Thoughts on the gray market

[Robert_Panzer]

@patrick c albright

@Robert Panzer

@patrick c albright

Robert,
It is wrong for me to purchase magnums of Armand Rousseau from an agent in France because Frederick Wildman is the official importer? In what way, shape, or form?

There are twenty pages of similar examples.

Patrick

Using my common sense test: You are standing in Gevrey with Monsieur Rousseau. You introduce yourself as Patrick Albright, arbitrage commodities goon extraordinaire who sources gray not for personal consumption but for resale because a) Wildman won’t sell to you or b) won’t sell “enough” to you.
As the guy whose family is responsible for creating such magnum, the literal fruit of his family’s labor, you’re telling me that if he disapproves of your activities that that means nothing to you?

Dollars and senselessness to me.

Robert,
You try to take the high road and then you delve into personal insults.

You just lost all of your credibility.

Patrick

If you say so…

[Ryan_Allen]

@Kelly Walker

As a consumer, I have no problem buying wines from a retailer that have been acquired through a gray channel provided they have a track record of good provenance.

If it is sourced through a gray market how would one know of the bottle’s provenance? I assume the gray market puts all the risk on the end consumer. Will the retailer take a flawed bottle back and absorb the cost? Could you go back to the producer in that case? What of counterfeit wines? (I don’t think I’ve ever consumed a bottle a devious person would even consider counterfeiting so this question isn’t rhetorical)

edited to add: I have certainly sourced grey market wines, price and availability being the main drivers in those purchases. I think generally the tide is changing in how Americans consume things. The source of such stuff rarely mattered in the past but as the world becomes a smaller place these concerns carry more weight. 20 Years ago did anyone know what the term “conflict diamonds” or “blood diamonds” meant? Did we care where our produce and meat came from? Did I know that my running shoes were made by children working in deplorable conditions? Foie gras is tasty, and only in, what the 1990s?, did discussions concerning the treatment of those animals come into public knowledge and on and on… That being said the end consumer could exhaust themselves trying to research and make ethical purchases. So do we put our blinders on and ignore all that and say “I got mine” as we hold our coveted bottles in our cellars or do we let ethics get in the way of consumer choice and an absolutely free and unregulated markets?
As a community we hold the small producer in the most high esteem, it is clear from the many posts here, do we blind ourselves to how our purchases affect that producer’s lively hood? I see a change in how we consumers make choices on what we buy and the source of things. I think ethics are playing a greater roll in the consumers decision making process across the board. Greater knowledge is driving these changes in consumer behavior. I think an interesting discussion would be exploring the impacts on the supply chain, on the producer and on the end consumer.

[k_s_h_i_n]

@Robert Panzer

Indeed, exclusivities are often abused for perceived trophy darlings, with egregious gouging on behalf of the intermediaries.
This is not cool whatsoever in my book.

Robert,
“He that is without sin among you, let him first cast a stone at her.”

[Robert_Sand]

As an European I´m (fortunately) not really envolved into grey market problems, so only some personal thoughts - and absolutely no offence intended against anybody here!

1. The main reason why grey market exists in the US is (IMHO) the quite strict three tier system.
   This system is - logically - unnecessary for both the producer and the comsumer, but it´s good for the state to control the market (and the money/tax) - and good for importers/wholesalers …
   and it raises the price for the consumer extremely (and unnecessarily).

2. The difference between how much the (let´s say French) producer (= wine maker) earns with a sold bottle of wine … and what the (US-)consumer has to pay for it is not fair. This difference is in no fair relation to the creative work envolved. The wine-maker has to do the major work (planting and tending vineyards, bearing all risks of weather etc., vinifying to bottling the product etc.).
   I cannot see the necessity that 2-3 companies in between are making money just to bring the bottle on the table of the consumer - one importer/retailer should be enough.

3. As far as I´m concerned (please correct me if I´m wrong) it is absolutely legal to buy elsewhere … and if not, it´s still illogical. So if the consumer is able to buy the desired bottle elsewhere cheaper (and in many cases it´s also or only the question of GETTING IT AT ALL) - why not?
   I´m less talking about the 15$ wine than the sought after rarities - when the tiny quantities are SOLD OUT through the usual chain it´s about GETTING IT AT ALL,no matter if GREY or not.

4. I absolutely agree with the problem of faked bottles, it´s a sad and criminal thing, but this is a decision of the buyer: can he trust the seller?
   And it´s more a problem with the expensive gems than the 15$ wines, right?
   BTW: it is absolutely illegal to fake a wine bottle!!!

In the century of www why shouldn´t a consumer be able to buy wines wherever he wants to - provided he pays all import and TVA taxes ?

[Robert_Panzer]

@k s h i n

@Robert Panzer

Indeed, exclusivities are often abused for perceived trophy darlings, with egregious gouging on behalf of the intermediaries.
This is not cool whatsoever in my book.

Robert,
“He that is without sin among you, let him first cast a stone at her.”

Kevin, I catch your drift, but honestly don’t think it applies to me.
You feeling that it is appropriate to mention is based on what, exactly?

[Ethan_Abraham]

@Ryan Allen

@Kelly Walker

As a consumer, I have no problem buying wines from a retailer that have been acquired through a gray channel provided they have a track record of good provenance.

If it is sourced through a gray market how would one know of the bottle’s provenance? I assume the gray market puts all the risk on the end consumer. Will the retailer take a flawed bottle back and absorb the cost? Could you go back to the producer in that case? What of counterfeit wines? (I don’t think I’ve ever consumed a bottle a devious person would even consider counterfeiting so this question isn’t rhetorical)

if you follow some retailers comments on twitter (mainly Posner) you hear all the time about distributors shipping on unfridgerated trucks in the heat of summer, etc, etc, so the provenance issue can run both ways. In addition, for flawed bottles, I am pretty sure that the popular retailers that Rob is alluding to will take back bad bottles regardless of how they bought it.

[patrick_c_albright]

Robert,
Your Pierre Benetiere Cote Rotie pricing goes against your whole premise.

Patrick

[james_l_moleberg]

This is the most sanctimonious, holier-than-thou preaching I have seen on this forum in some time. Are you fishing for business by offering yourself up as the moral right of the wine world? Sorry, my common sense test doesn’t involve standing in Gevrey with Monsieur Rousseau. It involves standing in my home with my children and knowing that I am better able to afford their education by not wasting money on an archaic system when cheaper alternatives of sound provenance exist in the market.

[Ian_Dorin]

I have a few points.
-Most of the grey market guys that I know/knew were agents of that winery, but not appointed to sell in the US. Furthermore, I don’t think the wineries cared much either since they paid for the wines in cash to get them. When a winery stops the flow to said agent, then you know they care, but I only saw that once in a blue moon.

-If the US importers did a better job of representing the wineries (this has many layers to it), and buying the wine (i.e. PAYING for the wine), then the grey market wouldn’t be necessary. This is no reflection of your business as I know very little about your operation, but the things I have seen go on in the NY metro market is absurd, and this is supposedly the best market for wine in the country.

-I’d really like to re-echo a point from above about importers/distributors and the system of getting Roumier/Rousseau/DRC and the likes of those marquee names and what you had to buy to get these wines (obviously with Roumier shifting importers, that got better). This type of 1987 way of doing business is old and tired, and needs to end. Prestigious restaurants and retailers should get these wines quid pro quo, not questions asked, and that was not happening.

-The grey market is going to become an even more enticing place to buy wine given the economic conditions of Europe right now.

-I think the “do you know how it’s been stored/shipped?” argument is a straw man. I’ve had plenty of wines that were bought on release from the US importer that were totally damaged, and the only thing one could point to in those cases was bad shipping conditions. I know every time I have a bad bottle of 90 DP or 90 Taittinger Comtes I’m going to see Schiffelin and Somerset on the back. I stopped counting how many bad bottles of each I’ve had with that label on the back, but I can easily tell you it’s something in the 60 to 1 ratio of S&S vs. some other import label. IIRC, I had 20ish straight bottles of 90 CdC that were totally shot, and all said S&S on the back (I can’t recall the exact number, but I was keeping score for a long time)

[k_s_h_i_n]

@Robert Panzer

@k s h i n

@Robert Panzer

Indeed, exclusivities are often abused for perceived trophy darlings, with egregious gouging on behalf of the intermediaries.
This is not cool whatsoever in my book.

Robert,
“He that is without sin among you, let him first cast a stone at her.”

Kevin, I catch your drift, but honestly don’t think it applies to me.
You feeling that it is appropriate to mention is based on what, exactly?

Robert,
Although I don’t buy wines from you, I feel that you have a great passion in wine and an excellent importer. I in general have an issue with “I am different sort of attitude”. There is no point for me to give examples.

[CFu]

@Robert Panzer

@patrick c albright

Robert,
It is wrong for me to purchase magnums of Armand Rousseau from an agent in France because Frederick Wildman is the official importer? In what way, shape, or form?

There are twenty pages of similar examples.

Patrick

Using my common sense test: You are standing in Gevrey with Monsieur Rousseau. You introduce yourself as Patrick Albright, arbitrage commodities goon extraordinaire who sources gray not for personal consumption but for resale because a) Wildman won’t sell to you or b) won’t sell “enough” to you.
As the guy whose family is responsible for creating such magnum, the literal fruit of his family’s labor, you’re telling me that if he disapproves of your activities that that means nothing to you?

Dollars and senselessness to me.

Pretty sure Monsieur Rousseau was paid when he let his wine go through the cellar door. Whether he sell to European agents or American importers he got paid. Why does he care who profits the most from that sale?

[Dav1dZ]

@Robert Panzer

@DavidZ

I would try to avoid dealing with any dealer who wasn’t selling gray market wines. I want my dealer to effectively get me the best deals possible - he should be on the customer’s side, not the producer’s. Any illusion that there are any ethics in this business other than the bottom dollar probably went out the window when nearly every wine region in the world doubled its prices in about half a decade. They take what the market will give them, and we should take what the winemakers will give us.

I would expect no less from you, David.

And I’d expect nothing less than this typical soft-shill from you. I’ll take my business to someone where I’m not subsidizing their social relationships with some celebrity winemaker.

Trying to sell people on paying you more money because it would make them more ethical is ironically the height of unethical behavior.

[Robert_Panzer]

Indeed, Rousseau made the same amount of money, but that doesn’t mean that he would condone any and all once the wine leaves his cellar.
When I told him how the DE distributor extensions/partners of Wildman roasted bottles of '08 Chambertin on unrefrigerated trucks, he was aghast and improvements were demanded.
Like many folks have opined, all because you are the chosen representative of a winery doesn’t mean that everything is done well.
However, having communication continuity up and down the supply chain allows for inefficiencies and poor handling to be corrected, which the gray market doesn’t allow for.

[k_s_h_i_n]

@Robert Panzer

Indeed, Rousseau made the same amount of money, but that doesn’t mean that he would condone any and all once the wine leaves his cellar.
When I told him how the DE distributor extensions/partners of Wildman roasted bottles of '08 Chambertin on unrefrigerated trucks, he was aghast and improvements were demanded.
Like many folks have opined, all because you are the chosen representative of a winery doesn’t mean that everything is done well.
However, having communication continuity up and down the supply chain allows for inefficiencies and poor handling to be corrected, which the gray market doesn’t allow for.

He sells his Chambertin for less than 200 euros, when it gets to the US retailers, it gets close to $1k.

[Dennis_Kanagie]

As long as free enterprise exists, there will be a grey market.

The wristwatch industry works well with it’s grey market dealers. Manufacturers put pressure on authorized dealers to meet a certain quota, and the dealer has to do something to move that much product if they want to keep their status. Granted, it is sort of frowned upon, but most companies turn a blind eye towards the practice.

Oh, and did anyone expect anything less than some -ing from the usual suspects?

[Robert_Panzer]

@patrick c albright

Robert,
Your Pierre Benetiere Cote Rotie pricing goes against your whole premise.

Patrick

Not at all. I squarely stand behind my fair fair fair pricing on Benetiere.

And if you’re pissed because I called you a goon rather than using the word “guy”, i’m sorry.
The rest of it is 100% objectively true: you are an arbitrage commodity guy.

Kevin, I am different than what is most commonly found in the biz. I am told so ALL THE TIME by growers and agents. It is not a self-appointed perception.

David, do please steer clear of me. You may take the cake for being one of the most unlikable souls (in board presence, mind you) whose consistent negativity has become legendary. Life is too short…

[Dennis_Kanagie]

@james l moleberg

Saying the equivalent of, “people got what they deserved” with respect to Premier Cru.

But they DID get what they deserved James. Their own greed led them to pump more & more money into a failing business that any outsider could see was flawed. There were hints which got stronger and stronger that PC’s demise was coming for quite a while before the actual fall.

EDIT: I want to add that I do feel bad for the people who got bilked.

[CFu]

@Robert Panzer

Indeed, Rousseau made the same amount of money, but that doesn’t mean that he would condone any and all once the wine leaves his cellar.
When I told him how the DE distributor extensions/partners of Wildman roasted bottles of '08 Chambertin on unrefrigerated trucks, he was aghast and improvements were demanded.
Like many folks have opined, all because you are the chosen representative of a winery doesn’t mean that everything is done well.
However, having communication continuity up and down the supply chain allows for inefficiencies and poor handling to be corrected, which the gray market doesn’t allow for.

I trust my grey market sources more than I trust Wildman to safely get my wines to me. There are far more examples of the three tier system failing in keeping distribution conditions clean than of private brokers.

[Ian_Dorin]

@Robert Panzer

Indeed, Rousseau made the same amount of money, but that doesn’t mean that he would condone any and all once the wine leaves his cellar.
When I told him how the DE distributor extensions/partners of Wildman roasted bottles of '08 Chambertin on unrefrigerated trucks, he was aghast and improvements were demanded.
Like many folks have opined, all because you are the chosen representative of a winery doesn’t mean that everything is done well.
However, having communication continuity up and down the supply chain allows for inefficiencies and poor handling to be corrected, which the gray market doesn’t allow for.

Doesn’t this kind of contradict your original post? I know you don’t openly attacked shipping conditions, but it’s usually an implied topic when being critical of the grey market.

Maybe I’m missing something, but why the rant about grey market? Is it happening at such a rampant level that it’s hurting your business? (I can’t possibly think that’s the reason).

[Brian_Lynch]

@Robert Panzer

My common sense rule of thumb: if you were put into a room with the grower whose life is entwined with making said wine, and you can’t look them in the eye and say, “I buy and sell your wine” without being reprimanded, you are a dirty bird, and you MUST know this inside…to then have the unmitigated audacity (as Frank Zappa would perhaps say) to pose as though you have a relationship with said grower adds even more tasteless insult to injury, as I see it.

This thread needs some humor

Perception:

(Well, right about that time people
A wine trader (who was strictly from commercial)
Had the unmitigated audacity to jump up from behind my import lines (peekaboo)
And he started into whippin’ on my favorite baby wine prices …
With a lead-filled snowshoe


Reality

(Well, right about that time people
A fur trader (who was strictly from commercial)
Had the unmitigated audacity to jump up from behind my igloo (peekaboo) )
And he started into whippin’ on my favorite baby seal …
With a lead-filled snowshoe

Frank Zappa - Nanook Rubs It Lyrics

Pay a little extra … be happy; sleep well.

Carry on …