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If you consider yourself a Burgundy enthusiast or perhaps wondered what the excitement over Burgundy wine is all about, attending the next La Paulee (in San Francisco) on March 1, 2008 is your chance to taste a cross-section of the best wines from the region, both supplied by the event organizers as well as other guests who bring fantastic bottles to share.

There are three events:

1. Grand Tasting ($300) - Held from noon to 3 pm on March 1, this is a walkaround wine and food extravaganza. 
2. Gala Dinner ($1,400, includes admission to Grand Tasting) - Starts at 6:30 pm on March 1. Guests are encouraged to bring a special bottle to share in the spirit of the La Paulee tradition. 
3. Exclusive Rarities Dinner (Est. $5,000, includes admission to all other events) - Limited to 50 people. Very special wines are served. This event is held on the Friday night before the Gala dinner.  The final schedule and price is still to be determined. 

Vinfolio issued a news flash email inviting our customers to sign up last week which contains more details of the events as well as a reservation form to download (provided again here).  You can send the form to Vinfolio at service@vinfolio.com or fax it to 415-946-1359 and we'll take care of holding a spot for you.

A few considerations in case you are hesitating

1. Daniel Johnnes (Wine Director of Daniel Bouloud's Dinex group) normally holds this event in New York every two years and he has not held it in San Francisco since 2001.  I suspect that there is pent-up demand on the West Coast which will result in it selling out quickly (all prior years sold out months in advance).
2. The response to our news flash email confirms that interest is running high.  E.g., we already have reservations to fill 50% of the seats at the Rarities dinner!
3. Read some press reviews from prior events which are glowing.
4. There will be plenty of interesting people to meet, from Allen Meadows of Burghound to winemakers from the Burgundy domaines whose wines are being served.  And "yes", I will be attending and would look forward to meeting readers of this blog and/or customers of Vinfolio.

Next step: Send in your form and we'll take care of the rest.

A newly published Associated Press story (for which I was interviewed) is titled "Collectors do it for love, perhaps money".  The title sums up the general point that most collectors of anything, whether it be baseball cards or wine, pursue collecting because it is a personal passion.  However, being knowledgeable about your area of interest may help you identify values that can lead to good investments.  If you're a serious wine buff and make intelligent buying decisions, chances are you can buy a little extra to sell later at a profit.

The chart above shows auction prices (per 750ml bottle, inclusive of buyer's premium) of 1990 Petrus in individual lots sold at major auctions houses worldwide over the past five years according to the Wine Price File (see more details on Vinfolio's site).  The relative performance displayed here could be repeated for many other fine wines.  What's going on?  It's simple -- demand has steadily exceeded supply.

What about the future?  The long term trend for fine wine prices is fundamentally upwards because growth in demand is likely to continue to outpace supply. 

Here's my supporting rationale: 

1. Wine has become a luxury good.  Wealthy consumers are increasingly buying it for other reasons than drinking it, including as a sophisticated way of displaying their wealth.
2. Wealthy consumers are less price sensitive when it comes to maintaining their lifestyles and often chase the same status symbols, as pointed out by Robert Frank of the WSJ's Wealth Report in his post, "Inflation soars for the rich."  Check out Forbes' cool interactive chart of its Cost of Living Extremely Well Index.
3. Fine wine is a global market.  Just examine the countries of origin of the top ten bidders at most major wine auctions.  Buyers seek out their chosen wines wherever in the world they may be found.
4. Supply of the best known brands is relatively fixed.  Lafite-Rothschild is simply unable to plant additional acreage to accommodate increased demand.  In Bordeaux and Burgundy at least, this is the norm.
5. Wine import duties are more likely to fall than rise.  What would be the impact on fine wine demand from China's burgeoning multimillionaire class if China were to cut its 50% wine import duty dramatically?  See my earlier post on wine import duties.
6. Wine consumption trends are up.  Per capita wine consumption rose 17% in the U.S. from 2005 to 2006.  The potential for growth in other economies is huge.  E.g., China's per capita consumption rate is only 6%-7% of the U.S.'s.  Also see my post on the Top 10 reasons driving wine's growing popularity.
7. The trend towards wine investment helps fuels prices.  Rising wine prices have attracted interest in wine as an asset class from both individuals and professional investors.  For example, in the UK, several wine investment funds such as The Wine Investment Fund and The Vintage Wine Fund have emerged (both founded in 2003).  These funds acquire and hold large quantities of fine wine which in turn creates greater scarcity and supports higher prices.

Bottom line: Those of us who enjoy drinking fine wine need to get creative on financing our "habit" (perhaps by buying additional quantities to sell later for a profit) or by seeking world class wines from newer regions or wineries that have yet to be recognized as such.

The press has been filled with stories about counterfeit wine in the past few months.  Any solution for absolute authentication needs to start with the wine producer for obvious reasons.  But for a solution to be workable for the trade and consumers, a simple method for them to verify the wine's authenticity is needed.  A security seal called Prooftag (adopted by Blankiet Estates and some Burgundy/Bordeaux producers) meets this test whereas Kodak's offering (adopted by Colgin, Vineyard 29 and Staglin, see press release) does not.

Overview of Prooftag technology

Prooftag is tamper-evident strip (about 1 cm wide and 5 cms long) which is applied to run from the foil capsule onto the bottle.  The technology works on a three dimensional signature called bubble tags that are made from a clear resin which create bubbles in unique (random) patterns during a hardening process.  Read more about why these tags are impossible to reproduce.

Tags also have a unique number assigned and both are then scanned with optical readers when created (by the manufacturer, French company Novatec) and recorded in a central database. 

The key advantage of Prooftag - Easy verification

There are 3 levels of "controls" to verify tags.   The first level is based on a quick visual inspection.  See example to right where the top image is an original strip and the lower one has been tampered with.  The strip might also be ripped.

The second level of control requires using the identifier on the tag to retrieve the unique bubble pattern image from the company's database.  Simply visit this authentication page, and enter the identifier (click here for the animated tutorial).  According to the company, over 99.95% of people tested can complete a visual authentication in a few seconds.

For the trade, optical readers that use an algorithm to calculate a signature for each bubble tag (analogous to how fingerprint readers work) can then be connected to the company portal for electronic authentication.

Possible issues with Prooftag's solution

I presume simply peeling off the strip (even if it remained unripped) would create the damage shown in the second image above (although I didn't see this scenario proactively addressed on the company site).

What about the long-term "stickiness" of the label in varying cellar conditions?  If for some reason the Prooftag came off accidentally, it could render the bottle valueless.  It seems likely this use case has also been considered.

Potential flaws in Kodak solution?

Kodak's system is based on applying invisible markers to printing inks, paper, and other packaging elements.  But these invisible markers are only readable with proprietary handheld readers.  Putting aside the low probability of an individual collector ever buying a reader, trade members might still do so if they care about selling authentic bottles.  The problem is when Vinfolio inquired about obtaining a reader for this purpose, we were told that they're available only to customers!  Huh? This virtually defeats the benefit of marking the bottles at all.  

The other obvious flaw with the entire Kodak approach is that it does nothing to stop a counterfeiter from refilling a bottle with something else (unless the markers are in the foil capsule and it is not resused after a bottle contents are replaced).

Bottom line: Wine producers deciding between these and other anti-counterfeiting options need to consider how the trade and consumers will interact with the technology.

P.S. Here's a link to the Decanter.com article which prompted this post.

How long should it take for wine purchased on pre-arrival coming from Europe to be received by your retailer?

A recent thread on the Mark Squires Bulletin Board on eRobertParker.com titled No longer a fan of Premier Cru attracted over 100 posts and I was struck how many times this issue was raised, often in the context of wines long since released such as 2003 Bordeaux.

Factors affecting timing

• In stock status at supplier at time of retailer's purchase (is it a supplier pre-arrival too?)
• Payment to supplier by retailer (no wine is released for pick-up until payment)
  
• Collection of purchase by retailer's logistics partner (should be within 1-2 weeks of payment)
• Frequency of container shipments (typically every 4-6 weeks)
• Time "on the water" (typically 30 days to California from Europe)
• Time to process the container contents upon arrival (10 days max)

Other than Bordeaux futures purchased at the outset of a new campaign (which should be 18-24 months max), most pre-arrival purchases should arrive within 3-6 months from Europe.

Why it might take longer than 3-6 months

1. Known period before supplier receives wine - If the wine was not in stock at the supplier when purchased, your retailer should be told the estimated time before the wine is available for pick-up (trade sources expect to be asked this question in this situation).
2. Did your retailer have a written invoice confirming his supply before selling the wine to you? If your retailer was speculating by offering wine for sale that he would try to "backfill" later once he'd sold it to you, then you're dealing with the wrong retailer.  This circumstance would also explain extended delays for wine long since released  (such as 2003 Bordeaux) as the pricing of supply could have moved against the retailer since he sold you the wine.  The longer he defers fulfilling your order, the longer he defers recognition of his loss.
3. Supplier defaults - The supplier may not have honored his written commitment to your retailer (or may be experiencing his own delays receiving the wine from his source).  There are a variety of reasons this could happen but as the customer, it shouldn't be your problem even if the wine ends up needing to be sourced elsewhere at a loss to your retailer.  However, depending on the scarcity of the wine, it might add a few months to the delivery period.  Any period beyond a few months is not reasonable absent a specific explanation of what happened.

Bottom line: If you're experiencing longer delays than 3-6 months and are not provided with specific reasons, then you can assume your retailer's slow payment is at fault as everything else is fairly predictable.  If you agree with my hypothesis, you should at least consider whether you're comfortable with being a creditor to your retailer when the evidence indicates a "stretched" financial condition.  The longer the delivery delays, the more concerned you should be.

Related posts on pre-arrivals

1. Why buying pre-arrival wine makes sense
2. Wine futures and pre-arrivals: what's the difference?