important thing for growth in wine sales in my belief, I think Romney is the best candidate for the wine business - notwithstanding the fact he's not likely to show up at the annual wine caucus in Washington.

You will notice a poll with a white frame around it on the right hand bar of the Blog this week. The questionof the poll isn't who are you going to vote for, or who do you predict will win. The question is:  Who do you think is the best candidate for the wine business?

Vote on the Poll in the right column, and comment below on your choice for the best candidate for the Wine Business.

And .......... please if you are a West Coast winery owner, take the Annual Wine Conditions Survey.


  1. Perhaps this is a simplistic way of looking at this but would you as a blog writer support a president who's religion forbids the reading of blogs? Would a member of the beef council really support a candidate who was a Vegan? Romney has made a commitment to opposing the consumption of alcohol, how in touch could he possibly be with the wine industry? You say Romney would be best and that sales are what drives the wine business right? Well then how could a candidate who vetoed a bill allowing direct shipments of wine into his state, esentially reducing every small winery's sales and profits be the best for that industry? As a winery owner the fact that he is such an allstar businessman in his field is not enough.

    1. Good point. I mentioned that in the blog that he wouldn't be attending the Wine Caucus. But lets look closer at the premise you lay out. Does he "oppose the consumption of alcohol," or does he not drink for religious reasons? Is he a prohibitionist, or a tea-totler? There's a difference.

      When JKF ran for president, there was an unquenchable uproar from the protestants that a Catholic would bring his religion into office and who knows what would happen? It turned out nothing happened and since then, the issue of faith hasn't been brought up relative to running the country. Sure, everyone is guided by their moral star, but I don't think either Obama or Romney put their faith before their country.s

      Lets be practical. Why would Romney at this time in the history of the country stop and force us to not drink, make sure our dead ancestors were ritually baptized, and ban caffeine from our culture? I acknowledge he could veto a bill on liberalizing alcohol but is that going to happen? Who in congress is going to get that bill passed?

      Sure, there are the neo-prohibitionists out there that will try and roll back the existing laws as demonstrated by the CARE Act, but that didn't make it to the Presidents desk. There are bigger fish to fry right now.

      Last, I would tell you to look at last weeks Catholic Charities fundraiser both the President and Romney attended. Romney and Obama both talked about the good of the Catholic Church; the positives the Charities did to help the poor and needy. He called the Head of the NY Catholic Diocese "The Holy Father." Do you for a second believe Romney or for that matter President Obama really see him as their religious father; someone they are under authority from? Its a sign of respect that only a non-zealot would offer up. So I suggest that religion as it relates to alcohol is a minor negative, but not nearly as important as a business mind.

    2. That is your best shot? That Romney is a teettllr? Kinda simplistic. How many votes you think anybody gets today who advocates that the gummint squash consumption, not grapes? Go deal with the real world, not the tiny one in your head. Romm & the GOP have not campaigned on the thoughts in your tiny head.

    3. Are there any examples of successfully insulting a person into taking a different point of view?

      A restatement of posting policies: Disagree with author but offer your own thoughts. Disagree with other posters but please attack the post versus the person. Flaming, spamming, off-topic posts, advertising and offensive posts that would not be suitable for work will probably be deleted. Drunken posts will be forwarded to your mother.

    4. Anonymous - "Would a member of the beef council support a Vegan" - yes at least I hope so. There is a bigger question than my choice of food consumption or beverage as far as that goes. There are several members in Congress that do not consume wine but they have supported the industry.

  2. Interesting post...but it's still a lot of conjecture regarding what Romney would or would not do. Unfortunately, he's changed positions so many times, it's hard to figure whether he's conservative or moderate. He's certainly worked to establish himself as a social conservative and you have to decide whether you like that. What we do know is what Obama has done..yes, yes, a lot of spending but he has brought us back from the precipice and there shouldn't be any doubt that we were there nor should there be the naiveté that exists that we can recover from where we were in four years. So what can we go on?

    It's a historical fact is that the economy has done better under Democrats than with Republicans. If you don't believe that, look it up. Here's a great article on the topic (in Forbes of all places):

    Here are some facts that the article points out:

    • Personal disposable income has grown nearly 6 times more under Democratic presidents.
    • Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents.
    • Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year).
    • Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end).
    • Republican presidents added 2.5 times more to the national debt than Democratic presidents.
    • The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations.

    As you've pointed out, there's a lot of useless noise out there from Fox, MSNBC, political ads, etc. As investment managers always point out, there's no guarantee that past performance is an indicator of the future but given the choice between uncertainty and past negative performance versus a record and past positive performance, logic (at least mine) says to select the latter.

    1. Great post John. Thats for a truly rational argument against my POV and sans the vitriol that dominates the election process these days. Its one of the things I have a hard time grasping: unanimously we all hate the negative campaigning, and increasing distortion of facts and logic slicing, but its just getting worse.

      Again, thank for an alternate view.

    2. You cherry pick stats. How bout household income, % in poverty, # on foodstamps, and the outright drop in # employed, or compare Ibama job #s with those of Reagan? And it was the great push to sell home ownership to the unable to pay, that created the recession we are STILL IN.

    3. Let's take a look at your statistics then with the last point first - home ownership to those unable to pay. It's a good point and as it occurred under the Bush administration, as well as other instances of lax financial regulation, I would think you're a supporter of Dodd-Frank, which was signed by Obama, and stiffened up financial regulation in a number of ways.

      Regarding employment, the average annual increase in employment under Obama has been slightly under 1% through September. Under Bush, it was .5% per year during his first term and .8% during his second term. To my earlier point about Democratic vs. Republican administrations, it was 2.6% in Clinton's first term and 1.6% in his second. Clinton's first term was the highest growth in employment since Lyndon Johnson, another Democrat. Both higher than Reagan, although at 2.5% during his first term, he did quite well. He also signed several tax increases to reduce the deficit. You also may want to consider the context of the times. Reagan came in with high inflation. Obama came in with increasing deflation. They're hardly comparable. Reagan also doubled the deficit from Carter and increased the national debt by more than half. His administration may not be the best model for you, although I understand that the mythology has claimed otherwise.

      Regarding your other points, you're correct that median household income has fallen and food stamp usage has risen. If you think both would have done better under a Republican president, then you should certainly vote for Romney but be clear that there is nothing in the historical record of how the country has fared during different party's rule to support that conclusion. This goes to my point that so many decisions are being made by emotions which have little to do with logic.

  3. It's not about the prohibition of alcohol. It's about who would be better for the wine business. The best thing for the wine business is not undocumented laborers self-deporting themselves. The best thing for the wine business is not a president who would shun wine at State Dinners. The best thing for the wine business is not having the majority of citizens reducing their spending because of fear of a lack of a safety net.

    There is a clear choice in this election of who would be better for the wine business.

  4. I agree that Romney's religious views pertaining to alcohol are a little concerning, however I think he is focused on the economy first and foremost and is the best candidate to get it moving again. The wine industry, all industry, needs a stable economy to succeed. Unfortunately in this election if we want that to happen, social and religious issues need to go on the back burner.

  5. I think the question is more complicated than who would be best for the wine business, which wine business? The one the supports the CARE act or the one that shows up at the ShipCompliant and D2C Wine Conferences? These are two different parts of the wine industry. Is it possible to be pro-business and not be more pro-small or pro-big business?

    Interesting that you mention neo-prohibitionists and the CARE act together. They aren't the same, it's big business using neo-prohibitionists to keep things as they are in the wine, spirits and beer distribution system. Free-trade of wine means that choice will increase for the consumer, more choice is good for small wineries, not for big wineries or big wine businesses. ~ I have seen statistics that 85% of the wine consumed in the US comes from 150 different wine labels. I wonder how many wine companies actually own those 150 labels or brands.

    1. Thanks McSnob... interesting thoughts. I think of the Wine business as business. You separate it seems big business from small business. From that perspective, you could ask who is the best candidate for big business, and who is the best for small business?

  6. Rob, I think that it's a bit of an elephant in the room and you are giving a little too much leeway and tolerance to what Romney's faith means in terms of how it would/could guide his decisions - and that will essentially trump fair and wise business, lest he lose his earthly life's goal of ending up in the Celestial Kingdom (I am sincerely not being derogatory here, I am married to a ex-LDS). He has run the checklist in every other way - marrying in the church, having many children, providing very well for his family and faith community - all fine and noble behaviors. But Mormons believe that the Lord frowns on those who consume alcohol (and those who smoke); so while he may try to be like Joseph Smith and "manage" his community by teaching them correct principles and letting them govern themselves (Smith's own words), can you honestly believe that anything that would not discourage, let alone encourage, the easier flow of wine to the flock would even be on his radar?

    Tax increases and other regulations might find a very comfortable acceptance in a Romney administration - contrary to his professing disdain for both in general - just as they might with birth control, abortion availability, medical marijuana and quite possibly tobacco. Sure, there will be no prohibition instated, I am sure he does not watch Boardwalk Empire; and likewise, unless he would have the ability to appoint three radically-right supreme court justices, no overturning of Roe v. Wade that I can ever imagine. But that does not mean that any of the sin industries would not encounter rough roads - at least consciously neglected ones - during any Romney term. There will be no beers at the White House with returning vet heroes, and my guess is also no concern for smart water rights, direct-shipping channels opening, fed tax relief, grants for new energy and sustainable production development in our wonderful business.

    I am voting Obama for a dozen reasons, but not the least of which is concern for my livelihood.

    1. Another rational post with an opposite POV from mine. I so much appreciate a sane debate. I actually was fearing opening the floodgates with comments and having to start deleting flaming posts. I love this community ... posting your POV in a straight-forward and respectful way of others is exactly what we want.

  7. I think you're spot-on here, Rob. Consider that the last two vintages on the West Coast have been of marginal quality at best and the 2012s won't be out for a while. Granted, inventories are certainly not overflowing the warehouse, but the economy should be by far the most important issue for any business owner, regardless of industry, upon which to base his or her vote.

  8. Since it is raining on the last of our 2012 harvest I might as well chime in since I have already mentioned my opion to many in my circle.
    Under Obama lowest interest rates ever, Very weak USD compared to Europe, Austrailia others who export to US, California export to Asia off the chart.
    The answer should be Obama
    The quandry is will these three reasons continue on?
    Even though I have already voted absente,Unfortunately California has already choosen for me

    1. Thanks Kiley and Rodney for the thoughts. Don't forget to vote in the poll in the right hand column.

      I haven't voted quite yet but have my absentee ballot. I'm still not firmly decided in this very close race so am waiting until after the last debate and this week to play out before making a final decision.

  9. FYI in a close race thus far with 60 votes in the poll in the right hand column of this Blog, The President has a slight lead over the challenger.

    Polllink -

  10. Rob....You have my vote to become the host of a new MSNBC show.

    1. You really know how to hurt a guy. Neither Fox nor MSNBC will find me watching political commentary. Anderson Cooper is one of the most balanced journalists and interviewers out there. I enjoy listening to his perspectives. I'd go on his show ... (as if ...)

  11. I wonder if Romney would really resist the urge to support a sin tax...

    I am a life long republican so this hurts somewhat and I realize that there are many variables to why certain industries have ups and downs but this much is fact, and you can ask any grower in CA this: we made very good money with grapes in the 90's right up to about 2001 then it absolutely hit rock bottom, struggling until 2009. Then it bounced back, and '10, '11, and '12 we saw the highest prices in 12 years for grapes (and subsequently bulk wine). I am not a fan of democrats but I am a fan of being profitable.

    1. The 90's were growth years because the boomers were in their prime and demand for wine was the highest ever. The 2000's were flat for most everyone starting with the Tech Bubble followed by the Real Estate Bubble. Planting was flat in the period in fact, more than 100,000 acres were pulled. I don't think those events did much to help the wine business. What did help the industry is the Granholm decision allowing smaller wineries to find a market for their wines. At the same time, the large wineries found alignment with the consolidated distributors. At the end, nothing the President did changed the events over the past 20 years.

      As it relates to supporting a sin tax, remember its Congress who writes laws. The President approves or vetoes them. Also remember there are sin taxes already in force because its been a typical place to go find revenue. Its certainly possible to see a sin tax increase, but anyone supporting that has to remember they will be fought both by business and consumers. At this point, there is probably less support for that versus any time in the past 20 years.

    2. 100,000 acres were indeed pulled out however those acres were all planted back and then some, just not to all to grapes but to almonds. More plating of grapes have gone on in the last two years then have in the last 10 years. During the country's recession we saw a shift to value priced wines and a decline of higher priced wines. The last two years that more expensive wine segment is surging back. Like I mentioned earlier, there are many variables to this, perhaps it was policy that administrations past created that are just kicking in now, we can argue that forever. All I know is the one in power gets the credit or the blame. Nobody is touting Mike Singletary as the reason for the Niners' success are they?

      Wineries and Growers have been more successful in the last few years, that's a fact. While Govenor of MA Romney vetoed a direct shipping bill, that's a fact. Hmmm, success with one leader, already slapped in the face by another...

    3. Good post. Wish you would log in with your name and/or join the community.

  12. Great debate. I was concerned the topic would bring the vocal edges of the both the electorate and argument to the surface and my day would be spent moderating the conversation. It says something about the quality of the community that it didn't happen and the debate was between community members as well as me.

    For those interested, while the post debate polls say the President won, the Poll we are running on the right column on who is the best president for the wine business is solidly for Romney at this point, in representative respects with the CNN poll that asked the electorate who was the best candidate for the economy.

    I'm certain last nights poll changed few minds, but the poll we are running in a tight race can possibly change the entire outcome of the election, under the right circumstances.....

  13. If Romney had said “I have never used a gun”. “Using guns is a sin”. Would the NRA have endorsed him? I highly doubt it – no matter what his business background is.

    1. It’s a false premise. You have to separate out issues of faith from the Constitutional Right to Bear Arms and the Repeal of Prohibition which gave the States rights to largely control alcohol within their borders.

      The question isn't about sin but it is about integrity. When a President stands up and is sworn in, they put their hand on a bible and swear they will uphold and defend the Constitution of the United States - so help them God.

      Both Obama and Romney are men of faith. Both have a higher power to which they must respond. It would be a conflict for Romney to hold out his own faith which calls drinking sin, over the execution of his office and the defense of the Constitution.

      This is ground we've covered as a country before when JFK was President and was an avowed Catholic. Everyone worried about him being under authotity of the Vatican. In the end, he signed many orders and bills that were in conflict with Vatican teachings but necessary to protect and defend the Constitution.

      Its a tempest in a teapot to go down the path of sin and somehow suggest that as a litmus test for ones suitability for office.


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