I’m not surprised at your reaction.
Unethical? LOL.
If an arbitrage opportunity exists, take it.
People are generally jealous of those who make smarter decisions and later reap the rewards. I told people to buy 2003 Scarecrow @ $100 release. If you want to see serious flipping, try the historic automobile market. I know a guy who bought a car at auction for $3.25mm, and made $1mm from someone who wanted it more within 30 minutes.
Wineries are free to price their wines any way that want. Their long term survival, however is not being influenced by ‘market exuberance’.
I think there is a difference between buying something like first growth or other classified Bordeaux to sell and buying a small production wine that you happen to have gotten allocations for to flip.
First growth Bordeauxs are readily available to the entire market. If you buy to hold several years and then sell it at a profit, well you really are not keeping others from getting it at a good price.
But, with small production wines, whether from California or Burgundy or whatever, generally producers are trying not to raise prices to market levels to reward customers. They want long-term customers to be able to drink the wine. In my totally and completely subjective view, there is something wrong with selling the wine - I think of it as a betrayal of the relationship. For example, when I go to a small Burgundy estate and they let me buy some wine (most of them can sell all they make through regular channels), I would think of it as a betrayal to their kindness to sell the wine. My thoughts. Nobody else has to agree.
To me, sharing with friends at cost to help friends is completely different from flipping.
You guys have heard of wine auctions right?? There was just a 2 day one finishing today at HDH in Chicago… Not sure why this is even a question.
George
I don’t think anyone is saying buying at auction & selling on is flipping or unethical. 
It does depend on the scenario of the original sale. The one Jay described would have most of us thinking the ‘friend’ acted like a jerk. Buying en-primeur in an open market, I suspect few of us would have any problem.
Not sure exactly what Jay described but…If you gave a friend access to a wine at release price/retail/futures etc… that was otherwise very hard or impossible to come by because they really wanted to drink it and all they did was flip it… outside of extenuating financial issues, than yes I agree. Douche move.
It has happened to me.
George
Flipping results from market inefficiencies. No different than any other market. There are many reasons why a highly sought after producer does not price to market in each vintage, both commercial and ethics driven. We like to romanticize our passion, but in what other luxury goods market would this issue even be raised?
It’s not a currency exchange or market where all the players understand that it’s only about the numbers.
If the reason the price arbitrage opportunity exists is due to a winery’s desire to reward loyalty, and to actually show goodwill and that gets taken advantage of by someone misrepresenting themself, it’s a crappy thing to do.
Getting an advantageous numerical result at a human cost is acceptable in business-vs-business, but in the world of a consumer on a winery’s mailing list it’s a low thing to do.
Auction is different imo. All the participants agree that the price will be driven by pure demand/supply. Who is willing to pay the most. It;s also why it;s harder to flip auction wines for a predictable profit.
Now, if you want all these wineries to begin allocating their wines THAT way, where they get maxiumum dollar benefit because each bottle is bid upon until the allocation is gone, then they are willing participants in that game. In THAT case they get to benefit from the complete upside, financially. ANd beleive me consumer WILL end up paying more than they had been if these limited-supply wineries decided to do it that way.
But no, they choose to create community, a relationship with longer term customers, and foster actual intangible goodwill. And that human emotion creates a market inefficiency which is then monetized by others.
It comes down to BOTH the seller (winery) and buyer (flipper) entering the arrangement with the inegrity of both knowing that the value is being decided based not SOLELY on the monetary value of the substance of wine itself but also other things the seller is being ‘paid’ in terms of the goodwill and intangibles of the buyer – I will sell you a wine I could get $300 for on open market for only $225 because in return I receive $225 AND the knowledge that you enjoy my wine and I am deepening a brand relationship with you.
Well, if the buyer misrepresents that, then yes, they can fool the seller into still giving them the lower price while essentially gypping the seller of the second expectation in the arrangement. Not illegal, just douchey.
Think of it like this. You take business client out and wine and dine them as you bid on a newer, BIGGER project for them that would increase your billables with them. Later on you find out they had already signed a contract with another company for the new add-on project and just wanted your free meal. How do you feel? Not a perfect analogy, but has enough similarity that I wonder how the pure numbers guys would feel about that client.
I had one high wine collector tell me the goal of a collector is to drink for free. I have a friend that buys all then Harlan they offer him for the purpose of reselling it. He personally dislikes it.
Me, used to cellar for a couple years most of my Marcassin allocation and then flip it. I was getting 2-4x my cost for the Pinots. It was a no brainer.
There is absolutely no way, like it or not, that flipping is unethical or immoral. Some of it ticks me off, so to speak, but there is nothing I could or would do about it. There are some positives as well. I have sold a bunch of wine that held no interest for me. I never bought it to flip, but selling it had the same net affect. Flipping is just one of myriad things that affect the price and availability of wine. Others are quality, critical acclaim, perceived quality, scarcity, vintage, weather, currency, critical acclaim (yes I mentioned that twice), location, demand, supply, etc., etc., etc.
“Within the bounds of the prevailing laws” is an interesting qualifier. As was pointed out elsewhere, trying to use auctions for arbitration usually doesn’t make sense because of the overhead. If you’re not ITB, I don’t think you have many legal options that make it profitable, and those you do have would probably make the person who sold to you aware that you flipped. (If a sales transaction between two private individuals fully complies with the law in most cases, I would be very interested to hear how that works, and how you avoid the sales tax issue).
If you want to make the case that the laws are ridiculous, I’m inclined to agree. But then you end up back in the discussion of what is ethical.
Turn the tables and it’s not the same thing because it was you got shafted? Just wondering.
This.
Wendouree Shiraz is such a thing, there are limited allocations, everyone asks for it and they try and cater for all the wine lovers out there. They reward loyalty in the form of crayon marks on your order form which denotes your general place in the queue. They genuinely want to try and please as many as possible.
What irks me is that you see them at Auction the following week in 6 pack lots. This person is not a wine lover, with all the wineries costs to make the wine etc, etc the bloke flicking to auction is making more money than them from the sale (Mailing List is about $55, Auction is about $100+comm). So they end up making basically the same money as the poor winemaker who is trying to do the right thing and keep it reasonably priced for all to be able to afford. I’m not really sure what type of person is OK with that.
Sure he can raise his prices, but then he starts to exclude his buyers who now can’t afford the $110 he charges a bottle, and all the customers lose. (well except the flicker as they would stop buying it now).
Anyway here is a good article on Wendouree as an aside… http://winetenquestions.com.au/tony-brady-wendouree-clare-valley/
Secondary wine market ?
It’s a reality and so it’s nice to see your wines fetch a good price.
If we have customers who are clearly only dealing on the secondary market and we know it….we will choose to sell to the consumer who is buying for themselves.
At least in CA, individuals selling items less than 3 times a year aren’t subject to sales tax. Sale outside the state would also likely not be subject to sales tax.
Presumably, all over the place. I can personally attest to a mirror of this conversation in the wet shaving world.