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The Fix Is In?

2011 May 5
by Mike

Robert Parker has just released his 2010 Bordeaux barrel scores, and along with his ratings, he has offered some contradictory observations about the state of the Bordeaux market. In one section of his report, he dismisses concerns that a bubble has formed and claims that demand, particularly from Asia, is growing. But a few paragraphs later, he suggests that maybe demand isn’t so strong after all and that there may indeed be a bubble at the high end (a New York retailer reprinted those comments in an email sent out yesterday; you can read them here). Parker notes that some unnamed people in Bordeaux are skeptical about how much buying is coming out of Asia and cites speculation that the leading châteaux—the First Growths and their Right Bank equivalents, plus the Super Seconds and other marquee estates—have held back vast quantities of wine in order to create the illusion of scarcity and “manipulate the market price.” Or it could be that the wines are being stockpiled by third parties—négociants, importers, wholesalers, investment funds. Either way, says Parker, it is possible that consumer interest is not nearly as robust as the stratospheric prices would seem to indicate and that a “major adjustment, just as we have seen in the United States with the real estate market” is in the offing.

Parker is a former lawyer, and I assume he wouldn’t give credence to the hoarding rumors if he didn’t think there was a possibility they were true. So here’s a question: If Parker is concerned that the top châteaux may be completely manipulating the market, why did he just issue ratings for their latest wines? His scores are still the coin of the realm in Bordeaux and are used to pump up demand and to justify the exorbitant prices. If Parker has reason to believe that the biggest names in Bordeaux are engaging in this kind of chicanery—and shafting consumers in the process—why abet their efforts? A few years ago, I wrote a piece suggesting that Parker stop rating wines that were subject to rampant speculation. He didn’t take kindly to the suggestion and accused me of having a “very provincial point of view” (it’s true—I’m such a bumpkin!). But consumer advocacy à la Ralph Nader is not just about talking the talk; it’s about walking the walk. If Parker, a uniquely influential critic, suspects that high-end Bordeaux is now a rigged game, he ought to use the power of his pen to do something about it. And in this case, that would mean putting his pen down and not rating some of these wines until he is satisfied that the châteaux are playing fair.

What’s your take on this? Should Parker have withheld scores for the wines in question, or is that placing an unjust burden on him? And I’d love to hear from some people in the trade. Parker writes, “The fact that no one can (or wants to) provide the actual sales figures of how much 2009…is actually being sold through to consumers is astonishing.” Have consumers been buying the 2009s? How much demand have you seen at the retail level?

48 Responses leave one →
  1. Jack Bulkin permalink
    May 10, 2011

    JJ nice post. Australia is just the most recent phenomenon of the “herd mentality” of wine buying and region abandonment by the herd known as the buying public. It was easy for our entire Nation to abandon Merlot simply because of a line in a movie about neurotics and borderline personalities that happened tobe set in a wine growing region.
    Parker and others loved big ripe Aussies so the herds of thoughtless and clueless lemmings followed. Then they opened the wines after a number of years and said WTF??? French oak might help, but the die is cast for for now. Aussie wines are in serious trouble check the auctions for prices of high scoring WA Aussie wines.
    No interest, except for single diget wineries.

  2. May 10, 2011

    Mike

    Thanks very much for the response.

    Would love to hear more about this – perhaps in a follow up post?

    “That said, interest in Bordeaux has clearly plummeted here in the US”.

    What is filling the gap I wonder.

    I will say, as an aside, that if the Australians in particular can’t use the impetus from Bdx 09 and 10 pricing to restore their wines to the tables of fine wine lovers, they may as well bulldoze McLaren Vale and the Margaret River and turn the land into apartments for the gazillion lawyers in the country looking for a seachange / treechange weekender.

    Perhaps they ought to switch to French oak, as a start….

  3. Paolo permalink
    May 10, 2011

    Very good point Mauss!

    What I meant by that was that these price increases may see an end to the en primeur system. After all, there has to be a point to tying up your money for 2 years. There certainly was when release prices were the lowest the wines would ever be – but that no longer looks to be true.

    If the buyers of 2009 look back when they receive their wines and they have not increased (and have maybe even decreased) in value, what are the chances that they will purchase en primeur again?

    Of course, as you rightly point out and I didn’t consider, is that by setting the price level so high, if this does happen, all the chateaux need to do is release a vintage at 3/4 of the previous price and enough people would see it as “value” that it would re-invigorate the entire en primeur system

    However, not so good for the negociants who have to buy into every vintage. If they end up sitting on a shed load of 2007s, 2009s and 2010s, we may see some of them with financial problems

  4. mauss permalink
    May 10, 2011

    Just a question we may have to ask to ourselves about “shooting in their feet” :

    We know that inckuding the food of the dog of the concierge, the cost of a bottle of a first growth reach a maximum of € 30 on the right bank and less than € 25 (due to scale economy) on the left bank.

    So, if a Lafite falls from $ 2000 to 500, they still make a huge profit. They will be more than happy with that. But can you now imagine all the potential buyers who will run in order to buy a Lafite at € 500 ? More than we think. Even at €60 they will make a profit !

    Do you think really a crisis may reach this level ? Maybe…, maybe never !

  5. Paolo permalink
    May 10, 2011

    Have just come to this article by way of another link, but have found the conversation fascinating.

    There is no doubt in my mind that the chateaux hold wine back and are doing so increasingly. I believe they have looked at the difference between en primeur prices and secondary market prices and have taken a decision not only to raise release prices but to hold wine back in the hope of selling it at a increased price later on.

    To me though, it seems like they have shot themselves in their feet. Release prices are now so high that there is no value in buying en primeur any longer. The 2009’s have hardly increased in value and some have actually dropped. Even the trade in Lafite (all vintages) appears to have levelled off recently.

    Its my belief that short of a further increase in demand (perhaps from a reduction in duties somewhere like India or Brazil), the chateaux will find that their wines from 2009 and 2010 sit at their release prices or just below/above for quite a few years.

    With regards to the demand from the Far East, it is significant, particularly from the UK. A lot of wine is being drunk there and a lot is being stored, but the demand is real and currently it is ongoing

    However, this does not mean that all price rises are down to this demand. Mouton 2008 for example increased in price rapidly upon the news that a Chinese artist would be designing the label. However, there is no way this was genuine demand from Far East consumers or even wine companies. This price was driven by speculation from (mainly UK based) wine traders. I think there are a few traders out there who are nervously sitting on a heap of Mouton 2008 praying that once the physical wines get into circulation in China, then trade will increase.

  6. May 9, 2011

    Keith,

    Thanks for this. Your point about China presupposes that there is, in fact, robust consumer demand for Lafite. Parker, in his comment that was the basis for this discussion, raised the possibility that the demand for Lafite and other top growths may be considerably less robust than prices would indicate and that the high prices are being driven by something other than market forces. As to your point about Communists creating inefficiencies-that’s unquestionably true, though we’ve proven to be pretty adept in recent years at creating inefficiencies and misallocating resources ourselves.

    I completely agree with your point about age and wines, ditto your comment about those old-school California cabs, which is great advice. I think the 91 Ridge Monte Bello, to toss out just one example, is a brilliant expression of cabernet–it would more than hold its own in a blind tasting with the First Growths, if not embarrass them. The 91 MB can still be found for $250-$300 a bottle–not cheap, of course, but compared to the First Growths or wines like Harlan, it’s a steal.

  7. Trent permalink
    May 9, 2011

    Parker should rate the wines. His function is to pronounce on all wine, and the economics should be a secondary concern. It’s not as if he only publishes on trophy wines; he regularly reviews and tweets on sub-$20 wines too. Will we wine drinkers benefit when pundits start telling critics which wines they should or should not be rating ?

  8. Keith L. permalink
    May 9, 2011

    On whether Bordeaux is a functioning market: I like to remember something I was taught early on about the discipline of economics, which is that whenever consumer behavior appears irrational, it is worth doing some further thinking about whether there is an underlying rationality. In the case of $1,000 bottles of off-vintage Lafite, the price looks irrational if you consider the product to be wine, but if the product is the form of currency necessary to grease a Chinese Communist Party official or show respect to a tycoon for purposes of winning a multimillion dollar business deal, then $1,000 is supremely rational. People who are buying the wine to drink are overpaying because that is not the most economically efficient use of the product, and the other, more valuable uses of the product are baked into the price. The market is doing exactly what markets do (determine prices), and the Communists are doing exactly what Communists do (create inefficiencies).

    On JJ’s query whether the Bordeaux first-growths indeed represent the finest expression of cabernet blends such that those who love them should suck it up and pay the asking prices: In my experience the single biggest factor in getting the best possible experience out of a wine is drinking it at its proper age. 1996 Cantemerle ($30) offers significantly more pleasure than 1996 Latour ($1,000?) and indeed more than most, perhaps all, of the 1996 first growths at the moment. I will grant that in 30 years the 1996 first growths ought to offer more than the 1996 Cantemerle does now, but not by a margin anywhere nearly proportionate to the price difference, and in any event now we are not just comparing relative financial investments; we are also comparing relative investments in time. If you don’t have 30 to 40 years from release to wait, you do not gain much by buying first growths to drink in top vintages. So if you want to experience cabernet blends at their absolute pinnacle, you need either a lot of money or a lot of time (lately, both). Well—actually, there is one other option. You can seek out older wines that were esteemed in their day as offering first-growth quality but which have since fallen out of favor for reasons of fashion or otherwise. Heitz Martha’s Vineyard, Diamond Creek, and Ridge Monte Bello are some of the wines in this category.

  9. Wilfred permalink
    May 9, 2011

    What a great discussion. Two quick points, related to the recent posts but admittedly tangential to Mike’s original blog post.

    1) Parker has, oddly and ironically, facilitated his marginalization. I always saw his board (not that he did, by the way) as a PR machine for TWA. By closing it to all but the faithful, he has invoked the “out of sight, out of mind” principle. He has also driven many from his subscription based business by alienating customers with insults hurled their way. Why he has done this is for psychoanalysts to dissect (yes, I’m a psychologist, but let’s have this conversation another time) but he has certainly actively participated in his own marginalization.

    2) For the poster who winced at the comments directed toward Jeff Leve, first I agree with Mike–if he acknowledges he’s not a wine critic, he neither should behave as one (by touting scores, promoting his reviews) nor should they be cited by others ITB. Second, Jeff can not only take care of himself, Jeff can be quite active in some of the acidic comments toward others (I won’t raise it here but it was open for all to see on the old Parker board in which lawsuits were threatened against him by his comments to others about someone he had an issue with). I wouldn’t be feeling too sorry for “poor Jeff.” He can give as good as he can get.

  10. May 9, 2011

    JJ,

    My remark about not being a buyer at $300 is not a comment on the quality of the wines, but rather, an acknowledgment of my own limited purchasing power! That said, I do prefer Burgundy to Bordeaux and would rather have a bottle of, say, Mugnier Musigny than a bottle of Latour.

    I agree with you that Parker’s influence is waning, though he remains the arbiter of all things Bordeaux. As for the role of journalists in general, I think there are a lot of perverse incentives at work in wine journalism these days, and you see it most acutely with Bordeaux. The race to be first to post scores, the pressure to throw around big numbers (high scores get cited by retailers, thus building brand recognition for journalists)–all these things fan the hype. That said, interest in Bordeaux has clearly plummeted here in the US, so I suppose one could say that the hype isn’t having much of an effect at the moment. Parker released his 2010 scores last week, and there was hardly a peep on the wine boards despite his enthusiasm for the vintage.

    As for Jeff Leve, I will leave that subject to my friends Bill and Jack. I will say only this: Leve has been very up front about the fact that he is wined and dined by the Bordelais and entertains producers in his home. Leve insists that he is not a wine critic, which I suppose is his way of saying that he shouldn’t be held to the same standards that we hold people like Parker and Jancis. Fair enough, but then his notes ought to be taken with a big grain of salt, and his scores really shouldn’t be cited alongside those of Parker, Jancis, Bettane, etc. Just my opinion, of course.

  11. Jack Bulkin permalink
    May 9, 2011

    Great story and no surprise. Many in the import to China trade have advised me that much of the Lafite purchased here was destined to curry political bribes in China. Freely flowing cash in a Communist controlled nation, no surprise. This is like the absurd number of fatalities in auto accidents that occured once the old Soviet Union allowed ownership of autonobiles in the late 50’s. A little personal freedom can be very dangerous and absurdly abused once first permitted.

  12. May 9, 2011

    A PR problem indeed. Thanks for the link; crazy story.

  13. W. Englehaupt permalink
    May 8, 2011

    Mike, Thanks for the insight. BTW, one data point on who’s buying first growths these days. Saw an interesting article today in the Washington Post (5/8/11) about a buying binge by China’s oil monopoly Sinopec.

    http://www.washingtonpost.com/world/asia-pacific/a-booze-blowout-for-chinas-oil-giant/2011/05/03/AFhXB67F_story.html

    Apparently, they have been on a buying binge of Chateau Lafite. They have purchased hundreds bottles of Lafite, in a $245,000 buying binge, some in the $2000++ range. All the while, they have been publicly raising gasoline prices, and complaining about how bad things are for a business. Apparently quite a PR problem.

  14. Bill Klapp permalink
    May 8, 2011

    JJ, we can let the Leve mess drop here, especially since this is a tonier address that is attracting many deep thinkers (and not Leve or any other members of Parker’s posse). Thanks for the concern you expressed, but truth is an absolute defense in these matters…

  15. May 8, 2011

    Jack – not directed at you, and I understand that Bill Klapp can look after himself. Mike doesn’t need to expunge anyone’s comments as he wouldn’t have any liability issues providing a forum – I was really just extending an invitation on whether some would want Mike’s assistance to self-delete, particularly if there was anyone who might have sleepwalked into a potential issue here.

  16. Jack Bulkin permalink
    May 8, 2011

    JJ, I speak only for myself and not that fellow Klapp who I understand is an accomplished long time Litigator and I assume capable of understanding the nature of the beast that is “Defamation law”.
    My only comment about Mr. Leve was your reference to him with others who are established wine critics. Just this past week Mr. Leve publicly stated the following on the EBOB Board:
    “I am not, nor would I ever want to be a critic. I like wine, especially Bordeaux. Writing about it is a pleasure. I take my tasting notes seriously. I think I do a good job of letting people know how a wine tastes and feels as well as offer some good tips on wines. But I have no desire to be a wine critic.”
    I see no reason to have Mike “expunge” my former remarks.
    His comments would seem to reflect agreement with your more recent statement including him in the enthusiastic amatuers camp.

  17. May 8, 2011

    I don’t think we need to hang Jeff Leve out to dry here (and I wonder whether one or two commenters might want to ask Mike to expunge their remarks just as a defensive measure – I’ll leave that with you….). But I take the point he is somewhere in spectrum between RP and JR and enthusiastic amatuers, perhaps even to the far side of that spectrum.

    Anyway, sorry for the loose terminology, but the overall point stands – lots of perspectives out there, no point listening to just one of them.

    Would welcome remarks on the other substantive points in the post if people have thoughts on them.

  18. Jack Bulkin permalink
    May 8, 2011

    Dan well put and I agree on the dim future for the manipulators. If the top Chateaux are hoarding, the end game will remind us of the outcome of the home buying zealots in the Las Vegas and Phoenix R.E. Markets in 2005.

  19. May 8, 2011

    Wilfred- so very well stated. To my manner of understanding, a wave of adulation is not unlike a wave of water. It will push some objects (or persons) forward to be thrust along by the energy behind. Despite all appearances, those objects/persons are not leading anything.
    But because there is this appearance, there will be believers; thus followers until the whole mass breaks up.

    Jack- imo, they wait because they are afraid of not waiting. The problem with market manipulation is that the manipulator must over time take more and more risk to achieve less and less incremental result. And, despite that they may believe that they are articulating some brilliant innovative strategy, the manipulator ultimately becomes co-dependent with a subset of ride-along speculators. The Bordelais at the top think they are living in a new paradigm and thus don’t have an exit strategy for their positioning. And they stretch themselves thinner and thinner to persist with even a maintainence strategy.

  20. Bill Klapp permalink
    May 8, 2011

    JJ, I find it amusing that you refer to Jeff Leve as a “critic”. He is the world’s most aggressive wannabe, but he is no critic. He is a guy with a pathological need for attention, of the “there’s no such thing as bad publicity, as long as SOMEBODY is talking about me” ilk. He has perhaps a decade of drinking experience under his belt, and, save the last couple of years, little of that appears to have been useful or relevant to his present-day blathering about Bordeaux’s wines. He now plays an interesting double game. On the one hand, when someone calls bullshit on him (which happens many times each day), he goes into this “I am no critic, I am just a regular guy who loves Bordeaux” schtick. Then he posts as though his scores carry more weight than Parker’s, and also personally pimps his scores to negoce and others to fuel the idea that he IS a credible critic. A handful of newbies out there have been fooled into believing that what Leve says should be taken seriously. Many more of us try to wise them up, but in arenas like the Squires board, that is well nigh impossible, since censorship is Squires’ prime directive since the board was closed to thinking people.

    Leve is the most unethical of any of the Parker minions, and, given the ethical issues that The Wine Advocate has faced in the last few years, that is saying something. Leve has spent the past several years kissing negoce and chateaux owners’ asses in an effort to be taken seriously in Bordeaux, and posting every moment of his adventures in real time, first on the Squires board, and then on his own website and every other wine board that tolerates such shenanigans (too many). Parker and Squires appointed him “moderator” of the Squires board, with the authority to delete posts arbitrarily (rarely exercised, because then nobody would be talking about Jeff!), and he has parlayed that into some vague notion in Bordeaux that he bears the Parker imprimatur, and thus, that the Bordelais dare not ignore him nor his Parker clone, trite, empty tasting notes and opinions. He is now wined and dined by the dumbass Bordelais. One chateau recently engraved a photo of Leve’s beloved dog Herky on the evening’s menu for a dinner at which Leve was the honored guest, the story of which enjoyed as much prominence as Leve’s ad nauseum posts of scores and notes. (You can see a hundred or so photos of “Herky”, along with a running commentary of Herky’s exploits, on Leve’s amateurish website.) Thus, what you have is a situation where Leve is admitted and entertained as the houseguest at an increasing number of chateaux, and then turns around and then, voila!, gives those chateaux glowing writeups. It is the purest violation of Parker’s published ethical standards, but when pressed on this point, Parker behaves as though Leve is a one-man vinous Mission Impossible team, of which Parker disavows any knowledge: Parker has only met Leve and drunk with him once or twice, and not even Bordeaux, and barely knows the guy; Parker made no introductions for Leve in Bordeaux, but indeed, provided him with only one chateau phone number (probably some truth there, as initially, Leve’s lead pimp in Bordeaux appears to have been the St.-Emilion importer, Jeffrey Davies, and, judging by the fact that St.-Em wines are Leve’s favorites, including those that Davies imports, it has proven a mutually advantageous relationship); Leve is not on the Wine Advocate payroll (true, I believe), so he is not bound by the Wine Advocate ethical standards, even though he is allowed to pimp his website and post every one of his notes and scores on the Squires board. And so it goes.

    Leve is an agenda-driven fraud being perpetrated upon naive and/or ignorant wine board denizens. Under pressure, he has admitted to his ties to those in the Bordelais trade, all of whom he considers to be his personal friends, and, of course, necessarily denies that he is a critic at each such turn. I will give him this: old Jeff is living the high life in Bordeaux for free, which, while a massive embarassment for the foolish and double-dealing Bordelais, is sweet for Jeffois. He needs to enjoy it while he can. With the outrageous Bordeaux pricing of recent years, which has caused perhaps two generations or more to ignore its wines, and now allegations that many chateaux are withholding their wines from the marketplace in an effort to manipulate world markets in the wake of Parker’s waning influence as the (inadvertent, perhaps) Bordeaux market maker, the timing is ripe for the Bordeaux bubble to burst, once and for all. Phonies like Jeff Leve are sure to be drowned following that pop…

  21. Jack Bulkin permalink
    May 8, 2011

    JJ, if Parker’s influence is truly waning, then why do the classified growths all wait until his reviews are out both online and in print before pricing?
    By the way, I would not list Jeff Leve as a wine critic. When confronted with they exact question, he unambiguously denied that he was a critic. They are too many “critics’ to count these days “including those that deny that they are critics” who have opinions and some followers but in my view Parker’s scores are still the barometer for eventual pricing. It may not be as strong as in 2005, but there is still very strong correlation.
    Your comment about the wine press having the power to stop enabling the Bordelais at the tips of their fingers is correct in my view. Unfortuantely, they have their hands in their own pockets when it comes time to criticising those whose wines they critque.

  22. Wilfred permalink
    May 8, 2011

    I’m of two minds, both internally consistent. First, I believe it is Parker’s job to review wine. He’s a critic and his job should be to provide timely reviews, in the same way a restaurant critic reviews restaurants in a timely way. A wine critic should not be confused with a consumer watchdog or activist; that’s the job for others.

    Second, this nonsense about Parker being a wine version of Ralph Nader is ridiculous, and its too bad Parker ever stated such silliness. In the older days of one sided communication, in which he pronounced “truth” from his throne, there was no light to shine on such absurdity. Now that people are allowed to question and shine light on these points and take issue with them, this silly assertion evaporates with a nanosecond of scrutiny. (I mean, what has Bob done for consumer activisim, other than get himself exempted from the Maryland shipping ban, only to refuse to help other Maryland residents in their quest for the same. I read about a lot of wine Bob personally drinks from his ‘pristine cellar’ and I bet he didn’t go buy it all at the local wine store in Monkton).

    Bob was a guy who was there when the stars were in alignment but unfortunately for him, time and technology marched on and he’s still in the same corner even though the light is shining elsewhere.

  23. May 8, 2011

    Mike

    Really interested in your last comment here:

    “I’m not a buyer at $1000 a bottle or whatever the wines sell for now, but I also wouldn’t be a buyer at $300 a bottle.”

    Just testing two possibilities here: is this either (a) because you’re not a Bdx / cab blend man (link here to your slate article on Bdx vs Burg; but contra: your other Slate article on legendary Petrus from magnum – suggests this stuff still has a place in your wine universe) or (b) there’s just better drinking cab blends out there for a fraction of the price?

    Clarification would be helpful to understand your comment properly – and if it is (b) I’d be very interested to hear more from you on that – perhaps in a detailled follow up post?

    There reason I ask is threefold:

    1. I believe Parker’s influence is waning. There’s a similar discussion going on here on the CT forum at the moment, which also links to a piece on this very topic published in Fine Wine magazine. The thesis is simply this: it’s not 1982 anymore, there are simply too many critics reviewing Bdx these days for anyone to have to put all of their faith in the voice of one of them. And CT itself is becomming more and more important, particularly in my experience in helping identify great wines in overlooked vintages.

    2. What’s sustaining the Bdx prices therefore IMO is not simply Parker, it is simply that the first and super seconds (and their RB peers) GET ALL OF THE OXYGEN OF PUBLICITY. Latour 2009 and 2010 is getting top scores from all manner of critics – anywhere I look (Jeff Leve, Wine Doctor, Janics, Decanter etc etc) I keep hearing the same verdict – historic wine, one of the greatest expressions of Bdx ever. Same for Margaux in both years as well.

    If the consumer is being told by not just one man, but the consensus of critical opinion, that these wines are the apogee of – let’s not say wine, but let’s say Bdx, and perhaps even Cab blends – then I think the prices will find the levels they are, at least north of $300. And if I had $300, I tell you I’d be lining up to buy some if it were available at that price.

    3. Understanding how points 1 and 2 run together I think is important, because it presents the wine reviewers with the key to unlocking the whole Bdx pricing circus: it’s not Parker keeping the show on the road, it’s the fact that the same wines keep chewing up all the attention, year in year out. Therein lies the cure. TURN OFF THE OXYGEN! If there really are better cab blend alternatives out there, I’d love to hear more – much, much more – about them. In fairness, you’ve got an immensely broad palate, and I know that others do give plenty of time to other regions as well. But the tone and emphasis keeps coming back to Bdx, and reinforcing the sense that the top first growths are really where the action is.

    4. Is that last point correct? That’s what it all comes down to – are Latour & Co really the finest expression of cab blends on the planet or not? I keep being told how Aussie cabs from cooler climates are competitive etc – my own experience is they’re not, not by a long way. (The use of American oak immediately distingushes them with an awfully heavy handed caramel flavour). Equally, my experience with Cal Cabs (limited, but reputable if not cult names) has been patchy, for very similar reasons.

    5. I know I need to do a lot more to expand my palate and try new wines – Vega Sicilia now tops the list thanks to your recent article. But there are plenty of us who do just adore cab expression (unfashionable though it is in progressive thinking circles) – again the CT forum here will show plenty of people with years of tasting under their belt, who have come to the same conclusion. For those of us in this category, I wonder what the advice of the wine press is. If Lafite & Co are the pinnacle, then we can just stop discussing the issue and resign ourselves to high prices for those, and enjoying 2nd-5th growths in between our privileged encounters with it. But if there is stuff that is just as good out there that is being overlooked, then I’d love to read more about it.

    Bottom line: it’s not all about RP anymore. Much of the wine press is enabling Bordeaux as much as anyone. If they think the whole thing really is a scam for the QPR proposition, the answer lies at the tips of their fingers – at their keyboards.

  24. May 7, 2011

    Yes, Christina, he seems to want to have it both ways–he wants to call attention to this possibility but apparently has no inclination to use his considerable clout to find out if it is actually true. As for that mud, I wear it proudly!

    Francois, thanks for your comments. You are obviously closer than any of us to the source–Bordeaux–and are surely more plugged in than any of us. What Parker was suggesting was something quite different, and considerably more nefarious, than what you’ve outlined. But Bordeaux produces a lot of wine, and the world economy is still limping from the biggest downturn since the Great Depression. In the US, consumer interest in the First Growths, etc., appears to be pretty much nonexistent, and I rather doubt it is any more robust in Europe. Yet, prices for these wines remain stratospheric. Is China really soaking up all the supply? If not, is it speculators, or–the scenario described by Parker–is it price manipulation by the chateaux? Parker clearly believes that the latter is a possibility, or he wouldn’t have even mentioned it. At any rate, if this is a bubble, it will inevitably burst.

    I agree with my friend VLM–high-end Bordeaux is hardly a rational, well-functioning market.

    George–I wasn’t blaming Parker. My point was simply that if he suspects that the market for high-end Bordeaux is being as egregiously manipulated as he suggests might be the case, he shouldn’t abet the manipulation. This has nothing to do with being priced out of wines such as Lafite and Latour. I’m not a buyer at $1000 a bottle or whatever the wines sell for now, but I also wouldn’t be a buyer at $300 a bottle.

    that leaves us with China, with speculators, etc.

  25. May 7, 2011

    It sounds to me like Parker thinks he sounds more respectable if he criticizes the top Bordeaux chateaux, but in fact, he doesn’t have the cajones to use his influence to do anything about it. And Mike, I love that you have engaged in some mud-slinging with Parker! Or rather, that he has slung mud at you.

  26. mauss permalink
    May 7, 2011

    About Châteaux keeping larger quantities for future speculation :

    As explained (if I remember correctly) by Gil Schwarz on the Parker’ BB, some châteaux are effectively keeping more quantities, in the recent years. For which reasons ?

    I did met one owner last week, we discuss these matter, and here are some ideas about this true fact.

    a : with the huge profit done on every bottle (cost € 200), if they sell all the wines, easily absorbed by the Negoces* (eager to collect such profit’makers), they will have to pay huge amount of taxes on profits. If they keep some wines inside the cellars, they will pay only later these taxes. They have even the possibilities of some “provisions”, something technical I am not familiar with, in their balance sheets.

    b : they gamble on the idea that Asian market will be stronger and stronger at least in the next 10 years, and so, they want to profit also from bigger selling prices, bigger profits to come.

    c : with past experience, they still keep in mind that they may have really louzy vintages (frost, rain for all the month of september/october) and then, they will be happy to put on the market some older vintages.

    d : obliged by the high value of their wines now, some of them have reduced sensibly the quantity of the “grand vin” and develop a “second vin” they want to be at the level of a classified (Pavillon Rouge, Le Petit Mouton, Forts de Latour, Alter Ego).

    At the level of trademark (the big 8 and a handfull others), the scores of Mr Parker has a minimum effect on their reputation. Basically, the actual buyers of those wines do not have the time to read Parker, if they know him. If, for example, Mouton gets only a 70 points, it will not change the price of what they will put on the market, or it will be really a minimum difference. Since 2005, they are now out of this “Parker’ effect”.
    The buyers of these wines buy “classification”, reputation and not a Parker score. Parker scores have real effect just under, for those with a 92/94 who may add some € additionnal on the expected value. And on a production of over 80.000+ bottles, this is quite something for them. So Parker has and will have a very strong effect on their income.

    Now, about the definition of the job of Mr Parker, this is a semantic discussion : he make his money with his readers and I think, wise as he is, he will never forget this key point. The rest is pure litterature and WE topic for strong discussion :-)

  27. Jack Bulkin permalink
    May 6, 2011

    Vin, great read and a hysterical analysis. The difference between the Chicago School of Economics and Robert Parker is that the former stubburnly advocated ” Rational Expectations” and the latter is always irrational in his expectations. “This wine is glorious and will be a worthy candidate for perfection in 35 years.” LOL

  28. May 6, 2011

    @Dan M, you say:
    “This reversal of reason applies to all markets; stocks, commodities, manufactured goods, art, jobs, you name it, and – wine. This behaviour is in fact to some traders the single best indicator of tops and bottoms. The market will look after itself.”

    I would posit that markets rarely work all that well. As we have witnessed, rating agencies and traders can be in cahoots (without necessarily needing that to be spoken) and create a price imbalance where there is not the demand to sustain it. Thus, the market does not function.

    Parker is the de facto rating agency used to price a financial asset (wine). There is an appearance of (probably incidental) collusion with the traders. Thus, the market does not function.

    The fundamental assumption in neoclassical economics is the frictionless movement of information. That almost certainly does not exist here regarding the supply side. The demand side is created by the rating agency. Thus, this is not a market at all.

    I’m surprised that anyone believes in Chicago School Economics anymore.

  29. George DuPorc permalink
    May 6, 2011

    What else can Parker do? Say, I think these wines are too expensive therefore I am going to taste them all, and then withold my opinion? whether a wine price is too high, or too high because the market has been manipulated, has nothing at all to do with whether or not the wine is any good. Thank god Parker does the only thing he can, and give his honest opinion about the wine, and let the rest sort itself out.

    if you don’t like the price don’t buy the wine. if you think they are being witheld, buy later when they presumably will be cheaper. but blaming Parker is crazy. Personally, I’m fed up with peeople bleating that they can no longer afford Lafite. There are people on this earth who can’t afford water.

    The wine industry has been corrupt as hell for centuries (your fancy decades old Bdx that you treasure so much probably was grown in the S.Rhone. Or even N Africa). It’s probably far less so now than ever, unless you consider it your God-given right to bathe in Latour.

  30. May 6, 2011

    Dan,
    It is as you say. That is part of my point.
    The sign on the game at the circus arcade says “a winner every time”, but nobody over the age of 15 believes it. Parker has never to my knowledge done anything that could be classified as consumer advocacy. He is in the advisory business. But the crowd clammers for advocacy and ever eager to please he says “get some here”. Either he doesn’t know the difference between advocacy and advice for sale, or he his hoping that they don’t. Or some combination thereof.
    Sorry, I just don’t see him as leader. Therefore don’t see him as a bad leader any more than I see him as a good leader. I see him as somebody put into a position by people who wanted what they thought he had to provide. I am going to study the Wizard of Oz more closely, then maybe I’ll be able to articulate this better.

  31. May 6, 2011

    Dan

    Have you seen the banner ads on Parker’s website?

    In his own words…
    “The world’s leading independent voice for the wine consumer”

    “Influence free: The one true voice of the wine consumer”

    Some legend that he has spun for himself, wouldn’t you say?

    Say things enough times, and people may actually start believing you.

    Look at Rex Ryan.

  32. May 6, 2011

    Mike,
    I understand your questions to be hypothetical.
    The whole representation and expectation of Parker as a consumer advocate has an aura of spun-out urban legend. It is not unlike the wine points themselves, and the market phenomena that arise from the points. IE, in total more reflective of some need that is in the people than of anything that is in the wine or in Parker. Thanks for all your provocative works and this great meeting place.

  33. May 6, 2011

    “If he seriously aims to be a “consumer advocate,” he should not only withhold reviews of chateaux he suspects to be manipulating the market, he should withhold reviews of ALL wines that have not already been offered for sale.”

    The problem with this idea is that Parker, or any wine critic, is in a competitive business where being first does matter. If Parker isn’t releasing his scores on, say, 2009 Bordeaux until 2011-12 while every other publication is getting scores to the market in 2010, he, or any wine critic, won’t be very successful for very long.

  34. May 6, 2011

    Question for Mike and the commenters here who’ve seen the Bordeaux EP carnival many more times than this relative newbie has.

    I couldn’t help but notice on the comments boards yesterday (eg Cellartracker forum) a bit of a collective yawn about the release of the Parker scores. So not like last year, and I imagine 2005 etc.

    Any of you get a sense of consumer fatigue about all this. It seems here we all are again bemoaning Bdx pricing as we all were last year.

    For me, I can say the difference between this year and last year is I am much much more interested now to explore other wine regions. Literally travelling to a retailer tonight to pick up my first ever Vega Sicilia – 1996, very keenly priced for the quality, great cellartracker notes.

  35. May 6, 2011

    I agree completely with what Keith says. Jack and Dan P. also make some great points.

    Dan M, I have no desire to believe or disbelieve in Parker. I don’t subscribe to the Wine Advocate, I don’t buy or sell off his scores. You make some fair points about how markets behave, but I think you would also agree that the Bordeaux market is unusual–I certainly can’t think of another market in which one person wields as much power as Parker does over Bordeaux. If he calls himself a consumer advocate and sees a situation in which consumers are being shafted by price manipulation, should he abet that price manipulation or should he try to use his influence to discourage it? I think the latter.

  36. May 6, 2011

    Dan

    I agree with much of what you say.

    My only issue with releasing scores before wine is released, do not say you are doing it for consumer advocacy.

    But Bordeaux can do whatever they want. When Parker retires, they will be sucking wind on many wines, and they deserve it.

  37. May 6, 2011

    Parker should not publish reviews of wineries which are providing less than their full supply to the markets? Really?
    Setting the trading issues aside for a moment, what I see here is that Parker’s vocal critics and detractors still have some desire to believe in Him. He gave you the Points and you gave Him the Power. The power to Annoint. And now, seeing the unintended but innevitable consequences, he should be given the Power to Deny?
    Back to the manipulated wine market… It is in the nature of all markets that, at peaks the supply side falls in love with their own product. They see no need to sell fully and begin hoarding, albeit they never call it hoarding. Conversely, at the bottoms of market cycles, their order books cannot be full enough and their warehouses cannot be empty enough.
    This reversal of reason applies to all markets; stocks, commodities, manufactured goods, art, jobs, you name it, and – wine. This behaviour is in fact to some traders the single best indicator of tops and bottoms. The market will look after itself.

  38. May 6, 2011

    Keith

    So true.

    His barrel scores on 2008 and 2007 California Cabernet created the worst frenzy for those regions.

    2008 Conn Valley Cabernet Sauvignon Reserve saw a huge increase in price, with a 98+ point score, before it was released and strictly allocated, as opposed to previous years, when the wine was readily available.

  39. May 6, 2011

    Robert Parker is not required to get info, and even when he is asked to, he fails (see Sierra Carche, 1997 Harlan, Behrens and Hitchcock, 2001 Las Rocas, premature oxidation in white Burgundy etc etc etc). Parker is a wine critic.

    That is all.

    He is not a consumer advocate. He is not the Ralph Nader of wine. He is not unbiased.

    He tastes wines, he rates wines. Sometimes he reviews seem to indicate a bias, most of the time they do not. Most of his ratings are right on target, some are not.

    If he would like to stir the pot in Bordeaux, he should actually do more than just speculate. Then he would become a journalist, with real ethics. Till then, he is a wine critic, who is claiming to have ethics.

    He could choose not to post scores for Bordeaux futures, but then what would consumers have to buy. He lowered some scores on 2008s in btl, and many are up in arms, talking about how much money they lost. They have not even tasted the wine, but they are pissed that they cannot resell it for such a high amount anymore.

    What a shameful business this is slowly becoming. We appear dependent on one critic to determine what we should buy and at what price. And when his scores are not high enough, we get pissed off, despite the fact that most of his scores are too high.

  40. Jack Bulkin permalink
    May 6, 2011

    I had the pleasure, (I think) of briefly working with Ralph Nader in the mid 1970’s and later working towards some of his Pro consumer efforts (seat belt in automobiles litigation) and sadly watched as any hint of his pro consumerism views were shuffled into the mud in 2000 in his fruitless march towrds irrelevency in the Presidential election that handed us the great duo of Bush/Cheney for 8 years.
    Sadly, it is my view that Robert Parker WAS once a consumer champion but instead of thrusting the havoc of bad politics on us all he has sadly handed the Bordelais, (did I spell that correctly Bill K? ) CA Cult Cab producers and Rhone Wine heroes a money printing machine that they have come to count on year after year by his scores and the sad and blind reliance of the Wine consumers of the organized Wine Advocate World. To say that he is now more identified with the interests of producers than consumers make Naders futile Presidential run seem heroic in comparison. (See 1997 Harlan) Since the 2000 vintage, Mr. Parker has frequently made the self fulfilling prophecy that Classified Wines will increase in value tremendously. He has except for the brief period of Oct 2008-June 2009 been correct primarily because of his gifted points.
    Parker’s statement about the likelihood of hoarding in Bordeaux by some great Estates is disputed in the trade. Isuspect that he made the statement merely to cover his own ass when the truth finally appears that the Bordelais have been working their customers so that he can have an excuse for a pass. ” See I told you so”.

  41. May 6, 2011

    If he seriously aims to be a “consumer advocate,” he should not only withhold reviews of chateaux he suspects to be manipulating the market, he should withhold reviews of ALL wines that have not already been offered for sale. Consumers are not served by such reviews because they don’t have the opportunity to buy the wines and are often harmed by such reviews because it gives the chateaux and the middlemen an opportunity to raise prices before anyone has the opportunity to buy. The only purpose in publishing reviews so early is to help a critic scoop his own competition or cultivate his relationships with the chateaux proprietors, who are obviously quite happy to cash in. (Hmm, there’s another one of those conflicts of interest!) But a critic who styles himself a consumer advocate should ask himself what publication schedule best serves the interest of consumers. I cannot conceive of any way consumers’ interests are served by publishing reviews of wines before they are offered for sale.

  42. May 6, 2011

    There is nothing illegal about chateaux holding back wine. Just as we have no obligation to buy, they have no obligation to sell. How they handle their inventory is entirely up to them. But if Parker has reason to believe that they are manipulating the market in the way he describes, it seems to me that he should deprive them of the ratings upon which they are so dependent. He has some power and influence here, and if the game is indeed rigged and consumers are being shafted, he should strike a blow on behalf of consumers by withholding that all-important number. And Evan’s point is exactly right–at the very least, Parker should be trying to get to the bottom of this. As I said in my post, merely by airing these rumors, Parker gives them credibility. No one is better connected in Bordeaux than Parker; he can’t get some answers?

    JJ, thanks for the comments. That’s an interesting point about regulatory capture. Certainly in the case of Parker, the Bordelais need him more than he needs them. But has he come to identify more with the interests of producers than consumers? I’m not going to touch that one! You make a great point, too, about Lafite in Asia; if the wines keep fetching record prices at auction, it does indeed create the impression that those stratospheric EP prices are justified.

  43. May 6, 2011

    Parker has never pretended to be an investigative journalist. His impartial consumer advocacy stance has always been about him tasting and giving honest reviews accompanied by a score regardless of price and prestige from the producer. I personally think he hasn’t held up to his own rigorous standards at times in recent years, but I don’t think we, as consumers, should hold him responsible for actions he never has wanted or claimed to perform. It seems fairly simple to me: he thinks the wines are great. And that’s all he has been here to tell people. Whether, in his opinion, the wines are great or not. It is then up to the consumer to decide whether he wants to pay the insane prices that the winery is charging for its 98-100 pt wine.

    As for what the top Chateaux in Bordeaux are allegedly doing, why is this unethical? It seems like a common business practice across several fields regarding luxury items and only in wine do people seem to get up in arms about it. If Ch. Latour can get 20% more profits in the long run by holding back half of their production for 10 years, why would they not do this? It isn’t illegal. In fact, wineries hold back large portions of their stock only to release years later fairly frequently.

    And I really am asking the question. I just got into wine about 9 months ago, and just got into the online wine world about a week ago, so I am new to all this. I just don’t follow the logic that wineries should release everything they have all at once and let the market fall where it may. They are in business to make a profit, and if people will buy them at inflated prices, then the price isn’t actually inflated.

  44. May 6, 2011

    Mike

    Interesting report – thanks for this.

    Two comments:

    1. Tend to agree that, at the least, he could have been expected to do more to get to the bottom of the story. And it’s an interesting point you make that he has the ultimate sanction (withholding ratings) for those who don’t want to open the kimono.

    I agree, we are back to the ethics discussion here. I think we are witnessing the phenomenon that economists have called “regulatory capture”. No need to bore everyone here with the theory – the title speaks for itself – but when you’re receiving Legion of Honor on behalf of the people you’re meant to be reviewing, I don’t know that you aren’t fatally compromised from that point onwards.

    I think much of the trade is compromised in that fashion, because those plying their craft in Bordeaux generally get pretty close to the Chateaux.

    There is a real gap in the market for a new generation of wine journalists who will review the wines from a distance. If that means not participating in EP and in Chateaux provided verticals, so be it. You don’t need that to review what’s in the glass.

    2. This quote really jumped out at me: “Either way, says Parker, it is possible that consumer interest is not nearly as robust as the stratospheric prices would seem to indicate”.

    One thought – does anyone really know who bought all that Lafite in Hong Kong at those wildly inflated prices – including 2009 vintage at 30 or 40% above what one could buy it on the internet for heavens’ sake?

    I have no information at all to suggest everything wasn’t totally above board here and so I can’t and I don’t make that suggestion. HOWEVER, I can’t help noticing that the Sotheby’s terms and conditions of auction don’t have (from what I can see) any restrictions on vendor bidding, or vendor affiliated bidding – which could open all sorts of possibilities IF someone wanted to move the market.

    All eyes will be on the Chateau Latour auction in a few weeks at Christies in Hong Kong. Again, I am not going to comment on anyone’s motives, but if someone wanted to demonstrate that the high EP prices for 2009 and 2010 are justified by creating another auction record prices here, it strikes me as incredibly easy to do so.

    Mike, you asked a couple of posts back whether you missed a big scoop surrounding the blackmail attempt on DRC. My instincts are that if there is a 3000 or 5000 New Yorker style expose to be written at the moment, this is it. Would be fascinating to see what someone could uncover about the Lafite and forthcoming Latour auctions, as an intro into the whole way that Bordeaux has just simply left the planet now.

  45. May 6, 2011

    Bill Klapp is right, and Parker’s “I wouldn’t KNOW, but it’s POSSIBLE…” comments take us back to the recent discussion regarding whether wine writers are journalists. There seems to be consensus that some are, some aren’t. Parker, in one paragraph, reminds us how true that is. There should be no one better connected and more capable of fleshing this story out thatn Robert Parker. Instead, he lobs out more soaring scores while warning consumers that maybe – just maybe! – they’re getting screwed. But how would he know?

    And yet I’m annoyed enough not to care whether Robert Parker is, or fancies himself, a journalist. He still claims the mantle of consumer advocate. A real advocate will do some work here, ask tough questions, get serious with the producers to whom he has given so much. He seems unwilling to do so, while still seeking credit for being consumer-friendly. It doesn’t work like that, unfortunately.

  46. May 5, 2011

    Raghavan,

    Thanks for stopping by. The production capacities are well-known, but I assume it would take a lot of legwork to figure out how much of, say, the 09 vintage has been put on the market to date. As I said in my post, I can’t imagine that Parker would have publicized the hoarding rumors if he didn’t think they were at least plausible. But my friend Bill is right: we really need a Woodward or Bernstein on the case!

    Mike

  47. Bill Klapp permalink
    May 5, 2011

    All I can say is this: if Woodward or Bernstein were the world’s leading Bordeaux wine critic rather than Robert M. Parker, Jr., we would KNOW what the Bordelais are up to, rather than having to speculate about it!

  48. May 5, 2011

    Like the post. If hoarding is taking place, wouldn’t it be relatively easy to detect, since the production capacities of the major chateaus are well known?

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