Sherry-Lehmann 2016 Bordeaux Futures

[Ian_Dorin]

What else would you expect them to say?

Certainly good spin, but everyone can read through the BS here.

This is going to get worse, so get your popcorn ready.

[Mikko_Tuomi]

@Ian_Dorin

What else would you expect them to say?

Certainly good spin, but everyone can read through the BS here.

This is going to get worse, so get your popcorn ready.

I appreciate a good spin. It’s like CEO gets done for doing a kilo of coke and the spokesperson would say “Our CEO is proud of his long track record of supporting small villages and farmers in Colombia”.

[Dav3_Dyr0ff]

I heard an ad today for Facebook ads. Basically telling you that you should want to let Big Tech follow you around online and track everything, because then they can bring you ads for small businesses that you will love, so you’re really just supporting those small businesses by giving FB your entire online footprint. Similar spin doctoring to that in the S-L article.

[John_Morris]

@Mel_Knox

I had not thought about the connection between Chateau and Estates and SL. The amount of money it took to take a serious position in the Bordeaux trade must have staggered the bean counters at Diageo. Much better to put it into a brand of Albanian pear brandy. Similarly it must have taken a lot of moola to stock the store like SL in 2016 the way it was stocked in 1990.

Good point.

[John_Morris]

@Mel_Knox

People don’t eat the way they did thirty or forty years ago. Claret…so wonderful with the standing rib roasts, steaks etc we use to eat when America was great.

I just read that the arms dealer we traded for Griner is a vegetarian…who knew?

You haven’t discovered what a good match mature claret is with organic quinoa and farro?

[J_Patrick_Lynch]

The DoorDash commercials are similar.

Using DoorDash a lot helps small businesses and workers!(While we take a big cut as middlemen.)

[Mel_Knox]

John,
I don’t even know what farro is

M

[Keith_Levenberg]

@Mikko_Tuomi

The spokesperson for S-L is pure gold. Post makes a claim that they stole bottles from inventory and instead of paying their obligations to tax authorities and their clients, they splurged that money in restaurants, and the response is "We are very proud of the fact that our company has supported NYC restaurants for almost 90 years. "

It’s like all the support the Premier Cru guy gave to young female entrepreneurs.

[Mikko_Tuomi]

@Keith_Levenberg

It’s like all the support the Premier Cru guy gave to young female entrepreneurs.

I appreciate good philanthropy when I see it!

[Arv_R]

I don’t understand how ‘reorganizing’ does anything other than delay the inevitable, and just increase the losses to stakeholders. The brand is impaired*, and whatever transition time they might have needed to improve the pathetic website seems to have been squandered. That would have seemed like the lowest hanging fruit to pick for a struggling business - halt rent payments and redeploy into better ‘real estate’ like a K&L level website. But the site was a disaster last time I looked at it. And if management is busy bleeding inventory during the process it gets even harder.

*I’m hard pressed to think of some on the edge wine retailer which was able to resurrect the brand? Sams, Premier Cru, Rare, Carolina etc.

[John_Morris]

@Mel_Knox

John,
I don’t even know what farro is

M

And you call yourself a San Franciscan.

[TGigante]

Ian

The interesting take here is that the 2 customers in the $800k lawsuit want to be compensated for the current value of the wine. Not what the paid, which I am assuming is less. SL claims the plaintiffs were offered a full refund of the original price, which they declined. Also, SL says the wine is due to be reviewed in February so we’ll see if they can make good on the delivery (doubtful) before the suit gets heard. I’m sure SL doesn’t want to set a precedent with an obligation to cover appreciation of the value

[Mikko_Tuomi]

@TGigante

Ian

The interesting take here is that the 2 customers in the $800k lawsuit want to be compensated for the current value of the wine. Not what the paid, which I am assuming is less. SL claims the plaintiffs were offered a full refund of the original price, which they declined. Also, SL says the wine is due to be reviewed in February so we’ll see if they can make good on the delivery (doubtful) before the suit gets heard. I’m sure SL doesn’t want to set a precedent with an obligation to cover appreciation of the value

The Plaintiffs also don’t want to provide interest free loans for vendors to speculate on appreciating assets.

It’s like what some homebuilders were doing a few years ago when the market was skyrocketing. Sell a new build home, take the payments, then when house was completed, buy the contract out with few hundred dollars and resell the house for 50-80% profit.

Taking payments for Bdx futures and then simply providing a refund few years later could be similar tactic.

[Ian_Dorin]

I totally understand all of that, but put yourself in the clients shoes. You bought the wine and now the market value is more. You don’t have the wine to sell. I think their approach is spot on.

I have no idea how that all stands up in court, but giving someone your money, and not getting goods in return sounds like a crime to me. BTW, SL has had that money now for up to 5 years possibly. That’s forever for non-delivery.

[John_Morris]

@Mikko_Tuomi

@TGigante

Ian

The interesting take here is that the 2 customers in the $800k lawsuit want to be compensated for the current value of the wine. Not what the paid, which I am assuming is less. SL claims the plaintiffs were offered a full refund of the original price, which they declined. Also, SL says the wine is due to be reviewed in February so we’ll see if they can make good on the delivery (doubtful) before the suit gets heard. I’m sure SL doesn’t want to set a precedent with an obligation to cover appreciation of the value

The Plaintiffs also don’t want to provide interest free loans for vendors to speculate on appreciating assets.

It’s like what some homebuilders were doing a few years ago when the market was skyrocketing. Sell a new build home, take the payments, then when house was completed, buy the contract out with few hundred dollars and resell the house for 50-80% profit.

Taking payments for Bdx futures and then simply providing a refund few years later could be similar tactic.

It’s a basic principal of contract law that, if a party fails to deliver goods contracted for, they are liable to the buyer for the fair market value of the goods on the delivery date called for in the contract. So, as a general matter, the plaintiffs/customers are on good ground.

But I would guess that SL had language in the sales documents saying that, at most, they were liable for the price paid; i.e., they only have to refund the price.

[John_Morris]

@Ian_Dorin

I have no idea how that all stands up in court, but giving someone your money, and not getting goods in return sounds like a crime to me.

No, where delivery is in the future and there’s no frauduent intent (i.e., knowledge you won’t be able to deliver), it’s just routine breach of contract. I’d be very surprised if the plaintiffs could come up with evidence that the store was in such bad shape when 2015 or 2016 futures that it was fraudulent to take their money.

[TGigante]

John

Yes, this is where it gets interesting. To my knowledge, no one has posted that they were made whole on current retail value. Best was refund or swap of other wine for non delivered products.

I assume there is risk on the plaintiff if SL folds before their case is heard. That would make the original refund look good ( assuming no clawbacks).

But this could set precedent if it goes through for the plaintiffs. Of course, for the average schmos with a lot less $$ on the line, retailers can push back a lot harder knowing litigation doesn’t make sense for the customer unless larger $$ are involved.

[Ian_Dorin]

I’m sure in 2017 when they were selling futures they were not thinking they would be in bad shape in late 2022. I’m just saying that if you bought something and didn’t get it, it’s a fair and reasonable ask (especially with something like Bordeaux) that SL pony up the wine. It’s not like it’s unicorn tears.

[John_Morris]

I wasn’t suggesting that it was unreasonable to expect that. But shit happens and even healthy, solid businesses sometimes can’t deliver what they agreed to. That’s when the language of the contract becomes crucial.

[John_Morris]

The Post article on the owners’ drinking the inventory has some unintended humor, including the suggestion that working wine retail was a high-prestige job. They make is sound like it’s being tailor to the king:

Working at Sherry-Lehmann is like being “the shortstop for the New York Yankees,” the source added. “You are at the pinnacle of your profession if you worked there, so people are angry and upset by what’s happened to the business.”

And this:

“My clients are not in the business of handing out interest-free loans,” [the plaintiffs’ lawyer] Gopstein sniffed, noting that his clients are demanding either the wine or a cash sum equal to its current market value.

Of course, that’s basically what you’re doing when you buy futures – providing working capital to the retailer to buy the futures on the wholesale market.