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One Cheer For The Great Recession?

2012 January 12
by Mike

In the introduction to his book A Hedonist in the Cellar, Jay McInerney offered the following observation: “In Europe, where wine has been a part of daily life for thousands of years, American oenophiles are sometimes viewed as monomaniacs—zealous and somewhat narrow-minded converts to a generous and pantheistic faith. American wine lovers need to broaden their vision and relax: to see wine as just another aspect of the well-lived life.” Those words were published in 2006, and while I think McInerney was wrong in one respect—American oenophiles have long been among the most open-minded wine drinkers on the planet—his larger claim was absolutely correct: at that time, there was a certain zealotry among American grape nuts. You could see it very clearly in the relentless point-chasing and trophy-hunting of the early- and mid-2000s. However, there seems to be a lot less of that stuff nowadays, and people also appear to be consuming a much wider selection of wines than they did even just five years ago. Economic factors have unquestionably played a major role in bringing about these changes, which raises an interesting question: Has the Great Recession produced a healthier wine culture in America?

Pollyanna types often note that good things grow out of hard times, and although I’m generally inclined to believe that it’s always darkest just before it goes pitch black, it does look as if the grim economy has had some positive effects in the realm of wine appreciation—that it has moved us towards that broader vision and more relaxed attitude that McInerney wished to see. I know that I often cite wine discussion boards here, but I think they are a good barometer of the mood among wine geeks, and I’ve noticed some significant shifts in behavior and attitude since 2008. People seem much less fixated on ratings, for instance, and on scoring highly acclaimed wines. Where it used to be that getting onto mailing lists was a big deal, discussion board denizens now seem to take pride in dropping off of them. Back in the pre-crash days, people didn’t hesitate to post accounts of blowout dinners at which numerous rarities would be uncorked. You don’t see many posts like that now. Ostentatious consumption is out, value is in, and oenophiles are finding tasting pleasures far beyond Bordeaux and Napa.

Maybe the habits of yesteryear are just in hibernation and will return once the good times return, but I’m not so sure. The Great Recession is undoubtedly going to leave some lasting scars, and I suspect that the changes we’ve seen within the wine geek community since 2008 will prove to be lasting, too. Wine is not a trophy, and the days of treating it as one are probably over, at least on these shores. It seems to me that our economic woes have yielded a healthier attitude—dare I say a more European attitude—about wine. The obsessive-compulsive exuberance that McInerney lamented back in 2006 has given way to a more laid-back and ecumenical wine culture, and that’s a very good thing, in my opinion.

What say you? Has the sour economy led us to a sweeter spot as wine appreciation goes? Has your attitude about wine changed as a result of the prolonged economic downturn, and have you noticed a change in outlook among fellow wine buffs? Is it one cheer for the Great Recession? I’d love to get your take on this topic.

23 Responses leave one →
  1. Nearmteerne permalink
    May 11, 2012

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  2. January 16, 2012

    Hi Ryan, thanks for the comment, and that’s a very interesting take on things. You are right: there is nothing relaxed about the whole naturalista movement, nor the debate that it has sparked. However, I think you’d agree that the naturalistas are on the extreme fringe of wine geekdom. Is participation on CellarTracker and on Wine Berserkers proof in itself that one does not have a relaxed, unpretentious attitude towards wine? I don’t see it that way, but I suppose it can be interpreted as such. I would still describe myself as a wine geek, but I think I have a lot more perspective than I did, say, five years ago (an austerity budget will do that for you!).

  3. Ryan permalink
    January 16, 2012

    I’m intrigued by the idea that people in other countries appreciate wine without all the fuss, but I don’t see that attitude taking hold in the States. “Natural” wines are cheaper than the cult wines of a few years ago, but there is nothing relaxed about the way that some people pursue these wines and idealize their producers. In a way, I think we may be even more removed from the relaxed and unpretentious ideal that McInerney was talking about than we were a few years ago. We’re devoting our attentions to a wider range of wines, maybe, but we’re as obsessive as ever. See Cellartracker; see also Wine Berserkers. But maybe that’s just the company I keep. If you describe yourself as a “wine geek,” then definitionally you’ve lost perspective. I know I have.

  4. January 15, 2012

    Dan, I think top Bordeaux are certainly overpriced, and I’d love to know how much the pricing reflects a) speculative investment and b) supply “management”. With Burgundy, it is harder to say. Some of these wines are crazy expensive now, but I think the prices for high-end Burgs are truer reflections of supply and demand than prices for the First Growths and their Right Bank equivalents.

  5. Dan McCallum permalink
    January 15, 2012

    Mike- yes, many true classics such as your list not necessarily over-rated. But all the same, for the most part- overpriced. And this by virtue of being part of what was swept together and foisted and astonishingly as an investment grade asset-class.

    Bill- Not sure that I follow you. In my opinion the “elite” wine market is filled with scams and shams that would make your foils, the Goldmanites, blush. That is how most markets look at the peak of a levatating cycle. My only argument was/is that the wine market would be eventually doing more or less what it is doing now regardless of the ‘great recession’. When wine made the transitions from being a consumable (and for some few a collectable) to being an investment vehicle; if not a get rich quick scheme– well, we all know where those things go. Finance is de-leveraging; wine is dishoarding. The impact of finance on the larger hoarders is important, the impact of finance on the consumers not so much. Despite that individual consumers may have greatly changed their budgeting, the markets are global and growing.

  6. January 15, 2012

    Dan, thanks for that–lots to chew over there. I agree with you completely about the “little” wines and why they are prospering these days. As for the part about the trophy wines, I think it depends on which trophy wines we are talking about. As you would surely agree, not all trophy wines are created equal. I don’t believe Haut-Brion is overrated. I think the likes of DRC, Dujac, Rousseau, etc., all deserve their AAA ratings. The Napa cult cabernets and certain other highly acclaimed California wines? Some of them are clearly examples of overrated assets, and I would expect their prices to fall in the years ahead (I think you are absolutely right about the wine cycle being a lagging indicator).

  7. Bill Klapp permalink
    January 15, 2012

    Mike, a couple of things:

    First, you never have to qualify what you say here. It’s your blog! (Or with apologies to Lesley Gore, “It’s your blog, and you can lie if you want to!” (: )

    Also, while I understand that there are no hard numbers to confirm it, I tend to agree with what Jay contends about people “downsizing” their wine selections. Remember that 2008 was by no means the end of the bull market. The market crashed in late 2002 and again in the winter of 2003, dropping under 7,500 both times. It bounced back prior to the 2009 crash, but I suspect that a host of Americans never made it back up from the 2002-03 crashes to take full advantage of getting wiped out in 2009!

    Dan, your theory is eloquently expressed, but dubious at best. The problem is the tiny size of the fine wine market, who is doing the buying and selling, and when. Your theory does not account for the contrarian economic phenomenon of Goldman Sachs partners drinking $5,000 bottles throughout the current recession, bankrolled by the billions that Hank Paulson, Timothy Geithner and Ben Bernanke stole for them from the American taxpayers. (By the way, I do not wish to imply that all Goldman Sachs partners drink $5,000 bottles of wine. Cocaine is the Goldman drug of choice, not wine, and I am confident that Goldmanites spend a multiple of their aggregate fine wine expenditure on each of coke and thousand-buck-an-hour hookers.) It also does not account for the rise (and fall?) of the Chinese wine market. Nor can it predict when Eddie Millstein is going to drop a ton of Bordeaux on the auction market, nor when Park B. Smith will be dumping Chateauneuf-du-Pape, nor the rise and fall of Rudy Kurniawan in the wine marketplace. Any of these events can have a significant impact on the fine wine market. How many Asian auctions were being held 10 years ago? You catch my drift…

  8. January 14, 2012

    Hi Jay, thanks for this. So people were already moving to lower price points before the merde hit the fan in 2008? That’s interesting. I agree with you for the most part about the regions that stand to lose from this scaling back. I think Burgundy might be an exception, simply because the quantities produced there are so comparatively small. But from what retailers tell me, the market for $50 and over Napa cabs is completely moribund and has been since the onset of the economic crisis. I suspect the Super Tuscans aren’t faring very well, either, and we know what has happened here in the US with top-end Bordeaux. And I agree, too, about the diversity. Just look at northern Spain and the quality of its white wines–and the prices, too. These are some of the distinctive and delicious wines in the world, and they are happen to offer amazing value. Despite the economy, it is a great time to be a wine enthusiast.

  9. January 14, 2012

    Bill, I think the good times roll on for some people, but they are being more tight-lipped about it, which makes sense. In the present circumstances, those kinds of posts might not be well-received by some people. You make a very fair point about American wine drinkers, and I should have qualified what I said. I was really talking about “fine” wine drinkers as opposed to wine drinkers in general. And, yes, even within that category, there are people for whom California is the only game in town, and yes, there are still plenty of folks who take their cues from Parker. But I do think that American wine geeks have long been open-minded in a way that, say, the French are emphatically not, and I do believe that the economy has produced a more relaxed attitude towards wine on these shores.

  10. Dan McCallum permalink
    January 14, 2012

    My observations on the wine scene most certainly include the trends that you outline. But I disagree that financial deleveraging was/is particularly causitive. I see the two (wine & debt) as both going through cycles rooted in social and technological developments. And wine’s cycle running a couple years behind debt’s cycle simply because it is a much smaller and vastly less lucrative world. The trophy wines are failing now for the same reason that the most secured layers of tranched sub-prime failed; the ratings agencies serially and collectively over-estimated them and as a result they were bid up and over-sold. The once-lost little wines are finding love now because of the evolution of communication and affinity group formation in the www world. And they are finding broadening trade now because of the expansion of commoditisation to micro levels in the retail world- another digital age development.
    Present trends in wine would have happened without present econolic trends. My beliefs, and I’ll stick to them!

  11. Jay S. Miller permalink
    January 14, 2012

    My impression is that the economic hard times of the past few years has sped up trends that were already ongoing. From the reports that I have heard, people have not been drinking less (if anything, the opposite is true) but drinking further down on the price totem pole. This alone is going to result in lower consumption of California North Coast wines, famous French appellations, Piedmont and Tuscany.
    The other side of the coin is increased exposure to wines from Chile, Argentina, Spain, and the less known regions of France and Italy. It also means exposure to varietals other than the Cabernet, Pinot Noir, and Chardonnay. This diversity can only be a good thing.

  12. January 14, 2012

    Yeah, Robin, that doesn’t seem like the wisest trade–I would have rather kept the wine, and I’m sure your friend felt the same way when he left Vegas!

    Clark, thanks for stopping by, and you make some excellent points. Retailers (and sommeliers, too) have a big role to play here, and you and many others are steering people to some really terrific wines that they probably wouldn’t find on their own. In the 1990s and 2000s, too many retailers stopped selling wines and started selling points. Perhaps the pendulum is beginning to swing back in the other direction now; I hope so. And that’s really interesting about the difficulty of a down-sell–the psychology is fascinating.

  13. Bill Klapp permalink
    January 14, 2012

    A few random thoughts: regarding Kapon, maybe he is simply too busy globetrotting and raking in millions from Acker’s auction empire, but for a while there, he and those he drinks with were writing up their high-end drinking exploits almost daily, and Antonio Galloni was often a part of the group, furthering his Champagne and Burgundy educations. Kapon’s e-mails and posts on wine boards by the others have all but dried up these days.

    Mike, yes and no on American wine drinkers being open-minded. Yes, in terms of being willing to drink wines from all over the world, which is utterly alien to European wine culture, a strictly locavore (locavino?) proposition (although “drinking well” is central). However, there are plenty in this country who drink nothing but CA wines, and actually believe that they are drinking the best wines on earth, without bothering to taste through the wines of other countries to confirm that. That trend can only be reinforced and strengthened by the current hard times. And then, there is the extreme parochialism of buying and drinking only that which Parker and his points tell you to. Regardless of growth in wine drinking in this country over the years, a lot of it is supermarket Yellowtail and cheap industrial wines from CA, Chile, Argentina and elsewhere (maybe a form of open-mindedness, but driven by economics rather than philosophy), and fine wine drinkers are a small subset of American wine drinkers generally. Thus, the points that I make about CA and Parker above make a pretty large dent in the “open-minded” theory.

  14. Clark permalink
    January 13, 2012

    Some very fair points made above. I would add that the ability of a consumer to ‘drink well’ aside from fairly serious wine study is to trust their local shop/bar/restaurant. Let us learn your palate. In recent months we’ve been able to turn Zinfandel customers on to Minervois and Primitivos. Likewise Sauvignon Blanc fans onto Muscadet/Gruner, and Champagne people onto Cremant. As long as there are salespeople who can engage and ultimately sell a customer a rising tide will raise all ships regardless of price. Several customers are *somewhat* insensitive to price and they are still looking for wine to fit their palate outside of their normal choices to drink everyday.

    There have been several instances recently where I know the customer will love the wine I have in mind but it is price-point is lower than what they are accustomed to spending. Strange how a down-sell can be equally as difficult as an up-sell.

  15. Robin C permalink
    January 13, 2012

    One of our friends recently sold part of his wine collection for $6,000.00 and then lost half of the money in Vegas. I have to think about that more to figure out if it has a larger meaning.

  16. January 13, 2012

    Frank, thanks for the link to Matt Kramer’s article. I am a huge fan of Matt’s, and pretty much agree with everything he writes.

    David, thanks for the comment. You make some fair points. But I think berserkers, certainly, sees enough traffic that one can draw some inferences. With regard to mailing lists, for instance, I think it’s very clear that people have been paring back and are taking a degree of pride in their decisions. So here’s a question for you: Do you think the recession has changed behavior permanently, or do you think the point-chasing, trophy-hunting, etc., is just in hibernation?

  17. David F. permalink
    January 13, 2012

    I am wary about using changes in board topics/tone over the last few years as a benchmark for at least two reasons. First, it is based on impression and is subjective. More significant, however, is that splintering of the online discussions. At one point, just about everyone (at least in the US) who chatted about wine did it at the Parker site. And then some people were tossed about and then the site went behind a paywall. Other boards took up some of the slack (in particular wine berserks). The result of the splinter is, I think (your mileage may vary) there is less online chatter before. Or at least less chatter on boards.

    In regards to Mike’s point about seeing less posts about big dinners and other topics, people are less likely to post since there are fewer eyeballs to see the post. You post to brag (big dinner, exclusive mailing list, etc.) and there are less people to brag too. Plus, depending upon where you post, odds are high some of your guests will not see or cannot see it. Where’s the fun in that?

    I think Mike’s reference to “economic factors” comes closer to explain things. First, it reduced the number of people able or willing to engage in some expensive behavior. Second, it made it seem crass (more crass) to brag about such things.

  18. Frank permalink
    January 13, 2012

    Et tu, WS??

    Matt Kramer on “Why I’m no longer buying expensive wine”

  19. January 13, 2012

    Jay, you may be right about John! In fact, I just received John’s latest missive, and he is certainly continuing to do his part to cull the world’s supply of rare wines. Perhaps you are right, too, about us not going all European, though I think more and more people are turning away from fruit bombs and cocktail wines.

    Victor, thanks for dropping by. That’s a really interesting story, and you are lucky that you came to this realization so early into your wine drinking life–you’ve surely saved yourself a lot of money! The most prestigious wines are benchmarks, of course, and if you get the chance to taste them, you should grab it. But there’s so much good stuff right now at very affordable prices; you can find a lot of pleasure on a modest budget, and that’s a great thing.

  20. January 13, 2012

    Interesting idea!
    Im based in Sweden, have had a great interest in wine for about 5 years (28 years old now).
    When I started reading more and more about wine I basically only sought for and strived after expensive/high-point wines. The reality, with me being a student, didnt give me a chance to only buy these wines but mainly seek after wines I appreciated to a reasonable price.
    About 1 year into this lifelong journey I discovered my demand for prestige wines wasn’t comparable to what it had been earlier.
    Today my biggest “goals” with my tasting arent those prestigious ones but rather drinking a really good wine at a minimum amount of money. This said Im not saying that i dont want to taste sought after wines, I do have atleast 10 wines on my “taste before I die”-list but I figure they arent my main focus.
    With this said I can relate to your story alot without being an American under the recession. If money hadnt been a problem for me early on: Sure, I would have started at/near the top.
    And I believe most (not all) people going ‘down’ to more regular standards will stay there after seeing the charm in using your palate/nose + knowledge instead of your wallet + others scores.

  21. Jay H. permalink
    January 13, 2012

    “Back in the pre-crash days, people didn’t hesitate to post accounts of blowout dinners at which numerous rarities would be uncorked. You don’t see many posts like that now. Ostentatious consumption is out, value is in, and oenophiles are finding tasting pleasures far beyond Bordeaux and Napa.”

    John Kapon does not endorse this post.

    Americans might be going more downscale (for sure), but I don’t think they’re going all that european. Wine with plush velvety mouthfeel, divorced from serving as natural accompaniment with food, still seems pretty dominant outside geekland.

  22. January 12, 2012

    Lee, that’s very interesting, and I think a lot of people have experienced something similar. They are finding plenty of pleasure at lower price points, and even if they were forced to cut back on their spending per bottle on account of the economy, many of them will probably not resume their old buying habits once the good times are back (if they ever return!). My sense is that this downturn has been an eye-opening experience for quite a few wine enthusiasts.

  23. Lee Newby permalink
    January 12, 2012

    I like many friends have traded down over the last 3 years and found some outstanding wines I had overlooked because they were in the $20-40 range and I was drinking in the $40-75. This has been especially true for many wines of Spain and the South of France, their $30 wines are very good.

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