I have been thinking about this topic. Reevaluating my position. When I use the word “flipping”, I mean buying wine with the sole intent of reselling it for a profit. I admit that definition may be too narrow. For the wineries there are pros and cons of the practice.
Some of the cons:
Wines are not always protected and stored properly which would impact the final consumers perception of the wines.
Wines resold in foreign markets could impact the wineries distribution channels
Wines become perceived as a commodity Vs a social bonding beverage
Allocations for those that want to consume the wines become harder to secure
Brand loyalty is displaced by marketability (which is more volatile)
Some of the pros:
The practice drives demand which can drive up prices.
It can have create more brand exposure.
I totally get that this practice is limited to a minuscule portion of the market. That being said, I’m still intrigued by the topic. I have resold wines for a profit. I somehow feel more at ease with the practice if I buy a wine at retail and then flip it for a higher price. I have bought wine and shared it with others at cost (sometimes including negligible cc interest fee if applicable). I wonder if the element of time and intent has an impact on my rationalization for the practice. If I sell a wine 6 months after a purchase does that make a difference? If I bought wine to drink but needed to raise money later for some reason, does that make it more acceptable? I cant shake the notion that my behavior (though less egregious more aggressive versions) has negative impact on the industry. I would like to hear others thoughts on the topic.
your right to do whatever with the wine you’ve bought
situations where you become cash-strapped and need to sell your wine to pay the mortgage
you’re actually a retailer / ITB
Then flipping is wrong, ethically and morally. You’re basically enabling wine speculation, preventing wineries / your sources reallocating based on their waiting list / criteria, all under the pretence of being just a “normal” consumer joe. Over time, the practice removes the incentive for retailers / wineries to provide scarce wine to their “good / loyal” customers at normal mark-ups, because they get “punished” by arbitrageurs for not marking to market.
I think this is not as black and white as some people would have it be. I like Jay’s articulation of when it is ok to sell, and when it might not be.
I will add: there are people who have allocated wines from very coveted wineries shipped directly to brokers. In these cases, I think, for me, this crosses the line, and a winery could, and should, stop selling to them. Also, historically there have been some people who ask for larger allocations from these very sought after wineries, and say they love the wine and would never sell it, and then have sold it, sub rosa, which again, I do not think is ok.
I do not think I should be the judge of what anyone does with wine they own, but I do think some actual behaviors of some people has been too commercial.
I would very much agree that buying a wine, cellaring it for a few years with the intention of drinking it, then later deciding to sell it, isn’t flipping… when compared to buying a wine knowing that you are going to sell it for a quick profit. You’re really then a small scale wine trader, not a normal customer and there will be different terms (if at all) for commercial deals.
Ideally such situations shouldn’t arise. We should pay the winery a fair price for the wine, albeit paying to join a club at the start of a winery’s existence may be a win-win giving them a modest income whilst the initial outlay eats into their cash reserves and before the wines are ready to sell to the market. In such situations a club discount is the reward for your help. If the winery is selling at market price, then a 10% discount isn’t going to excite flippers, but does reward the people who helped them get started. The problems seem to occur when the club member price is much less than the market price. That feels like the club members are getting an awfully generous deal, yet also means many might stop drinking the wines, but continue membership for the easy financial gains. For just ~10% gain I doubt many would bother, simply dropping off the mailing list / club membership.
Buying wine with the intent to immediately sell for a profit
VS.
Buying wine, a few years down the road realizing you have too much/not to your taste/need to sell for financial reasons.
Bordeaux en-primeur was the logical place this occurred. FWIW I’m less bothered by this, as it was *purely a commercial deal. The winery / negociant priced the wine cheaper if you paid upfront, taking the chance that someone in the chain might go bust and you get nothing, but also that prices would go up (if they go down then you lose money). Anyone could play, if you were prepared to stump up the money. The problems emerged when this approach, coupled with growing emergence of a much expanded ‘super-rich’, resulted in a price spiral that put many wines out of the reach of people who could previously afford the occasional bottle. The problem isn’t so obvious initially for the producers / negociants / merchants / buyers, but it ends up dis-enfranchising other potential buyers, who sensibly see better value elsewhere. Many shifted to Burgundy and many of those will now look elsewhere. If the prices get out of hand, the sensible wine drinker explores their other interests.
regards
Ian
as long as it wasn’t a case of ‘who you know’ to get the offer, which was always a suspicion of the London en-primeur market.
Not the same as your point, but I distinctly remember in my early years buying my entire allocation knowing that I would share it with friends (again at cost). It was the equivalent of letting my friends “cut in line”.
My question was sort of rhetorical; my view on it is that although I don’t do it myself, if someone hustled his way to arbitrage opportunities to be able to finance a hobby they might not otherwise be able to afford, more power to them.
I agree. Many moons ago, I shared by allocation of Harlan at cost with a “friend” of mine. No preconditions, but he did say he always wanted to drink the wine. I found out very soon afterwards that he sold the wines for a huge profit. It was his wine to do with as he saw fit, but it really irritated me.
