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Investing In Fine Wine Is For Fools

Vinted on March 12, 2013 binned in commentary, wine news

“Investing” in fine wine is a fool’s errand.

As in, “greater fools” – for it is certainly a fool who hopes to sell his/her speculation to greater fools for a profit.

The term greater fool is actually a pseudo-technical financial one, probably best explained in William J. Bernstein’s amazing book The Four Pillars of Investing (emphasis mine):

“The acquisition of a rare coin or fine painting for purely financial purposes is clearly a speculation: these assets produce no income, and your return is dependent on someone else paying yet a higher price for them later. (This is known as the “greater fool” theory of investing; when you purchase a rapidly appreciating asset with little intrinsic value and no capability to create income on its own, you are dependent on convincing someone else to take it off your hands later at a higher price.) There’s nothing wrong with purchasing any of these things for the future pleasure they may provide, of course, but
this is not the same thing as a financial investment.”

Substitute “coin” with “red Burgundy” and “painting” with “First Growth Bordeaux” and the quote would remain apt, cogent and frighteningly applicable. The bottom line is that holding onto fine wine for any reason other than to eventually drink it (or pass it on to someone else who might) is stupid.

This is because wine does not conform in any way to the modern paradigm of investing, which is built upon lower-risk (and thus lower-returning) loans or higher risk (and thus higher-returning) valuation of something’s (usually a company’s) ability to make profit. At best, it’s a hedge that someone (the greater fool) will want the object badly enough to take it off your hands at a price higher than what you paid for it…

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Should Millennials Be Drinking More Wine With Food? (Guest Post)

Vinted on February 19, 2013 binned in commentary, guest posts

[ Editor’s note: following is a guest post from the 1WD intern: the young, unpaid Shelby Vittek, who many of you will recall really shook things up with her first 1WD article. You can check out more of Shelby’s work at TableMatters.com, and find her on twitter at @BigBoldReds. Let us know what you think (but keep things civil, you opinionated b*stards!). Enjoy! ]

Just before the holiday break, Joe prompted me to run down to his cellar before lunch and pick out a bottle of wine for the meal that Mrs. Dudette had cooked up for us. It was an exciting moment – a free grab of any of the bottles I’ve been sorting through and cataloguing for months. (No, I didn’t choose a crazy expensive bottle, or touch any of his beloved aged Riesling collection – I know better than that by now.)

But the excitement of this new responsibility quickly turned into fear. I don’t often drink my wine with food and was worried my selection wouldn’t stand up well to the meal. What if the efforts to impress my “boss” ended in total failure, causing him to reconsider taking me on as his intern? And the last thing I wanted was to put Mrs. Dudette’s amazing cooking skills to shame.

Sometimes, my biggest flaw is this: I am a Millennial; and while we do have wine knowledge, we don’t know much about matching it with a meal. My generation, a hodgepodge of older students and young working professionals, marries wine more with occasions and events than they ever do with food. We drink it at parties, when we hang out at each other’s apartments, and in front of the television during date nights with Netflix. I even have a few friends that like to drink wine while writing a paper, which may or may not have once happened in the basement of our college library…

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Boomers And Busts: Sobering News For The U.S. Wine Business in 2013?

Vinted on February 12, 2013 binned in commentary, wine news

Anyone remember back in 2011, when we talked about the fact that Boomers – who by and large account for the vast majority of current wine sales – wouldn’t be around forever, and so the wine biz really needed to get off of its duff and start thinking about how it would court Gen X and Millenial buyers?

Well, I’ve got some bad news for those who’ve been ignoring that advice.

In the 2013 incarnation of Silicon Valley Bank’s annual State Of The Wine Industry Report presentation, a round-table style discussion between author Rob McMillan (from SVB’s wine division), Paul Mabray of VinTank, Tony Correia of The Correia Company and MJ Dale of KLH Consulting, who discussed the results of the report live in mid-January 2013. During the discussion (uber-interesting for wine geeks and insiders, probably not so much for normal people), McMillan (who is a nice and interesting guy, by the way, something I found out when I had dinner with him at Nickel & Nickel) discussed the sobering fact that the exit of Boomers from the wine market will be a potentially enormous blow to wine sales, and that the Millennial generation requires focus to help fill the expected gap.

To ease in the understanding of this, I’ve taken a graph from the SVB report and “enhanced” it so that the implications are more, well… transparent (click to “embiggen”):

In other words, Boomers don’t just exit the wine market “feet first” (though many, hopefully, will continue to love wine and keep on buying it until they shuffle off this mortal coil); they exit it in droves when they retire. The message is this: if you’re a wine producer who hasn’t been courting younger generations as well as Boomers (And as we’ll see in a minute or two, chances are good that you haven’t), you ought to be crapping a brick right about now…

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Are Wine Blogs Killing The Joy Of Drinking?

Vinted on January 8, 2013 binned in commentary, wine blogging

Mashable.com – the über-popular purveys of tech and pop-culture news – recently ran an op-ed style screed by Sandra Garson bemoaning the phenomenon of everyday folks blogging their exploration of food, and in particular, their forays into cooking. In other words, Garson decries the proliferation of food blogs.

Here’s a snippet of Garson’s article, which I think best sums up her anti-food-blog stance:

“The Internet has made the most important kitchen tool no longer the knife, or the rolling pin, but the camera. If you can’t take stunning, high resolution photographs of your work, you don’t count as a cook. They are indeed stunning photographs: the luscious, carefully styled, pornographic kind. Those photos arouse you. They get your blood racing, your stomach pumping. You are excited and want closure, satisfaction… You want to eat that right now.

Bah, humbug. Those of us who can’t make a dish look so perfectly luscious are probably going to feel inadequate and pass on learning to cook… On full display is how hungry we are to be seductive and to be number one; how obsessed we are by excitement. Sadly, what’s harder to see or taste is the way to cook.”

Garson underscores her points that food blogs are 1) scaring people away from cooking, and b) are too commercialized and self-centered, by contrasting food bloggers (largely made up of consumers and everyday citizens) with… Julia Child.

Which is sort of like comparing the holiday soccer games I play with my friends to the World Cup. Or comparing wine blogs to Gerald Asher (you knew this was coming around to wine, right?).

And so in Mashable’s article we see a reflection of nearly every misapplied criticism that has been levied against wine blogging over the past five years, which we might summarize as “wine blogs are killing the joy of drinking!”…

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