Dan's Papers - May 8, 2009 - The Wine Bubble

Along with the financial and housing markets, the wine industry has changed during this recession. As with all economic downturns, alcohol consumption is up, but luxury items are way down, and this includes luxury wines. Conspicuous consumption and greed appear to have gone the way of Ponzi schemes; they are still around, just not quite as popular any more.

Gone are the days of impressing fellow diners at four-star restaurants by selecting that elusive vintage of Petrus or Screaming Eagle for a paltry few grand. After a decade of high end wine prices escalating with every vintage, with wines becoming more collectible and sparsely allocated, the tide seems to have turned. As with Hamptons real estate, everyone is wondering where the bottom is. In other words, when should we start collecting again, whether it be wine or houses?

Fortunately, collecting wine was never for me. I am a wine drinker and, luckily, my years of being in the restaurant and wine industries have offered me many opportunities to drink extraordinary wines at all stages of their evolution. Too young, too old, and sometimes, ahhh! Just right.

But there is good news for wine buyers. There are an amazing number of stunning opportunities right now. Some importers and distributors are being squeezed by their bankers (or accountants) to lower their inventory. When this happens, offers come tumbling out, such as great vintage Champagne that sells for less than non-vintage Veuve-Clicquot! Wine collectors and wine drinkers don't mind having some of their wine ageing in a cool place, but distributors and importers get pushed by their wineries to take the next vintage and wineries are pushed by their bankers to move their latest vintage out.

Prior to September 2008, it was the distributors and importers that were begging their producers to send the next vintage of that "hot" wine and the winemakers begging for some more time for the wine to settle and evolve before selling. So basically the whole high-end wine market has been turned on its head. Instead of customers begging their merchants and restaurants for the next vintage of that 95-point wine and those same merchants and restaurants doing the same begging to their distributors and importers for more hard-to-get wines, the formula has reversed.

Some of the shifts we are experiencing in wine markets will be temporary. Others may stay around for good. As a wine consultant, I am in the precarious position of guessing which patterns will be which. Highly allocated wines (those generally in short supply) being readily available is temporary. The dumping of expensive wines by the wine industry pipeline will also end eventually. The pricing of wines at fine wine stores and some restaurants is seeing some adjustment, but will this last when the recession fades? Also, some restaurants are becoming increasingly creative with their wine programs, offering half price wine nights, free corkage nights, etc. How long will that last? But perhaps the biggest question mark for wine stores is the future of wine sales in grocery stores. This did not make the grade this year in New York, but came pretty close. If it happens, how can wine stores be prepared to compete and continue to offer a great wine experience for the consumer?

If you think I have the answers, try again. I can only make an educated guess, and hopefully my insight into all things vinous will help with the guesswork. I have consistently said that great wines from great vintages will still have a strong market. At the moment that area has been soft, but there are some real sage buyers taking the money that would have gone into Bordeaux for 2006 and 2007 vintages and buying 2005 and other great vintages that are already on the market. In addition, the Asian auction market seems to be waking up from its winter recession slumber and the other auction markets should and are beginning to slowly follow suit. As the wine auction prices escalate the rest of the market usually follows. This, however, may take a bit more time as restaurant wine buying is still very weak, and this goes back to allocations.

Allocations of wines have been an issue for some time with the darling producers all wanting to sell direct to the consumer, skipping the retailers and wanting to have their wines in the best restaurants. With the demand of restaurant wines down, these "blue chip" producers are now faced with unsold inventory or offering their wines to the wine stores that have traditionally begged for such wines as Caymus Special Selection, J. Phelps Insignia, Pahlmeyer, Leonetti, Carlisle, DuMOL, Hirsch, Talbott, Pride and Montelena. The list goes on. These wines used to be "under the table" wines. In other words, wines that may have literally been hidden under tables at trade tastings and trotted out when the "right buyer" arrives at the producer's table. Lately I have seen such wines sitting openly on tables at tastings, not just in Manhattan, but out on Long Island as well. Recently, anyone at these tastings was able to compare wines such as Caymus Special Selection Cabernet Sauvignon to Duckhorn, Cain 5, Diamond Creek and J. Phelps Insignia, all sitting out for all to taste. A truly unusual site for wines that buyers had to beg for just a year ago. At one tasting I was stunned to see three single vineyard Diamond Creek Cabernet Sauvignons virtually ignored! Some buyers didn't know the pedigree of the winery, while others just don't have a customer for such wine in this economy. (By the way, all three were stunning, with the Gravelly Meadow being my favorite.)

So changes are afoot, but how long these changes will last before the wine market marches on is the question of the moment. We also wonder which changes will not revert back to their old roaring '90s heyday. But if we see some stability in the housing market in the next few months, our little holiday from allocated and exorbitantly priced wines will be over a year from now or sooner. My advice? Enjoy it while it lasts. That 1982 Latour may never be as affordable (I know, it's all relative) as it is at this moment again and, let's face it, neither us nor the wine is getting any younger. Just be sure to wait to pull the cork until I can find your house.

Christopher Miller is the Senior Wine Writer for Dan's Papers "Wine Guides." Mr. Miller is a graduate of the Culinary Institute of America, an Advanced Sommelier with the Court of Master Sommeliers, a wine consultant and wine educator. He is also the Education Director for Long Island's Sommelier Wine Academy, and has held the position of saucier chef at Schweizerhof in St. Moritz, Switzerland, and that of sommelier at Manhattan's '21' Club. He will be starting a Sommelier Wine Academy Captain's Course on the East End in September. Visit his website noblewines.com or email: