Column: Cultwine & Recession

Financial Crisis and Fine Wine

There has been much speculation concerning whether or not the Great Recession (as it's being called in the U.S.) has hurt California's cult wineries and, if so, how badly. Obviously, the only people who know are the individual winery owners and their bankers! These are privately held companies and, as such, their records are not open to the public

My own sense, having followed these wineries closely for many years, is that they were hit hard after the devastating third and fourth quarters of 2008, when the economy fell off the cliff. There were many anecdotal reports. The owner of possibly the most famous cult winery in Napa Valley told me that applications to get onto his mailing list in 2009 were lower than they had been the year before, which was the first time that had ever happened.

Many retailers and winery owners told me privately that they personally knew that sales of the most expensive California wines had tanked. Some owners admitted franky that their sales were down severely. Others insisted that, while their own sales remained healthy, they knew that other cult wineries were struggling. After all, the group that was hit hardest in the recession were wealthy, older Baby Boomers–precisely the demographic that was buying cult wines.

But it looks like the bottom may have been reached. For example, Premier Napa Valley is the big mid-winter event sponsored by the Napa Valley Vintners. It is highlighted by a charity wine auction of specially-blended barrels that are bid upon by the wine trade. The most recent PNV, held in February, established a record of $2.4 million, the highest take in 15 years.

As for the Napa Valley Wine Auction, it has not set a record since the recession began, but here, too, there are indications that excitement is returning to the bidders. Last week, when online sales for one of the June auction’s events were posted, all the tickets sold out in 7 minutes–even though the Napa Valley Vintners raised the price $100 a ticket over last year.

At this year’s Premier Napa Valley, a new record for a single lot was recorded: $125,000 for a five- case offering from Scarecrow Wine. (Screaming Eagle had been a previous record holder.) In 2009, an identical five-case lot of Scarecrow sold for $80,000. It would have to be said that Scarecrow is the cult wine du jour. The grapes come from a small estate in Rutherford, adjacent to Francis Ford Coppola’s Rubicon property; both vineyards are on the site of the great John Daniels’ vineyard for Inglenook, one of the historic wineries of Napa Valley (whose name now, alas, is seen only on inferior bottles of cheap jug wine).

Is Rubicon considered a cult wine? When Mr. Coppola (who, of course, directed The Godfather movies) launched it, more than 30 years ago, it was. With the Coppola name, and with the historic prestige of the vineyard (which Coppola meticulously reassembled by buying acreage as fast as he could afford to), Rubicon had its moment in the sun. Its rise to prominance was similar to that of Dominus, the property of Christian Moueix, of Chateau Petrus, which Moueix created around the same time. Both Rubicon and Dominus are still considered classic Napa Valley wines, and they are certainly very great; I rate both highly every year, and I cellar them. But I don’t believe they would show up on anyone’s list of the hottest cult wines. It’s hard to say exactly why. They’ve been around for a comparatively long time (by Napa standards), but then, Harlan Estate has existed for 25 years and shows no signs of its cult status eroding.

People still try to create cult wines despite the recession. One interesting winery to watch is Kenzo Estate, in Napa Valley. The Japanese billionaire Kenzo Tsujimoto reputedly spent $100,000,000 launching it. He hired as his winemaker Heidi Barrett (who had been at Screaming Eagle and whose name is associated with many expensive Napa Valley wineries; I profiled her in my book, “New Classic Winemakers of California: Conversations with Steve Heimoff”). Kenzo also hired as his viticultural manager David Abreu. This was the best team money could buy. Will Kenzo make it onto the cult list? I’m sure Mr. Tsujimoto hopes it will, but I don’t sense it has, which is one reason why prices for Kenzo’s wines have mostly stayed below $100. No true cult Cabernet would ever be sold for that low a price.

Written by Steve Heimoff

Leave a comment