Saturday, May 02, 2009

Squealing eagle?

Interestingly thoughtful comment by Morton Leslie in response to a blog posting by Steve Heimoff about recent happenings at Screaming Eagle. Heimoff's point is that the sale of his shares by one co-owner of the cult winery to the other, because the former is "no longer needed", supports a view that Screaming Eagle's price is not sustainable.

For Heimoff "The wine biz today is more like show biz than a consumable industry... But in this troubled world of wine, the narrative is shifting away from exclusivity and exorbitant prices and more toward pleasure and affordability, which is where the narrative should be". Leslie responds that:

"[Screaming Eagle] is all about its customer. The wine itself has no intrinsic value above any other good tasting wine except that the buyer has evidence that many people are dying to have it, and only certain special people are able to buy it, and that owning the wine says something special about the customer and their status. The wine's value is in what it does for the ego of the SE customer.

Now, what happens when you tamper with that perceived ego-enhancing value?…a different winemaker…customer sees evidence that the wine’s price is arbitrarily set …perhaps by a greedy owner unrelated to actual demand…owners publicly split…America (and the world) has had its fill of greedy self-indulgent people…

What if instead of making you look special, buying the wine makes you look like a fool? I’d say that it isn’t that there is evidence there is trouble, there is trouble because there is evidence."

I agree with both Heimoff and Leslie, and reckon that Warren Buffett's much quoted assertion that it's when the sea goes out that you see who's not wearing a swimming costume could be applied to wine. Over the next few years we may well see which currently astronomically-priced bottles manage to maintain their prices...

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