Is California Wine At a Pricing Inflection Point?

 

 "Better to remain silent and be thought a fool, than to speak out and remove all doubt"

It's not easy deciding on a presidential candidate. The debate between Mitt Romney and George W Bush didn't help me. ......but that's not important.

What IS important is the Gomberg-Fredrikson Report for May shows cumulative bulk imports accounted for 19.3 million case equivalents shipped into the US in 2012; a whopping 167% increase. That's the equivalent harvest of 27,000 acres of US winegrapes calculated at 12 tons per acre.

The Mystery Surrounding Lot18's UK Closure

The past week's change in strategy announced by Lot18 to close their UK efforts was curious, particularly when you consider they have been there only four months. Its a mystery worthy of Scotland Yard if you ask me. Repeated calls for an investigation have fallen of deaf ears. There are some clues however: The closure follows a couple small rounds of layoffs and the abandonment of some early initiatives directed at other luxury areas. In their press release, Lot18 suggested the reason for the closure:

‘Unfortunately, the supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate.’

A likely ruse it is. The supermarkets did it! They strangled Lot18 and I'm guessing the deed was done with a rope in the produce section by Colonel Mustard! Seems very suspicious to me. I called their CEO Philip James for comment on Friday but at press time there was no response so we are on our own to solve the mystery. What's the real reason behind Lot18's U.K. closure? Elementary my dear Watson.

Is There Really a Grape Shortage?

Women's Syncronized Swimming Team Drowns Trying
To Signal Help with their Legs

I thought I'd tip my lid to the upcoming Olympics in London and in this weeks edition of SVB on Wine, share a story and a revelation about market bubbles and tie that into an observation about year-end grape supply and grape market dynamics.

Let The Games Begin!

Is 7%-11% growth in US Fine Wine disappointing?

Up to the spring of 2010, I wasn't the most popular of prognosticators. Prior to the crash I started handing out predictions as I saw things, a housing bubble, large market corrections, etc. Strangely, after the first gloomy prediction my literary agent stopped getting any calls for book signings and speaking opportunities. “Call someone that's not a Debbie Downer.” I was a pariah, a leper, an outcast with the likability of an attorney from the WSWA. Then last year when I said we were at the beginning of another long-term period of growth in fine wine, the phone stared to ring. I was once again quotable and in demand for speaking engagements. What’s the old saying? Failure is an orphan, but success has many fathers? That's why it's particularly disappointing for me to throw a little cold water on the wine recovery.... but let me emphasize the adjective 'little' because its a measured mid-year course correction, doesn't change the growth forecast, and I still want to get some speaking invitations.

Finger-Pointing Our Way To Luck in America

When I graduated from college I started the on-campus recruiting process. After putting myself though college for 7 years I was flat broke and I needed a job. I thought I'd get a chance to work on Wall Street; some place like Goldman Sachs maybe? They made $10k a MONTH to start. That sounded fair to me. Sadly, I woke from my dream to discover Wall Street didn't recruit from Sac State. They only recruited from the top 1% schools and Sac State was clearly in the 99%.  I struck out on all the other interviews too. On the outside I blamed the 11.8% unemployment rate we suffered at the time, but on the inside "no-no-no" wasn't doing much for my self-confidence. I wanted to finger-point but I needed to make a living.

With one last interview scheduled, that with a company for which I didn't even want to work, I got a job offer. Even if it wasn't my dream job I can't begin to describe how good that felt. I got a job! I may not have been in the 1% but I was in the top 90%. Somebody liked me! And the job? I was a management trainee for a multinational bank getting a starting salary of $11,500.00 ..... a month year ....... $11,500 a year!

Imagine my surprise when recently a good friend with an alcohol enhanced and vocal political viewpoint got on a bit of a rant and told me <with a face that looks like he sucked on a lemon and pointing a bony finger at my nose >..... "You greedy bankers are what is wrong with America."

Now I will take credit for global warming, mid-west storming, and the sun when it doesn't come up in the morning, but this? It's not my fault. I never got my Wall Street dream job but today, with another 10,000 job cuts estimated for this year on Wall Street, I'm reminded sometimes luck is when the things you want, don't happen and things you don't want do happen.

Neo-Prohibitionists are Alive and Well

Taxing alcohol will save us from all sorts of ills, or so many would have you believe. Here's a quote that got my attention this past week:

 "Returning alcohol taxes to their 1977 levels (when the government collected $57 in 2009 dollars per gallon of alcohol) would raise an additional $18.5 billion in revenue across all levels of government -- and also lead to reductions in drunk driving, violent crime and disease."

But things aren't always what they seem. Remember the recently concussed CARE Act? ..... "To keep your kids and communities safe." Somehow I don't think that bill was about our kids or communities. I know, call me a cynic.

Rodney King & the Evolution of the Wine Consumer

The passing of Rodney King this past weekend was a sad event for me. I remember being so impressed with the man when he stood up to the cameras after the jury acquitted his attackers sparking the LA riots. He said simply, "Can't we get along?"  How many of us in that circumstance, having just been denied justice would have used that platform to complain about the verdict instead of being willing to utter even a single word to plea for a better world? It's hard to believe that was 20 years ago in April but it was, and the echos of  Rodney King's choices that day are still positively embedded in American Culture. He's left a positive mark. Time does move on though and with its passing, there is an opportunity to reflect on the evolution of events and cultures. While wine seems so far removed from the subject of Mr. King today, his appearance in the national press has given me a chance on this Father's Day to reflect on the past 20 years economically and the evolution of the wine consumer we're witnessing.

You Might Have to Wait Until 2013 to Close your Vineyard Purchase

As a native Californian, we were forced in grade school to make the pilgrimage to Sutters Mill in Coloma to see where John Sutter and James W Marshall discovered some yellow flakes in the mill tailings; starting the California Gold Rush. It was a long bus ride to look at a stream and an old log mill that we couldn't even climb on. There weren't even snack bars there. And if that wasn't a big enough rip-off, I didn't see any gold there.

As we know from history, there were some who hit it big in the Gold Rush. But the ones who probably did the best weren't the ones who dug for gold. They were the ones like Levi Strauss who sold the miners their provisions as the costs of essentials like flour and dried beans skyrocketed. It was a seller's market. What does that have to do with the wine business?

Ping-Pong Socialism and Wine

Most people who have a little gray hair remember when the Chinese were really Communists, living behind a wall and carrying little red books. You can debate what they are now if you like, but nobody will argue China is the same as it was in 1971. That's when Former President Nixon's Ping-Pong Diplomacy forever opened the world to the Chinese and their people, and their people to the world. Interestingly, if you ask a person on the street in Beijing about that event, they point to America's sponsorship of China in the world as being a galvanizing point for their country. They are grateful for our part and even teach about our impact in their history classes as I was told by two young women I met there while traveling.

The Greeks have Fallen and they Can't Get Up!

When I was nerdy young man, I remember feeling proud when I heard the news reports talking about a strong US dollar. Yes! We are stronger than anyone! (I know... I listened to economic stuff even then, but I got my share of Zeppelin too.) Then I remember when someone would say the dollar was getting weaker and that made me feel like there must have been some kind of a conspiracy happening.