another sign of the times- I recently received about two cases of wine from a well regarded “cult” Napa winery that I have bought from for a long time. Their shipping costs were always on the “elevated” side, but for 8+ years it came in a high quality box and packed in a sort of floating styrofoam to minimize the risk of damage while in transit. When I received the wines I found them in a standard box with cardboard dividers. Very low end protection and no boxes. Yet the shipping costs were the same if not slightly more than a previous shipment back earlier this year.
Its not enough to email them since they take care of me with invites to their annual party, and generally they are great people who I enjoy buying from, and its clear that they are cutting corners to save some money, but at least they should have given a heads up in regards to the changes.
It is what it is, and there are greater things to worry about, but still… not a good look in my opinion…
I truly think this was most if not all of us during Covid. If your cellar wasn’t already full it probably was during those clearance sales.
What is the appetite for folks like us to buy in large scale and cellar wines long term with no storage space?
I do think we will continue to see several great deals as wineries just can’t sit on unsold inventory forever. There will be a reality check with Napa in particular for the overpriced wines. Bordeaux is another issue with lots of unsold inventory although tariffs and currency devaluation will slow down any deals for us here.
I pay about $35/pallet/month for cold storage. Each pallet normally contains 56 cases (or if it’s sparkling, around 44 cases). Based on footprint, so if you have a half pallet, you still pay $35 for it, which doubles the case cost. So, assuming you have a full pallet, that’s $420 each year. Half pallet is $840/year. Or put another way, $7.5/case/year at the very lowest end. Half pallet, it’s $15/case/year.
As you can see, it doesn’t take that many years before you’ve paid more in storage per case than you could get wholesale, maybe 5-10 years tops. Obviously, the higher the price of your wine is, the longer you can store it (but the slower it will aslo sell, of course). But for us middle/premium producers with wines in the $25-45 range, that’s kinda where it’s at.
So yes, we will see a lot more library sales. This is why I keep doing BD myself because I long ago figured out that it’s better the customers store the wine for free than me having to pay for it
One thing I’ve noticed, unfortunately, is that the price of “off” vintage burgs has started to come up. There was a huge stash of 07 burgs for sale earlier this year for very low prices, of which I bought some, but wish I’d bought it all because the prices have jumped lately.
One of my favorite quotes out of the Greatest Thread of All Time was how someone loved that Premier Cru would store their wine for free.
=========
My personal belief is that the market won’t see the supply / demand mismatch get rebalanced until there are structural changes on both sides. For some niches - think Sauternes/Barsac/Port - we are seeing producers moving away from costly (in time/labor) and unfashionable sweet wines and making dry wines. Even if they appear lower priced, presumably the much lower production costs and broader market demand, make them a better ‘investment’ for the producers. That’s rational behavior, and as long as the secondary market is such a bargain for older Port and Stickies, I don’t see that force going away.
Challenge for wineries will be distributors inventory drawdown to reduce holding costs and interest costs then buying new inventory at significantly lower levels to manage DOH v. Demand.
State Variations: Not all states have this tax. States that do include Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Kentucky, Georgia, and West Virginia.
There are a couple ways of looking at taxes on carrying inventory.
One, as you note, is a pure tax on inventory that only a minority of states impose.
The other applies to all in calculating profits and COGS at year end.
Edit to add it can get a little more complicated depending on jurisdiction and whether using FIFO or LIFO. So happy not to think about that stuff anymore.
Side note after reading @Adam_Frisch’s storage fee notes. How crazy is it that Constellation paid for library storage for YEARS after buying Ravenswood and Joel Peterson was able to buy his library back?
Some entities own their own warehouses so there is no or little associated expense involved in holding additional inventory other than opportunity cost.
interesting watch on the HDH auction yesterday. While Indidnt stick around for the whole thing, it did appear that most everything was upper range or over estimate. BDX in particular seemed to be finally moving out of the trough. Didn’t stick around to see what happened with anything from Cali though, which has really taken a nosedive.
Have you noticed any major demographic changes in the last few years?
I ask because I’ve certainly noticed that Western Springs and around you have become popular with millenials that used to live in LP/Streeterville/River North/Old Town/the like. It could be down to funneling as to who I talk to and interact with since I don’t have feet on the ground. But it popped into my head with what you just said.
