Is there a new pecking order for cult Napa Cabs?
Well, the case could certainly be made after this past Saturday’s Premiere Napa Valley: the part-auction, part-networking-event, part-total-insanity in which small, selected barrels/lots from some of Napa’s most celebrated wine producers are auctioned off to collectors, buyers and importers, as special, once-in-a-lifetime future bottlings. The idea is that those wines are unique to each winning bidder, as the small lots from each producer are sold in their entirety to the winning bidder for that lot (I attended on the heels of the 2011 Pro Wine Writers Symposium).
Last year’s auction started off a little grim due to the down economy. The atmosphere was a little more convivial this year and when the biddings kicked off, the auction room was packed and the excitement, to my eyes and ears anyway, was more palpable. But when a Japanese importer got into a friendly-but-intense bidding battle over Scarecrow’s 5-case 2011 Premiere lot, the festivities took on the air of a rock concert, with cheering, clapping and smiles. No dancing or head-banging, though.
The winning bid by the Japanese importer was $125,000 – roughly $2,000 per bottle of Scarecrow’s stuff on offer that day.
We may just have a new King of cult Napa Cabs, and a renewed focus on Scarecrow’s winemaker Celia Welch – not only was the $125K the highest bid of the day for any of the 200 auction lots on offer, it was the highest winning bid in the history of the Premiere Napa Valley auction.
Will that Japanese importer ever break even on this weekend’s historic transaction? Probably not, at least not when it comes to recovering the investment on that particular wine. BUT… very likely the cache factor will send more business their way, so it seems a smart move commercially.
Is the news good for CA wine? Probably – if there were a better indication of the economy for high-end wine recovering, I’ve yet to see it. I did hear grumbling on the auction floor by other producers that the historic bid was more fanfare and marketing over substance, but there were plenty of people raving about the quality of the Scarecrow lot wine, and I think any Napa Cab producer needs to see the forest through the trees here – I can’t think of any way in which this won’t benefit the recovering industry here, generally-speaking.
More to come on all of this later in the week – including my notes on some of the other auction lot wines, and video of the history-making gavel being slammed on that Scarecrow auction (for now, you’ll have to settle for my crappy cell phone picture of the winning moment from the “results board”).
What do YOU think? Is Scarecrow’s record-breaking success a boon for Napa Cab.? or is it a score-whoring setback for fine wine at affordable prices? Shout it out in the comments!
Cheers!
Comments
1WineDude
This just in, press release from NVV / Terry Hall, about $2.4M total in the auction; modest increase from last year but still an increase:
"Last year’s PNV auction brought nearly 30% more than 2009's take, and this year closed at 6% more than 2008's record-setting $2.2 million, clear indicators that confidence in investing in Napa Valley wines is strong. Overall this year there were 68 successful bidders, a third of whom were first-time bidders, who purchased 1530 cases at an average case price of $1546, an increase of 37% over the recession-stressed take of 2009 and 20% more than 2010's average case price."
Full deets at http://www.napavintners.org/news/images/Feb11/PNV…
Steve Heimoff
I can't get too excited about these superstar wines that come and go like morning dew on the grass. One year it's Dunn Howell Mountain – then it's Groth Reserve – then it's Opus One – then it's Screaming Eagle or Sloan or Harlan or whatever. Who knows why this Japanese importer acted as he did? It doesn't mean anything to 99.9% of the people and I can't figure out why it means anything to you, Joe.
1WineDude
Steve – I appreciate the cautionary, reasoned take, believe me. I thought it would be fun to discuss the potential impacts, which is essentially all that it means to me. Cheers!
Dave Bender
Great coverage, Joe. I think there are some really great things to take from this. One thing is for sure, CA could really use a thirsty market like Japan to help cushion their premium level wine market. I love hearing about US wines selling for top dollar, comanding prices that are actually fair market value with the rest of the wine world. I like to think of these sales as bragging rights for the US wine industry, helping to further solidify our place as forever a key player in world class wine. Congrats, Scarecrow!
1WineDude
Thanks, Dave. I guess you and I have (very) different sized bank accounts because wine at $2K / bottle isn't fairly priced in my mind! :-)
But do agree that the publicity alone is worth it for NV.
Cheers!
Dave
No no, Joe. I'm just a Sommelier at a small French restaurant. My cap on wine for my personal consumption presses the $150 mark (maybe once a year). Therefore a wine that is $200 is still as untouchable to me as a $2000. "Fair" is a relative term naturally. Of course you and I both know that we can find 95 pt. + tasting wines, for a fraction of what the proper marketing, labeling, advertising, reputation etc. could properly drive these wines to $fetch$. There just may be a price point that a wine crosses, that then establishes it as a "status symbol" in the market. This for me is clearly the case with Scarecrow–and good for them!
1WineDude
Dave – well, we both still have opportunity to sample some of those big dawgs, which itself is beyond the reach of many consumers despite how modest the opportunity really is!
I agree with you I'm happy for Scarecrow and Napa for the success, but there are dangers that come with it – exclusivity breeds all kinds of nasty, parasitic extra baggage; but many a wine brand would love to have that problem.
Cheers!
Aaron
I'm torn about this. On the one hand it is excellent publicity for CA wine and American wine in general. On the other hand, it seems like cult Napa cab is getting one step closer to first growth Bordeaux and 1er Cru Burgundy where wines are bought for investment and not consumption, a sad state indeed for anyone who believes wine was made to be drunk, not hoarded or used as a marketing tool for an importer. It's pretty clear to me that these prices don't reflect the utility that someone would get out of actually drinking a bottle, which means that prices are way out of whack from fundamentals.
1WineDude
Thanks Aaron – great point about the escalating prices. In one of my recent podcasts I talked to Jaime Araujo, who co-authored a report on the Asian wine market and we discussed some of those exponentially increasing prices. Turns out, $2K for a bottle of wine as a gift to seal a business deal in Asia is peanuts compared to a Rolex or something similar, and it's an approach like that (treating wine as a collectors' item instead of a consumption item) that is helping to fuel the crazy prices. I'm guessing a similar motivation is at work here, though more to give cache / exclusivity to the importer – not identical to the business-gift thing but along similar enough lines (and certainly with similar results!). Cheers!
Mark
It's definitely a different market. One thing we've learned about doing business outside of the states, names are incredibly important.
1WineDude
Thanks, Mark – I am quite sure the cache factor came into play that day!
Terry Hall
Thanks Joe, great post–you captured what I think is the overarching message of looking at market indicators and trade confidence. The price per bottle is not representative of the Napa Valley appellation overall–readers should remember that this is just 5 cases of wine out of nearly 9 million produced from the Napa Valley AVA.
And while Jaime is spot on with business protocol in Asia, the underbidders up to the last bid for Scarecrow were Southern Californnia wine retailers.
1WineDude
Thanks, Terry – more coming this week including some video (I'm really hoping that I don't need to pay any royalties for that…? ;-)
Cheers!
PaulG
Nothing succeeds like excess…
1WineDude
:) Now you sound like a few people who were on the floor that day, Paul…
Bill Smart
Does anyone else think that Premiere Napa Valley sounds like a giant beauty contest? Or a popularity contest from a bad high school movie?
1WineDude
Bill – I think that's a very valid interpretation. Others would argue it's more than that, but there's no doubt that's a part of it.
Bill Smart
Personally Joe, I'd rather sit around drinking beer and shooting the breeze w/you about our biz.
1WineDude
I hope to take you up on that someday!
Mark
Well higher prices are certainly better than lower ones. Having done some work at least leg work on the export side myself, it's hardly a panacea. The entire Hong Kong market which the California wine industry has long looked to as a fix for all their problems, is only about the size of sales in the city of SF as an example.
Susan Guerra
Hi Joe,
I'm bummed I didn't know you were at the actual auction. I was there in my new role at Gary's Wine and Marketplace. We were paddle #1 (sitting directly in front of the Japanese contingent) and dropped out of the Scarecrow bid at about $90K. We visited with the Scarecrow folks, Brett Mimi and Celia the day before and tasted the wine. It was delicious but worth $2000 a bottle–I don't think so. We knew going in that the Japanese would bid as much as it took to get that lot–not only for the taste but for the history and cache tied up in the property itself and in Celia being the winemaker.
As for drinking these auction wines, Gary bought 32 lots in all. We have customers who have been buying these auction wines for over a decade and the reason they keep doing it is because they drink them. They are not really collectible in the sense of being able to sell them later at a profit because they have no tangible market value. Even though they are one-of-a-kind lots it's not the same as trading in 1st Growth Bordeaux. The vintners use the term "futures" but I think that's a bit of a misnomer.
This particular event is not open to collectors. It's only for the trade. Gary doesn't "resell" his lots in the same way we sell other wines at retail. He primarily goes because he has developed a group of customers (some of whom traveled with us) who love the wines and who buy into them in advance. He sells at only enough to cover his costs on the wine and shipping.
The scene was a total gas though and I don't know about you but my palate was pretty shot after tasting barrel samples for a week straight.
Sue
1WineDude
Hi Sue – are you kidding! Testament to the madness that not only did we not run into one another, but at one point I was trying to help someone locate the contingent from Gary's (obviously unsuccessfully)!!!
Hopefully we'll see you at WBC11 in VA?
Cheers!
Susan Guerra
Hi Joe – Too funny! I was looking for you in the barrel room actually, because I knew you were at the WWS and I saw Steve Heimhof, Lettie Teague, Alder and Jim Gordon so I figured you might be there too.
I will be in VA and also at TasteCamp. Will I see you at both?
Cheers to you too.
1WineDude
I'll be at WBC but unfortunately can't get away from the last vestiges of the day job for TC (and bumming about that, because I'd love to check out the scene again up north).
Charmion
The good side is that probably 95% of people who drink wine, don't have the foggiest idea of what the noise is. Publicity is always good, even bad publicity, they teach in school. So, $2K for Celia is nice. But super premium wines represent a very small % of the total spending on wine, and the industry can survive or thrive or whatever, regardless of the $2K phenom. I know Celia, bravo for her. But millions of cases a year are the industry, while $2K is just a spec in the heavens.
1WineDude
Thanks Charmion – and a tiny (though brilliant) speck, at that!
Colorado Wine Press
Two points:
While I am sure that a majority have no idea of what just went down in Napa, no one is talking about the "bad" publicity that might trickle down to those individuals. Do you really think that 2k/bottle is not going scare away the occasional wine drinkers? Two thoughts cross my mind when I see that price. 1) What does it taste like? and 2)I don't understand wine and need a beer. While I do think that in the wine circle, Scarecrow's good fortune will prove good, the larger picture is a bit more complicated.
Second, people actually do buy some of these wines. I have seen a few bottles from previous PNVs at a local wine shop, and I actually bought one (2000 Cosentino) for a tasting I hosted. Though, that was before things really started to get as crazy as this weekend!
1WineDude
Thanks, CWP – I think finding these wines, at any price, is still pretty rare. Depends on the sizes of the lots, obviously, but hey, even seeing wine priced at $200 / bottle makes me want to drink a beer!
Colorado Wine Press
The are rare to find, but it does happen and not at the mesospheric price range. The two that I have noticed here in Denver are priced at $100 (one is on clearance, and has been for quite some time, at $60). Even by simply being on the shelf provides PNV more exposure to the general public.
1WineDude
Good point, CWP – we do get caught up in the hype of events like Scarecrow's pricey bid, but the vast majority of those 200 wines at PNV go for 2-10% of that, and prices are MUCH lower (though still relatively high). Cheers!
Obnoxious Pendant
Just for the record, it's "cachet," not "cache."
Obnoxious Pedant
That should be Obnoxious PEDANT…Damn you, autocorrect!
1WineDude
Seems we are both victims of the autocorrect today! :)
Alfred
This is a very useful discussion which i have got now and i am very happy to you to know the One thing is for sure, CA could really use a thirsty market like Japan to help cushion their premium level wine market. I love hearing about US wines selling for top dollar, comanding prices that are actually fair market value with the rest of the wine world. I will suggest the content to my all friends.