2024 Wine Buying Strategies (HOLD)

I'm Tom Bain and this is Wine, Money & Song. If you're interested in wines and wanting to find out the best values, please subscribe. So the last episode we went over what happened in 2023 and basically it's leading us to what is our strategy in 2024 and it was a very tumultuous year 2023 where a lot of the volumes were down and double-digit losses in the wine market and swelling inventories and prices are just too high to exist and it's too high in Bordeaux, it's way too high in Burgundy. Burgundy has basically frozen at the top level, even though it's a very small supply of wines. Those top wines, DRC wines and stuff in the secondary market, they're not moving through. The prices have hit a level where it's just staying there and eventually they have to find a price where they'll sell. I want to tell a story before I go into the strategy about what I think you should be thinking about in 2024. I was watching, I think it's a CarMax commercial or a Carvana commercial and this family is selling their used car and the woman is tracking the value of her used vehicle and she wants it to go up before she sells it and her husband or her boyfriend is sitting there, should we do it? And he says, no, hold, hold. And every day he's asking, and she goes, hold, hold. And four or five times she goes, hold, hold. And then like at three o'clock in the morning she's on the internet and she sees the value has gone up a thousand dollars, she sells it. And he wakes up and he says, we sold it. So I want you to think about that in 2024 but I want you to have the opposite philosophy, is I want you to hold your buying decisions until the prices start coming down. And are they going to come down? I can tell you one thing for sure, they're not going up. They're not going up. The prices have hit a price of, you can't keep raising prices to the ceiling, you know, and trees don't grow to the sky. And that's where a lot of these wine prices have gone. And I see prices, especially in a secondary market, start coming down. And for you who are interested in Bordeaux wines, right now I'd be looking at the older vintages. I'd be looking at wines before 2010, even before 2005. And you look at those prices, those prices are less expensive like on the, you can even go back to 90, 96, 98. They're less expensive than the 2022 futures are. What kind of, you know, those are wines that have bottle age on it, maturity, and they're in their drinking window while the 2022s won't be in their drinking windows for at least 10 years. So until the 2022s come down in price, which I think they will. Maybe not all of them, maybe the first growths will hold forth because their prices, their prices are more elastic. People will pay more for those wines because they're royalty and because they're the cream of the crop and people will pay up for it worldwide. We'll see if they come down or not. If they don't sell, they'll come down. But I would be looking for the older vintages, especially in Bordeaux. And in Burgundy, I'd just wait. You know, I would just wait. I wouldn't put my toe in there. And there's been a lot of price appreciation in the Piedmont wines and in the Brunellos in Italy. They really appreciated in the last five to seven years a lot. And I'd be very choosy. And my strategy for this year is we're waiting for the prices to come down and some will come down. But what you should be doing is you should be investigating some of the other areas in the world who produce really excellent wine. If you're not just collecting wine, you know, like Bordeaux's and Burgundy's and Tete-a-couve champagnes, which are all wildly expensive now. As far as champagne goes, the sales are down, but the demand worldwide, you know, it's there and it's not a huge production. I would be very careful buying those wines because some of the Tete-a-couves are over $300. And I don't know how high those prices can go. I have my doubts. So I'd be looking. I'd be looking at other wines. And I told you about Piemonte, Barolo's, Barbaresco's. Those prices have gone way up. Brunellos have gone way up. And I'd be looking at other wines from Italy. I'd be looking at Barbera, even though they're from Piemonte, they're still less expensive. Dalcettos and a whole number of other wines that Italy has indigenous grapes. The wines are wonderful. The white wines from the northeastern part of Italy are tremendous. Go there. Look there. Look there for value. And wines from France, since the COVID, the prices like from Saint-Saëns and Pouilly-Fumé used to be $20 a bottle. They're now $30, $35, $40 a bottle. And they're made from Sauvignon Blanc. Do you wonder why there are millions of cases of tank-fermented New Zealand Sauvignon Blanc selling like crazy? That's part of the reason. You know, you can pay a half to a third of the price. Is it the same quality? No, but people need to have value. And they're shoving people out of the market at those prices. And it's true with a lot of the wines from France. Alsace wines have gone up and all the other wines from France. And you should be looking at Chile. Chilean wines, they've been making wines for centuries. Argentine wines, and you know how I love how I love the Catina wines. They make a lot of really good wines. And just their straight Malbec and Cabernet and their straight Chardonnay, just the bottom-level quality are excellent. And they're around $20 or less. You should be looking there. Argentina makes a lot of wines and a lot of value wines and high-quality wines. You should dip your foot in with South Africa. South Africa has been making wines for centuries. There's very little known about it, very little promotion. But as a wine consumer and just having the curiosity and about learning new things, you should go out there. And I'll be working this year to find wines for you to look for from those areas. And keep your minds open. And if the French wines start going down, then you can go back into that. And you know, Spain has a lot of really good wines. And you know I've mentioned the R. Lopez Radio wines. Phenomenal wines. And you should be looking at those wines. And you should be trying wines from Spain. Very, very diverse. And some outstanding values. Red and white. Now I want to talk a little bit about California and about the price of California wines. California is sort of its own little game because it's beyond, you know, you have the big producers who sell their wines in supermarkets and drugstore chains. And you can even go into gas stations and they sell wines in certain states. And these companies make hundreds of thousands of cases of... Some of the wines are very good and value priced to sell. And they're cleanly made, well-made wines. But if you're really interested in wines that have distinction, you know, you have to go to other wineries. And Napa Valley. Napa Valley is very different than a lot of the other California wines because the land in Napa is very expensive. I'm very partial to Sonoma too. You know, Sonoma has excellent vineyards and mountain ridged vineyards that are very good. But Napa is where California wine is. That is the prestige. But understand, there's hundreds of wines from Napa that sell for $150, $250, $300. And how can that happen? Because most of these wineries, people go and they visit the winery. They take a tour. They pay $70, $80 to taste the wine. And then once you get in there, they try to hook you in to the wine club. And if you've ever been to a meeting where they're trying to tell you... sell you timeshares for a vacation spot, it's high pressure. It's high pressure when you go to these wineries. They try to hook you in. This segment, you have this bunch of wines. You can sell this part of the club. And then you have a premium, a gold, and a platinum. And they don't give the wines away. They sell it at retail. Now what's to their advantage of selling those wines at those prices? Well guess what? They sell you the retail price generally. And only if you order a break. So what they're doing is they're bypassing the importer, wholesaler, which is about 30%. They charge up. And then they avoid the retailer, which is another 25, 35%. And they pocket that themselves. And a winery doesn't only make wine. They're in a hospitality business. They're entertaining guests that come in. You can have lunch at these places. You can have formal dinners. Some of them have hotels attached to the wineries. So it's beyond making wine for them. But if they can sell like half of their wines at the back door and make those extra margins that the wholesaler and the retailer would get and they pocket it, very profitable for them. And they don't care about the final end market. They don't care about the three-tier system. And you have to understand why the prices are so high in Napa Valley. Because it's a hospitality business, a lot of these wineries. And that's how they get those high prices. And people get wined and dined. And it's an experience for them. It's a place to go to. It's a destination. And they're willing to pay up for it. So think about it that way. So I think to finalize my thoughts is I want you to hold to a great degree with all the top wines, as far as Bordeaux, Burgundy, and a lot of the top Italian wines. See where that market's going. We do have a 2023 Bordeaux Futures campaign that's going to take off in a few months. And I'm sure they'll be blowing smoke up our butts again. And there's just too much wine backing up now. So if they're going to be successful in 2023, they're going to have to lower the prices 25%, 30% just to get interest. But as far as what you should be doing, I want you to hold. I want you to look and be very, very particular where you're spending your money. Because I think prices are coming down. They're sitting there. And reality has to re-establish itself with double-digit losses in sales and volume. Something has to give. And the thing that I think is going to give are prices.