Seattle Wine Blog

This blog is dedicated to commentary on all aspects of wine, especially short entries to help you find the best wines without the usual hype and spin. These are my frank, independent opinions, usually based on tasting wine at a public event, off the shelf or at the winery. "All creative acts must arise out of a specific soil and flicker with a spirit of place" -D.H. Lawrence

Tuesday, December 16, 2008

Madoff Makes Off With The Funds

Well, it looks like Madoff (maydoff) ran off with the funds, or rather, made off with the funds. Looks like this head of the NASDAQ figured it out and was, in fact, the pinnacle of this round of conniving and thievery on Wall Street. He brought the postmodern logic of rapacious capitalism to a head by realizing that there is no need for a referent(something real) when all you need is to manipulate the signs and signifiers. Much more brilliant than merely selling subprime and liar's loans for hefty commissions, then repackaging them in alphabet soup as CDOs and SIVs to pass the risk to greedy investment banks who passed the garbage on to little old ladies and little towns in northern Norway. Only the rich will suffer from this Ponzi scheme and besides it won't really hurt them anyway. Wrong! Jeff Skilling of Enron (remember Enron?) couldn't have done a better job.

What's wine got to do with it? Of course, Harry Rodenstock immediately comes to mind. Rodenstock made off with the funds by selling ersatz bottles of "Thomas Jefferson" wine to a very similar group of rich people. Proof that rich is not the same as smart, despite the easy assumption that it is so in our materialistic society. Why do people consistently fall for con men?Because all transactions are ultimately based on trust and we tend to trust our friends, "one of us", and authority. By Jove, it's the Great Gatsby! Let's see, how many times has our trust been betrayed? Watergate, Irangate, Enron, Global Crossing, Dot- Com Bubble, Subprime mess, Lehman Brothers - the list goes on.

Thanks to the Great Depression II, the wine and restaurant world are suffering significant losses of revenue since many people are eating and drinking at home. Tom Wark recently published a piece about the impact of the economy on the wine world called: "Prepare: it's About To Get Real Ugly Out There." In it, he predicts that wine consumption will drop and that small wineries selling wine for over $25 will struggle. I predict that wine consumption will rise in volume, but fall in dollar amount. Just because people aren't paying four bucks for coffee at Starbucks, doesn't mean they are stopping drinking coffee. If I were a small winery owner I would take two measures. First, I would lower my prices 15 - 20%. Sales and specials may do the trick, but how about "permanent" reductions (I see that the consumer price index just dropped the most since 1932). With grapes costing only 10-15% of retail price there is or should be plenty of wiggle room in a $35 bottle. Plus there should be plenty of good grapes and juice floating around out there at good prices. Second, since consumers are shifting from the top shelves to the lower shelves, I would do the same. How about following your consumer and producing a wine for under $20, preferably under $15. Many larger wineries world wide follow this approach with great success. The big prestigious Port houses sell a flagship vintage Port for, say $75, but make all of their money from huge volumes of Ruby and Tawny Port. Seven Deadly Zins from Michael David is another example. Oh, yes, and "House Wine" and "Little Red Truck." At least the Emperor's Clothes mentality hasn't gotten to the point where someone has tried to sell a bottle of wine with a great label, great marketing, great buzz, but no wine in the bottle, yet! Or maybe you know of some plonk that is nearly equivalent. My philosophy is: Eat , Drink, & Be Merry.


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