Scarecrow!

Scarecrow from the 2005 vintage is available March 21st-31st at $150/bottle. Buy your entire allocation.

The 2003 vintage received 98 points from RP, the highest score that Parker has given for any inaugural vintage. Released to a lucky few at $100/bottle, the wine was trading at $800 as soon as the Wine Advocate's review was in in the mail. Today, this wine is at least $900.

The 2004 vintage got (only) 95 pts from RP, but the damage from the first year's success could not be undone. The cheapest retailer on wine-searcher.com offers the 2004 Scarecrow at $700, but as with the 2003, there is no shortage of merchants willing to charge $1000.

The 2005 vintage isn't bottled yet, but Parker gave it 94-97 from the barrel. Pre-sales on winecomune.com are the cheapest at $620-$650. A brick-and-mortar wine merchant will charge more. I'm not buying much wine right now, but '05 Scarecrow at $150 gets me reaching for my checkbook.

2000 Chateau Lafite Rothschild Extends Gains, Lafleur Weakens

First growths and other top Bordeaux from the 2000 vintage have been on a tear lately, prompting this blogger to speculate that a wine bubble is here (see earlier posts). Results from Acker Merrall & Condit’s January auction suggest that a top is finally forming, for everything except Lafite. Most wines failed to appreciate over the past 7 months. Latour Cheval Blanc, and Margaux are holding steady at $1000 each, Mouton is still $750, Haut Brion is a little more variable –stuck in a rang of $650-$700 with no discernable trend, Petrus remains at $3600.

Only Lafite continues to climb. Now at $1500, up from $1300 three months ago.

It’s not all good news: Ultra-rare Lafleur sold at Acker’s January Auction for $1815. That’s down from $2000 in the fall of ’07, which itself is down from $2400 from the summer.

Will the bubble reveal itself this quarter?

The Importance of Dumb Money

Bring me the best wine! Only the very best!

It is vital for the wine speculator to understand this attitude. The very best of any collectible, including wine, is likely to be overpriced relative to the second best example of that collectible. Not just priced higher, but overpriced.

Let's look at an examples of where pricing makes sense and another where it does not make sense:
DRC Romanee Conti vs La Tache. Romanee Conti has an average annual production of 450 cases/year, whereas La Tache produces about four times as much - 1870 cases, on average. For the 2002 vintage, the Romanee Conti gets around $6500 at auction, compared with $1700 for the La Tache. To me, this price ratio looks about right.

Now let's look at 2003 Bordeaux, Latour vs Montrose. Both Chateaux make about 20,000 cases a year, and both made less than usual in 2003. Both wines score 100 pts (RP). Yet Latour costs $1000/bottle, and Montrose is $250. Maybe Latour is better, but is it 4 times better? This ratio defies common sense. I do expect Latour to cost more, because it is a first growth, and there is a certain prestige associated with that, but not 4 times more.

Compare this to the 1990 vintage, where again, both wines earned top marks from RP. The 1990 Latour now trades for $900, and the 1990 Montrose costs $500. This approximate 2:1 price ratio is what I foresee for the 2003 Latour and Montrose. 2003 Montrose is on my short buy list for Bordeaux.

2005 Quilceda Creek Allocation - What to Buy

Orders for the 2005 Quilceda Creek are due by January 7th. Recent years have been very favorable to Quilceda Creek, with the following advocate scores: 2001, 98 pts; 2002 and 2003, 100 pts, 2004, 99 pts. If you still haven't decided what (if any) of it you want, here's my analysis. The magnum of Cabernet at $253 is a screaming buy. Current auction ranges of the '01, '02, '03, and '04 magnums are $300-$500, $650-$850, $650-$950, and $300-$450 respectively. Someone pre-sold their '05 cabernet magnum on winecommune for $420 recently. The risk in the '05 Quilceda Creeks comes from the fact that they are not rated yet. You can hope for a 100 point score from the Wine Advocate, or sell yours on winecommune before the wine is reviewed. If you only buy one part of your allocation, it should be the cabernet magnum.

The cabernet 750 ml bottles are compelling as well, although they appear to offer less upside potential. Current auction ranges of the '01, '02, '03, and '04 in regular bottles are $150-$250, $250-$280, $220-$280, and $140-$315 respectively. The '05 cabernet in regular bottle recently pre-sold on winecommune for $166. At $115 (allocation price) I bought it, but I like the magnum better. Both offerings appear to be only barely prifitable at 98 pts. A 100 point score would make the magnum saleable at 260% of its release price, while the regular bottles would apear to be worth about 190% of their release price.

The merlot, at $75, is probably cheaper than it would be on the secondary market, but I just don't see the same potential as with their cabs. I didn't buy it.

Do I still think the wine market is overpriced? Yes, at the high end -I'm still predicting drops in '08 for DRC, Petrus, and anything that can't be bought new for $2000. But the deep pocketed consumers won't quit the wine game altogether. They'll be drinking the more "affordable" Quilceda Creeks instead.

How to Drink Red Wine with Chicken and Fish

I confess, in addition to speculating in red wines, I like to drink them. So much so, that sometimes the menu gets changed to match wine, rather than the other way around. For instance, when I get interested in consuming an '82 Beychevelle (more of a consumer wine than an investor wine, at $135, having risen from $100 over the last 7 years.), then I tend to schedule a steak to match. But in my household, steak requires an advance appointment with my wife, who could happily eat chicken, fish, and turkey in and endless rotation. What does a red wine lover do in these circumstances? One answer is smoke. Smoke can transform white wine foods into red wine foods.

My first experience with the transformation of white wine food into a red wine food was with salmon. The basic recipe is to 1) rub the salmon with sugar, salt, and pepper. 2) "line a deep frying pan with aluminum foil" - but really you are making a cocoon out of foil to sit in the deep frying pan. The smoke will stain anything it touches, so the foil is not for the cooking as much as it is to aid the cleanup. My advice is to use two layers. 3) put some mesquite chips in the bottom of the pan, add a rack, salmon, and cover tightly with a foil lined cover. 4) put it on the stovetop and fire it up -high flame, 15-20 min. 5) Serve with '89 Sociando Mallet or reasonable facsimile. Chardonnay and dill cream sauce stand down; this is red wine food.

Tonight, I tried a more ambitious version of the aluminum foil cocoon smoker. This time, I used a whole chicken. The main smoking agent was lapsang souchong tea (a tea pre-smoked with pine needles), although to be fair, I included orange rind, star anise, whole cloves, and brown sugar in the smoking mixture. My wife and I had it with an '82 Beychevelle. The match was outstanding, but the credit goes to the smoke -not the cloves or anise. The lapsang souchong is a bit intense for a whole meal (better for an appetizer), and if we had to do it over we might use either oolong tea, or mesquite chips.

The take home message is that you can make red-wine friendly meals, without the red meat. Enjoy.

Party Over in Wine Market (for now...)

The big news in wine this week is not wine. It's the Sotheby's fine art auction of Wednesday, November 7th. The total pre-auction estimates were $350-$500MM, but the actual total was $269MM. Sotheby's stock dropped 28% on the news. What does fine art have to do with wine? Everything. If you can afford $150,000 for a Miro to hang on your wall, then you can afford $1800 for a 1982 Latour to have as you cellar trophy. And you probably buy them for the same reasons: to feel sophisticated for your fine taste, and to feel the status that comes with playing in a game with very few "winners".

But when the winners start to feel like suckers, it's game over. Art and wine are highly speculative investments. They produce nothing. They do not pay a dividend. They require climate control, insurance, and security (translation: expensive to own). And of course, they are not necessary for anything.

Those wines which have been the targets of trophy-hunters (1945, 1982, 2000, and 2003 first growths for instance) will show the most dramatic price declines (perhaps 20% by the end of Q1 2008? - just a guess). Some particularly striking examples, such as $12,000 for a 1990 DRC Romanee-Conti, (up from $4000 in 2003) could probably stand to fall a little farther.

The last four years have been a great time to be selling fine wine. Perhaps the next 4 will be a good time to buy.

Why Futo is a Buy

This month, about 800 lucky individuals were given the opportunity to buy 3-bottle cases of Futo, the new cult-wannabe from CA, for merely $600. Yes it costs too much. A good friend of mine, who has been on the Sreaming Eagle allocation list (and others) since inception, confided in me that "almost none of these wines are worth what you pay for them."

I bought it, because the speculator in me thinks that this wine is a good bet - to rise in value. The wine has not been reviewed yet, so the true market price is anyone's guess. But how bad does it have to be to stay at $200? The makers of Futo, Abreu and Aubert, both have impressive track records - and they have experience making wine together. Consider their last joint venture, Sloan, had a 92+ (RP) for their premier vintage (2000) today's price: $255. Now, I need to assess what are the odds that Futo (2005) can beat 92+? The winemakers have 5 years more experience than when they made Slaon, and the vineyard is next to Harlan. It could be a bust, but I'm in.