June 12, 2025 • 84 mins
I was asked to taste a wine and give an opinion of its quality. It was very good. A St. Emilion from a Chateau I did not know. The wine had never been in the US, and the wholesale company was new to the idea of even carrying a St. Emilion. My curiosity required me to ask the wholesaler, "Maybe the Chateau owner will come on the show?" "Let me check." "He would love it"
So then I though I'd best look up the guest (this was one hour before his arrival). OMG..this Zaya Younan is a formidable businessman with over 1200 patents, 5 hotels, three golf courses, a fine cigar company, and now 2 Chateaux in France. I was humbled; for him taking the time to drive to my studio to be on the podcast, shows serious humility....but maybe I shouldn't be so surprised. This is often a trait of successful people: Do what it takes.
Zaya Yonan’s story is so cinematic, you’d think Spielberg had optioned it already—after all, how often do you meet someone who bought his ticket to America at age 13 by painting bicycles and hustled his way from Tehran’s crowded streets to the boardrooms of General Motors, before helming a global luxury empire of vineyards, hotels, and world-class spirits? On this episode, you’ll be invited deep into Zaya’s personal odyssey, where survival, vision, and relentless drive transform childhood struggle into the highest echelons of success. You’ll hear how a chance encounter with an American principal in Iran sparked the dream that shaped his life, how the hunger for opportunity forged discipline and resilience, and how an immigrant’s appreciation for the nuances of culture, flavor, and ambition blossomed into a lifelong pursuit of excellence. Layer by layer, the conversation uncorks everything from engineering breakthroughs at GM—where Zaya’s after-hours tinkering changed the game—to his uncompromising standards in wine, cognac, and vodka; you’ll discover why he believes terroir and tradition trump short-cuts and quick profits every single time. Along the way, you’ll learn why luxury, for Zaya, is less about showmanship and more about a soulful, intellectual connection—whether you’re savoring a Saint-Émilion Grand Cru or admiring a watch. Listeners will leave with more than stories: you’ll gain rare insights into what makes a wine “talk,” how French winemaking culture prioritizes complexity over convenience, and how food, heritage, and even adversity can fuel an entrepreneurial spirit. Most importantly, you’ll reflect on how Zaya’s tale of grit and gratitude reframes both the immigrant experience and the real reasons we chase—and cherish—luxury.
Try the wines here: www.frenchconnectionwinespirits.com.
#winepodcast
#WineTalks
#luxurybrands
#ZayaYonan
#PaulKalemkiarian
#immigrantstory
#luxurywine
#Bordeaux
#SaintEmilion
#winemaking
#entrepreneurship
#successstory
#cognac
#wineeducation
#wineinspiration
#luxurylifestyle
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#storytelling
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
You cannot just go out and buy pallets of wine and, you know, Hope that
in 10 years you'll sell them at a better price. The vast majority of the
wines, they will not take any value over
10 years. Sit back and grab a glass. It's
Wine Talks with Paul Kay.
Hey, welcome to Wine Talks with Paul Kay. And we are in studio today in
(00:21):
beautiful Southern California about to have a conversation with Marc Lefleur all the way out
in Geneva, Switzerland. Hey, have a listen to a couple of shows that just put
out one coming up with Zaya Yunan.
And this story is unreal when it comes out in about
a week and a half. I mean, it's really, really quite interesting.
But not while we're here today. Here to have conversations with Mark Lafleur. Welcome to
(00:43):
the show. Thank you, Paul. Honored to be with you. From
Geneva, Switzerland, along the way. Yes. So it's
nighttime there, I think, right? 7 o' clock, 8 o' clock. Evening, evening, 7 o'
clock. Beautiful sky. It's summer, summertime
today. Are you
Swiss by birth? No,
(01:05):
I'm American by birth, actually. Born in
Guadalupe, West Indy. My parents traveled a lot when I was a child
and we ended up in Switzerland when I was 4 or
5 years old. So I've been here for quite some time. Wow.
How interesting is that? So what languages do you speak? We speak
a few different languages in Switzerland. Obviously you have to
(01:28):
learn mandatory German when we go to school
and then we have a few options. So it's quite common to speak
a fourth language, if not more. And my fourth language is Italian.
In French. In French, obviously. Yeah, yeah, yeah. Wow. You
know, I just had this guy I was talking about whose show is coming up,
(01:48):
incredible story from Iran and
he says, I came to America. I was 13. I did on my own. I
showed up, I and they put me in German
class in, I think it was in Illinois when he,
where he landed at 13 by himself. He didn't bring his parents or anybody. He
just decided he was leaving Iran and coming. I said, why would they put you
(02:09):
in German class in Chicago
when you're coming from a country that speaks Farsi?
So it didn't make any sense to me. But my father's
from Cairo and he spoke five languages as part of the culture, which is
not a very American thing to do, to have a multicultural,
the background in languages as you're, as an American. So it's really interesting. Do
(02:32):
you find that that language skill set
is an important skill set in the wine trade? Yes.
Well, in my, in my in my situation, it is
because especially the Italian. I.
I'm personally very fond of Piemont
wines. I travel there very, very frequently.
(02:54):
And obviously, speaking Italian opens a lot of doors in terms
of building relationships with the producers. There's just a whole different
way of being welcomed there when you speak the language.
I'm saying this, the Italians are very welcoming to everyone.
There's no doubt about that. But surely speaking the language
helps. Well, we were in Piemonte
(03:19):
just a few months ago. I opened my big mouth because
we like to go to Monaco for the Grand Prix. And I told some
friends because every year we've told them that we've gone, they said, no, you know,
it's too expensive or whatever the reasons are. This time, five of the
couples said, yeah, we want to go. So I was straddled with 12
people to move around, and I, of course, wanted to do some wine events.
(03:41):
And we started in Pomonte and had an incredible time there. Dropped into
Monaco for the race, headed to Bordeaux for some tasting and
podcasting there, and then came home. It was very
gracious. But what a world of difference between
wine cultures such as Piemonte. I don't know if
you want to call Pimon to Piedmont, Pimonte, and just
(04:04):
to say Bordeaux, you know, just a world of difference in the
rural aspect of it, obviously, the grapes and the. In the
terroir. But how do you. How do
you define that with your clients when it comes to collecting and investing
wine? Yeah, we can still. We can start from there. That's a
good. That's. That's a good comparison. I think
(04:26):
there are differences, I would say,
in all areas. You mentioned terroir, you mentioned grape varieties,
all these aspects, of course, but I think
the production in Piedmont is still very
artisanal compared to what Bordeaux is doing.
Bordeaux is
(04:49):
at the top of the pyramid. It's a rich man's game in a good
way, in the sense that there's a lot of capital available for the.
For the. For the classified chateaus.
They are competing for excellence, they are
innovative. They are doing a lot of research to
understand the environment in which they're growing the grapes, to
(05:11):
understand how they can better in terms of wine quality.
It's high tech in Bordeaux for the top tier
chateaus and in Piedmont is
more, I would say,
reminiscent of what's happening in Burgundy in terms of approach.
And all the Piedmont producers have gone to
(05:34):
Burgundy to see how things are done over
there, to be able to learn
more and replicate quite a few of
the Burgundy approaches in Piemonte, that's an interesting comparison.
And for the listeners, I don't think we properly introduced what you do as an
investment consultant and building
(05:57):
investment portfolios around wine, which is a really interesting concept. And
we'll peel that back a little bit later. But when
my dad was selling wine in the 70s in his wine shop
as a French speaking, you know, his French was a second language or third
language and a key understanding of the
French culture. But he always sort of not complained, but he always sort of
(06:20):
would say, hey, you know, the way the Bordelaise have positioned themselves, they've sort
of not over romanticized, but romanticized the
value of a good glass of Bordeaux and
not exclude the rest of the wine world, but to sort of position itself, as
you said, as king of the hill. And I think that's still true,
that certainly they've been able to
(06:42):
elevate their status in the world of wine based on the
classification. And I guess the
natural rarity of the wines is that, I mean it seems like it's always
been a solid investment for someone to invest in a top
growth Bordeaux.
That's a topic I love speaking about. And
(07:06):
Bordeaux wines are not that rare as one would believe.
And I think there's a misconception around
the top. The first growth, for instance, as to
their, their scarcity.
Muto hot shield is is produced to about
(07:26):
300000 bottles per vintage. Margaux is
150 000. I think Lafitte is probably the smaller
producer out of the first roast, it's still 100000 bottles.
We're not talking about super rare bottles at all. And I think
this is where Bordeaux faces issues,
is when there's a global slowdown in market demand, they rapidly
(07:49):
into oversupply situations and
stress on pricing. That's when we see prices go down. Right.
Whereas Burgundy and Piemonte producers,
well, historically in Burgundy and
now for different reasons in Piemonte, we'll get to that. But
(08:09):
Burgundy has top wines
globally celebrated that can be produced
at levels of what, two, three, four barrels, a thousand bottles, up to
5,000. So I mean the, the scale of what Burgundy
and Piemonte is producing on single site vineyards is
completely different from what Bordeaux is doing with hundred
(08:31):
thousands of bottles of the, of the first growth. You
know, there's so many directions that take that thought because
again, these classified growths, they're
positioned as you know, I think in general, the general public when it
comes to wine would barely know how to pronounce them, let alone
they would certainly say that the rarity of them would be,
(08:56):
would be the eminent feature. And here we are saying
there's no up to 25,000 cases of one and
115,000 cases of another. And that, that's
quite voluminous. But it's still, it's still, they, they still have a
demand and they still have a rare, an
exclusivity to, around them. And if you talk to,
(09:18):
let's say, novice collectors, novice investors, that's where they're
going to go first, is to say, oh, well, I have, I
have Lafitte in my cellar and I have Petrus in my cellar and I have,
I have, you know, Margaux in my cellar. It.
And that's not changed in a long, long time. Does Barolo in
Piemonte have that kind of, I don't know, what's
(09:40):
the word I'm looking for? Do they have a kind of intrigue?
Yeah, well, I think what you, what needs to be factored in is
that Bordeaux has 150 years
of marketing ahead of Burgundy and Piemonte.
That's fair amount, you know, so there's, there's, it's.
(10:02):
They started selling bottles in the 19th
century. Right. So we're talking about a
status that has grown ever since. Right. Whereas
Burgundy is probably building a status
at global scale in the past 50 years, maybe. And the
Piemonte past 20, 30 or so. Right. So
(10:24):
Piemonte is amongst what I call the
investment worthy regions, the emerging, the
emerging region because they're very new to, I would say
the, the global public. And when you say of investment, are you talking about financial
gain in the, in the future or quality or a little bit of
(10:44):
both? Aging potential. I've got this in my
cellar. I can't wait to taste it in five years, 10 years, 15
years kind of thing. Or like we're going to spend some money on some
wine, put it in the cellar and then we're going to see how it does
in the future. Yeah, exactly. I
think it's very important to, to, to make a distinction
(11:07):
between what could be seen as a speculation and investment.
Speculation would be
betting on a few high priced bottles and hoping for a
quick return in two, three years or so.
Wine investment doesn't work like that.
Returns are when they do actually
(11:29):
happen in the expected way, or rather
at the 10, 15 year horizon, if not more. So
investing in wine, in essence. What does that mean?
That means whether you're collecting at home, whether
you're using a managed storage solution,
(11:50):
usually in bond, the, the essence is
placing capital in wines that have a strong potential to
age 20, 30, 40 years in terms of developing
quality, while at the same time they will become
rarer and rarer on the global market marketplace.
So the, the, the, the, the target is to be the owner.
(12:16):
Preserved wine that can age well, and of which
you may find yourself being the only owner to have a case to sell on
the market in 20, 30 years down the road. So that's
interesting. So you, you have to sort of, not only, I mean,
I guess the Bordeaux classified gross going back
to that would be sort of the blue chip stocks, you know, everybody knows what
(12:37):
they are. There's no, there's not necessary to predict their value
in the future in the sense of quality, certainly not in financial gain or at
demand for those aged Bordeaux in the future.
But man, if you're predicting potentially what a
Barolo might be worth or, you know,
(12:59):
another part of the world, Burgundy for instance, as well,
that takes a little bit of skill and a little bit of understanding of
where wines are, where the vintages, where
the terroir is at the time that those vintages are made, in order to not
only predict the quality of them, but potentially predict
the rarity of them. When that happens, is that kind of your
(13:23):
skill set? Is that what you're trying to invest into your, for your clients?
Yeah, I think, I mean, no, no, no one can guess the future
in terms of valuation.
You cannot draw a continuous line from the past, hoping the future
will mirror the past. So the,
the one thing that
(13:45):
we can't put on the table is the understanding of
terroir quality of aging potential of the wines in the
volumes of production and potential demand going forward, I
think we can
use the data at hand and make an assumption
rather than a prediction. Right. And
(14:09):
in the case of Piemonte wines, Barolos and Barbarescos, what
is interesting today is
climate change, which is very honestly rather
playing favorably to that region for the time being.
And I can see that for the next 10, 20 years, obviously
if it gets much warmer quicker, it might be an issue. But
(14:33):
the Nebbiolo grape variety that goes into the Barolos and
Barbaresco is a late ripening grape.
And historically on some cold vintages, the,
the producers had a hard time to reach maturity
with their grapes. And sometimes on the colder vintages, well,
those Baros and Barbarescos would always remain rather
(14:55):
austere and difficult to drink, even after
some decades. Right. But the few degrees
or degree and a half perhaps, that we're having on average today
and in the Piemonte region is actually,
in my opinion. And you can, you can see, you can hear that from producers
(15:16):
helping the, the quality of, of the
grapes generally. So we have a context here where the wines
are absolutely superb coming out of the past vintages
and long aging potential. Softer tannins,
more approachable because both of. Both because of
riper, riper grapes and, and
(15:39):
improved white making, of course. So we have top quality,
good, good climatic conditions, long aging potential
in the wines versus Burgundy at,
I would say, comparative caliber,
maybe. Yeah. A quarter to, to
half the price. Yeah. You know, it's kind of interesting. I. I did.
(16:02):
I did this for 35 years, tasted every Tuesday from
9am to 2pm you know, amassed
100,000 wines under my palate. Excellence.
It took a long time for me to. To grasp
the value of good Barolo, good Nebbiolo.
And it almost wasn't until we went on this trip where
(16:24):
I started to understand, you know, that terroir differences and how,
how special the grape is to produce these rather
unique wines in that part of the world. Does when somebody comes
to you, it says, I want to invest in wine.
Is that what they say? Or I want to create a cellar that might have
future financial value. What's their typical purpose of coming to Marc
(16:46):
Lefleur and, and trying to figure out what they're going to do in the
wine world? Well, usually
they, they are already collectors.
They have knowledge around wine, and they do have a
feeling that they can probably do something a little bit more rational
than purchasing by compulsion and
(17:09):
drinking and enjoying, which they do, and they will continue
doing. But if they have some extra cash to, to lay aside,
they. They may be looking for a route
of purchasing wines that is
very simply backed up by a little bit more of data and
analysis. And usually there's, there's a. There's
(17:32):
an understanding that storing the wines in bond far away from
home, not only for avoiding to drink them, because
if you start drinking your investment well, then, well, that's great because you're drinking great
wines. But the idea is to keep them aside. Usually
they come to me to organize a managed inbond storage solution,
(17:52):
which is kept. So wines are kept in professional storage.
That's interesting, because my career, look, my business
was the original Wine of the Month club, and it was. Wines were 15 to
$20 retail. That's what people bought, which is obviously a very important
segment of the market. But I found there were two types of
sort of unophiles that were really into wine There was the one type
(18:15):
of unophile, which I see a lot, which is they just
chase the biggest brand they can to say in the next
conversation with somebody at dinner, I only drink this. I. I have this
in my cellar. And that's one type of collector. And then there's the other type
of collector that actually seeks to understand
the value of that glass of wine, not just to talk about the brand
(18:37):
name, but to actually talk about the wine you have. Are those
two segments that exist, or are there more when it comes down
to collectors and people investing in wine? No, I
think you're. I can see those. Yeah,
those. Those two polls as well. But what.
What often happens is that investing in wine and has a lot to do
(19:00):
with deconstructing false beliefs. What. What I like to
call. We talked about Bordeaux just before, but
most often collectors who want to start
investing in wine with a view not necessarily to drink the bottles,
but to. To have them as cash in the bank.
They. They would come to me and say, oh, you know, I love this wine.
(19:23):
I would like to invest in this wine. Or, I've heard about this.
Is this a good investment? And usually it's not the case, because the wines
that you love continue loving them, but
they're not necessarily a great investment for different reasons. I mean, we talked about
Mouton, which is an amazing wine. There's
many great reasons to acquire Mouton on a regular
(19:46):
basis, because it's one of the top Bordeaux that can be found,
and it's fabulous. But that's not
necessarily where you want to put your. Your cash today. If you have a view
of. Okay, I want to see some valuation over 20. 10, 20
years. All right, so there's. There's. There's. There's
conversations I have with my clients around these
(20:08):
topics. Sharing data,
deconstructing false beliefs and. And showing them a route
which is
going towards properly rare products versus
perception of rarity. You think there's social
and political pressure on the perceived value of these wines.
(20:29):
And what do I mean by that? It's currently the. The sort
of social view of Bordeaux is that
anybody can go there. There's lots of Chateau for sale. You can invest if you
want. And. And there certainly was some
degree of exclusionary practices when it comes to real
estate in Bordeaux. Burgundy's always been that way. Burgundy is very
(20:52):
tightly controlled, as you know, there's people standing in line to get access to vineyards.
Does any of that play into what. What you talk about with your investors?
Yes, yes, there's a bit coming Back to Bourdeaux. I think
there's a lot, there's too much generalization, like there is too much generalization
in the world of wine
everywhere. I think there's been
(21:16):
last year a lot of talk, the media was talking about it,
well, here in Europe, but I think in the US as well, of wine growers
taking the vineyards out to replace it with other agricultural,
whatever they, they could go for. But the French
government, they subsidized, you know,
(21:39):
taking the vineyards out. So the, the picture of Bordeaux was, was,
was widely damaged because of, of that
situation. But we're not talking about, we're not talking about the top
level, but we're talking about the entry level. Right, which is
a very different business, a very different segment that has nothing to do with investment,
by the way. It's a, it's a different segment that
(22:02):
has produced wines in large quantities.
The Bordeaux appellation is very big in itself. And they did
suffer from competition from Italian wines that
probably, yeah,
cheaper entry points, better value for money, Spanish wines,
New World wines as well. And
(22:26):
I would say when I say entry category, we're talking about bottles,
let's say €10, €15, a little bit
dollars is 1.2. I think today
these wines suffered from huge competition
from European wines and from wines from beyond.
And obviously in that segment there are
(22:49):
some producers, some wine growers who were probably
very ambitious, creative, but did
not necessarily have the financial, you know, the
capital to actually improve the wines
that they were producing. And
they did suffer from the competition at the end. And then many others
(23:12):
did not even seek to improve what they've been doing for ages. Right.
And for during the 80s, 90s and the beginning of the century, all of
the entry category, Bordeaux was selling easily. And
now suddenly it's a wake up call and say, well, it doesn't work anymore. Yes,
well, you've been doing the same thing for 40, 50 years and well, the world
is changing and competition is there. There's great wines from
(23:33):
elsewhere coming into France as well. And, and, well, what's your plan?
Well, I don't know. I've been doing this for 50 years and it worked so
well. Not going to work anymore. Right, so
this is one story about the entry category
Bordeaux on the other opposite side.
The
(23:55):
all classified chateaus for large
majority are, as I said, I think earlier in the call,
are really engaging. Passion, determination,
capital, technology, whatever's out there to
improve, perform and come out vintage after vintage with the best
possible product. Right. And so these chateaus are
(24:19):
obviously still there, suffering from the global
economy, that's a different story.
The market is not great for top
end wines right now. When you're a seller
for the buyer, it's fantastic. Right. So it's a great time to invest.
It's a great opportunity, great window of opportunity to,
(24:42):
to collect at this point of time. But
you said something interesting, I want to pause you there. That
made me see the marketplace a little clearer. And
as a vendor of wine, I always felt, you know,
margins were important. Buy it as least expensively as
I can. As long as I keep maintain what's in the bottle as quality and
(25:04):
sell it for a fair value. You know, I was not the type that would
sell it for as much as I can. It would be what I thought its
market value was. And so the whole idea of my club at the time that
was started, you know, 50 years ago was we're going to send you the best
of what's on the street for the price that they were offering. So we would
compare $20 cabernets with $20 cabernets and $50 bordeaux
(25:25):
with $50 bordeaux and tell you amongst those segments,
these are the better values. And so that's what, so
that that marketplace is convoluted,
congested, influenced by all kinds of market
forces which, not the least of those things like white claw and bubbly flavored
drinks and the non alk movement and the low elk movement and all the other
(25:47):
things that are happening sort of in society.
But then as I got out of the industry or started getting more mature in
the industry I'm talking About the last 20 years, you start to realize the value
of this honest glass of wine that reflects terroir, that tells you about the expression
of where it came from and when it came from. And
these, those market forces tend to start to dilute a
(26:09):
little bit. Even though you're saying there's pressure in that area as well,
of course, because general consumption is down and you know, the lots of
societal changes, but less volatile
than that congested part of the marketplace that, that.
I will talk about your response to one of the posts in a minute. But
is that, do you see that as accurate? Yeah, yeah,
(26:32):
absolutely, absolutely. I think it's. Now it's,
it's correct. I think that the congestion is
clear. The, and
I don't know if I like, I like this comparison because I
use it every now, now and then. But the,
you know, it's like I'm into cycling. I love cycling. The Tour de
(26:55):
France is starting in a month, right. So we'll, we'll all have our eyes on
the Tour de France. But you know, it's a, I love. Watching it, by the
way. It's a three week, it's a three week race, right?
And the, at the start of the race you have 180 or 200,
you know, cyclists. And as, as the race goes and
they hit the mountains and you know, the hills get steeper. Well,
(27:17):
at the back of the peloton, you know, those who are not well
prepared, well, they, they drop off, right? And some drop out of the
race. And at the end of the race when they reach Paris, well, way
less cyclists than they were at the beginning. And it's every year
like that, right? And well, the Tour de France is still
not great, but those who are not well prepared, well,
(27:39):
they, they kind of drop out, right? And, and in the
congested wine segment, it's, it's, it's the same, it's the same
thing, the same reality. If you're not pre, for, for competition,
for change. And I'm not saying change in terms of,
oh, we have to do things completely different, but when I say change, it's just
other, other product production regions coming out with great
(28:02):
products at better value for money. And so,
yeah, that obviously, you know. It'S, it's an interesting problem and
I, this is the part that drives me crazy. In particular, why, why we got
in touch with each other. Your response to one of the posts or somebody's response
to your post. Because
wine, it's slow, right? It's once a year
(28:23):
that you have a chance to do something with it and you
can't predict all the things that are going to come from your vintage
and what the market's going to be ready to take on. Because you're looking
five to seven years down the road. Like, if you think
Syrah is going to be hot, a hot product, I
mean, for instance, look at Sauvignon Blanc or Sancerre, for example. 20 years ago,
(28:45):
15 years ago, you couldn't sell Sancerre to save your life and only to collectors
or at least aficionados. And now I see people ordering
Sancerre, you know, in Spanish restaurants and, and it's like,
okay, when did that happen? Well, it's slow. It's very slow.
And so when it comes to innovation in our industry, what does that
mean? I don't, I don't know what it means. And here I am, I've spent
(29:07):
35 years doing this. I don't, I don't think new
packages, you know, are innovation. I don't think putting things in a tetra
pack is innovation or cans or low alka. I don't think that's
innovation. That's just a response. I'm not sure what the word
innovation means, but because it's so slow and because we have little
chance, it. Sometimes the dynamic has changed before you can
(29:29):
respond to the previous dynamic. Now, in this particular
case, in your case, with investment wines, that has been, yeah,
Bordeaux through some tough times. And we have this, you know, it is
cyclical. It's like any industry that level
of wine seems to be not immune from, but
pretty close to the general consumption of
(29:51):
wine is a problem. And that leads to this question.
You responded to a comment about terroir. You posted a comment about
terroir and how it's driven, how it's, you know, as you
and I would see it, being in this industry as long as we have, is
the critical part of a wine and what it should be expressing.
(30:11):
I'm going to stop for a second. I threw this out at a winemaker,
a Bordelaise winemaker the other day and I said, you know, there's really no such
thing at that level of a bad vintage. It's certainly
there are vintages that are better than others to your palate. But when it comes
to the idea that a successful vintage is explaining to the
taster, this is the year and this is the place that we grew it,
(30:33):
that's a success. And we might like the
15s bread in the 14s, but that 14 can be pretty good.
You know, it could be a great expression of 1940,
2014. So when you see those
comments, like, well, we have to be more innovative. We have to, you know, we
have to respond. We have to. And your comment was
(30:54):
like, no, it's. What are you going to respond to?
What, what are we doing? We're not going to put Lafitte in a can.
Exactly. Yeah. You know, it's like,
yeah, let's, let's repatch. Yeah, let's repackage the 15 again, see if that
works. And I don't think that's going to help the market too much. Yeah, no,
(31:15):
right, so what are they, what are they talking about?
Do you know what this idea of
terroir, the idea. Let's just take one comment that was just made that the idea
of terroir is past his prime.
Yeah, again, again, there's so much to say on, on the topic, but again, let's,
let's, let's make some
(31:38):
differences, some distinctions here, which are really important. I Think there is.
I did this post on terroir which was, I think it
was important just for me
to refresh everyone's memory on the importance of
the notion. But it is true that the terroir really applies
to wines that do really have a
(32:01):
terroir that specifically
provides a set of wine profile and taste
inside whatsoever. A good example, a good example here in
Switzerland is Geneva. Geneva is a wine
producing region, but they have a very, very poor soil.
In terroir, Nothing remarkable. Whereas
(32:24):
50km away in the next canton, there are
really nice
terrace vineyards bathed by the sun. Great terroir,
it's a different, it's a different ball game. Right. So clearly
Burgundy has one of the most
(32:44):
richest terroir in the world, Piemonte as well,
Bordeaux as well. There are other regions that have
poor terroirs, poor soils, but the climate
is favorable to wine growing. And you can grow wine very well.
And then you may produce wines that are
less influenced by the terroir because there's not that much under
(33:08):
the soil that will influence the taste. Right. So it's
more about winemaking and
choices of grape varieties and blending.
So I think that the notion of terroir is
absolutely essential to
many of the great wines, but that does not mean that it's always
(33:30):
an essential component. Right.
Then coming back to the question about innovation
in wine,
I think the most important thing
that anyone could do is go and see the wine growers, speak with the wine
(33:50):
growers. It is such a stressful
job to actually start from
January with a new vintage. You don't know what the climate is going to
give you. Climate is changing. There are more storms,
there's more hail, there's more ups and downs, there's colder weather
patterns, unexpectedly frost, heat waves, is
(34:13):
going in all directions. And what was always
a stressful job, meaning that you start the year hoping
that the, you know, the year will be successful
all the way up to September, October, the harvest, and
every day of, of, of the year is,
is a stress, is a challenge for the wine grown and it's become even more
(34:36):
challenging. How am I going to do to ensure that
my vineyard is going to produce quality grapes in the
climatic conditions that we have today? And
to ensure that it requires a lot of adaptation
in the way the vines are
trimmed, in the way the soils are plowed, treated
(35:00):
and so on. And so innovation,
there's no time for innovation there. How
do you. It's about taking care of,
of your land, of your 10 hectares or 20 hectares of vineyard.
Right. And the decisions the
(35:22):
radical decisions that can be taken
could go as far as, well, we're going to take this grape
variety out and replant it with another grape variety
because we believe the soil will handle it.
Also in the context of global warming, and
also perhaps because the demand, the
(35:44):
market is perceived as
more welcoming for another grape variety. But by
taking such a decision, as you said, it's a very, very long shot.
If you plant a different grape variety, it's going to take you
5, 10 years to produce the first
vintage of a wine that you will deem
(36:07):
grape good enough to commercialize, and maybe 20 years to
see it become, you know, the wine that you envisaged at the
beginning. So it's not about, oh, well, the market is changing,
next year we'll do this or. Yeah, right, exactly.
What. That's the part that's driving me crazy. And I was
(36:29):
like, if you took this, that'd be an interesting study. I don't know if you'd
be able to figure this out, but if you took the segment of
consumers, just segmented them, and you said, okay,
well, in America, if you pulled a hundred thousand people and said, do you drink
wine? The common knowledge is, at least according to the Wine
Institute, 25,000 would say yes. But of that
(36:50):
25,000, that includes the person that goes to the local
Olive Garden chain restaurant of Italian food and orders a house
Chianti. You know, they would say, I drink wine. But are they a
candidate to care about wine? Probably not. And
so the segments of consumers,
there's always been a certain amount of people that want to learn about wine
(37:13):
and are, are challenged by learning and just want to
learn. There's also the group that's completely intimidated by it and stays
away from it, and then there's people in between. So I don't know if that's
ever changed, if it will ever change. And if, if, if today's
generation thinks that, you know, innovation changes
that. It just hit me as you're speaking
(37:35):
that if you, if you try to take terroir out of the conversation
and somebody responded to your, somebody responded to one of your
responses of your last post about terroir, and the person said, if
wine isn't dumbed down soon, it's going to be out of business. I completely
disagree with that because it's always been the same. It's always been the same product.
It's no different than it was when Noah landed on Mount Ara. And that's what
(37:58):
it is. It's fermented grape juice. Maybe we've improved the production value
and the quality, et cetera, but it's still the same product. And so if
you try to dumb it down and take all that out of the conversation of
wine, which I think is innovation in its own self, then all you're doing
is Talking about a 14 or 12% alcohol beverage
and that then you're lost everything because White Claw is
(38:21):
6% and there's RTD cocktails that are 20. I mean, you're,
you've just put wine into the mix of,
of all the rest of it. If you can't discuss
grape varietal on terroir, I mean, you've ruined it.
And it's. Why would you do that? I think
there's a question in there or not. I think there's, there's room for everyone.
(38:45):
And there are multiple segments, as you say, there's multiple segments there.
There are. There, there's a segment that
doesn't need to look very far beyond the glass
they're enjoying, and that's fine. Others,
others want to know whether the wine has been organically
(39:05):
grown and what was the winemaking process,
because. Not so much because of the, of
the wine knowledge that they want to acquire, but they just need it to be
organic because they believe everything should be organic, which is fine as
well. So they, they may be sensitive to that
aspect and others are looking for more knowledge.
(39:28):
And so, yeah, there are many different segments.
But I think that the response of dumbing down is
because we see that, we read that.
I think it's a little bit, I would say,
the end of civilization. I'm glad you're
(39:49):
so glad you said that. I just wrote that. I just wrote that. I'm telling
you right here in this paper. I wrote civilization as a word. No, but I
mean, great empires have gone down, and most often
by dumbing things down, you know,
I don't think there's a great future for erasing what
makes the richness of whether it's wine or anything else
(40:12):
might. You know, it's kind of interesting because you probably, as you
in Geneva, when you sit with your friends or family and you start having a
nice meal and there's a good bottle of wine there that quite often,
if not all the time, that that conversation ends up
about that bottle of wine. And what's interesting when those happens
here, in fact, I have a big event in my home tonight. We're going to
(40:34):
be exposing some new Armenian wines that have come to America.
Obviously, this event, that's the conversation. But
amongst the regular conversation, the topic
of Wine comes up. And even though there are. Everybody at the
table's got a different level of knowledge of wine, that conversation is not
intimidating by most people. And most people, because of the environment,
(40:57):
you're sitting, having a meal, and you're relating, and there's a lot of
camaraderie there that the intimidation
goes away, regardless of your study of wine. And
the reason I wrote down Civilization is when I was interviewing
Florence Catiard from Chateau Smith Old
Lafitte, they also own a winery in Napa.
(41:20):
I had a similar question, and she said, yes, of course. We think that.
Because it's. Because when you have that glass of wine, it is welcome to
civilization. And. And I go, what? That is so
profound. I hope I can use it. Which I just did. And then there's a
movie out that I saw on the plane recently. It's a French movie. It's about.
I think it's about the first restaurant ever or something, or the first chef that
(41:41):
broke away from. From. And it's a woman chef at this point.
But anyway, the. The protagonist in the
movie says, wine is the intellectual part
of the meal. And I thought that was very profound.
So White Clock cannot be the intellectual part of the meal.
A tetra pack, wine sold, or bag in the box.
(42:05):
Imagine this, Mark. You're sitting at dinner and you've got this big box on your
table, and you pull the spigot out and you put your glass under. And that's
supposed to be the intellectual part of the meal.
Yeah, but sadly, I think the.
The word intellectual is. Is. Is. Is negatively perceived
by
(42:27):
a segment. Whereas I think the. There's
joy in the intellectual conversation. And
all the tastings I organize because
I entertain my clients, I do tastings
for institutions, different
formats, and people enjoy
(42:50):
drinking and tasting what I'm serving. But
people like to talk. People enjoy the conversation.
They want to listen, to participate. And some of the
tastings I do in my cellar, I can't kick
people out because. Not. Because they. Obviously they're enjoying the
wine, but they enjoy the conversation.
(43:13):
And this is what wine is about. Right. So if. If there's
nothing to say anymore because everything is dumbed down,
where's. Where's the conversation going, you know? Yeah, it's a
really good point. It's a really good point. And I was annoying to see
that word. We're gonna have to dumb down wine. Dumb it down. What is that
saying about the people you're dumbing it down to? So that's
(43:35):
another point. Right. You know, in the investment world,
I'VE had some interesting people on the show. And I got a text not too
long ago from a. Actually one of my good clients who is a great collector.
He's got one of those sellers where you put your thumb on the thing and
the door opens. And whenever I find an interesting vintage that comes our
way or offer, I'm offered something from one of the suppliers that's
(43:56):
unique. He usually takes up. Takes me up on it. But he
sent me a picture of a recent dinner in, I think it was
Singapore or Shanghai. And he's with Rudy, you know,
the famed fake wine guy. And you know,
I don't know if you know the whole story, but he is. The initial
chink on the wall when he got busted was because he produced an
(44:19):
1890 something burgundy in the chateau.
Confessed they had never made that vintage. Yeah. And he got turned in. Right.
So do you, do you. And then I had. Richie
forgot his first name from Sotheby's on the show. And we've talked about
how Sotheby's might vet wines. And
(44:40):
he admitted that probably some fake wines got through even
their scrutiny. And there's a lot more forensic
opportunities now than there were in the old days to detect
fake wine. But do you subscribe to
this NFT and blockchain
management of vintages with. Not only with wine, but Scotch and
(45:03):
places, things like that? Not really.
I think, I think all these. I think
as long as there's not, I would say, a globally
adopted protocol where all
producers agree on, you know, the
methodology of authentication.
(45:26):
You know, if you use a blockchain, you have to use it from
out of the gate. Right. If you
buy a wine that has been traded two or three
times and you put a, you know, you put your transaction on the blockchain, it
doesn't change the fact that before you don't know what happened. Right. So it's.
(45:46):
And so then if you
acquire today only
exclusively wines that are
blockchain certified from day one today,
while you're closing the door on the majority of the wines you would want to
drink. Right. So it's a bit of a.
(46:08):
I would say it's too young of a process
to be able to implement it across all valuable
wines. And. And again, we're talking about.
Yeah, there would need to be a commonly
adopted protocol, but try to get the French to agree
amongst themselves. That's a tough one. Trying to get Italians
(46:30):
in French to agree on. Forget it.
It's not happening. Well, I think it's interesting. Sorry to interrupt you. I think
it's interesting. I think there's certainly some value to it. At least
it's stored properly and there's provenance there. But like you
said, as soon as it is released from that, then
all provenance is gone. And you have no idea. And there are
(46:53):
limited number of winers that have taken up these blockchain companies
to supply, supply. Plus it's sitting somewhere that you're not sure
always about what it is. And the way I've handled it here,
I think some people would have a great level of confidence and
comfort using a Blockchain Company and
NFTs to protect their wines. That's perfectly fine.
(47:16):
My strategy here in Los Angeles has been that I only do
business with really reputable known
Bordeaux houses that, that are import. Like there's one here called
Duclos, which is part of the Moex group. And I know
those wines are coming direct from the wineries because of
the, the trust factor, which is almost the same thing. Right.
(47:38):
So that's important. Which, which kind of scares me
a little bit. I did buy some Margaux a few years ago and I'm. The
more I have discussed this, the more I realized I didn't buy
it one of my regular suppliers. And so
I have to assume it's real just because of the percentage, you
know, play on that. But I didn't get it
(48:01):
from Duclos, one of the guys I know. I mean, you would expect Southern Wines
and Spirits, the largest supplier in America, to only have
documented wines as well as R, D, C and some other players.
But I thought it was an interesting feature
and different than other blockchain ideas. But
I can see people saying, look, I feel comfortable with it. They
(48:23):
pay good money to do that. You have to pay off site storage, do that.
Do most of your collectors have their own sellers that they store in
or do you have them in Bond somewhere?
They do both. Because most have, I mean, all wine
investors are wine lovers. So they have
either a seller at home, small or large.
(48:45):
Depends on. And they have. And when they come
to me, they actually open a storage account, professional storage account in Bond, so that
they have the, you know, they have the two sides. Yeah. You know, it's interesting.
I had not. I was not a collector. I had no interest in
collecting. I was just, I was a vendor. I. I never
had a seller of my home. I had a warehouse here with 30 or 40,000
(49:07):
miles at any given time in it. And so what did I need a seller
at home for? Right. And. But when I sold the company
two years ago and during COVID since we did so well and people, you know,
everybody was buying everything. I, I started to order some
interesting wines, a lot of Grand Cru Burgundies and some classified growth Bordeaux
and all kinds of interesting things. And the buyer of the company
(49:29):
wanted none of it. They want none of it. They like. No,
whatever you have that was for sale through the club subscription model.
We'll take that. Which my average cost on those wines was
three to four dollars. And we're not
interested in anything in your cellar. And I built a cellar here at the office,
which was, you know, obviously temperature controlled. Etc. So now
(49:52):
I was going, whoa, I have like almost 3000
bottles, 2800 bottles of wine that
I had to find a home for. I don't have the space of my
home. I was able to build a cellar that would hold about
900 and now I have still about
1800 here at the office under
(50:13):
temperature control. And I'm not complaining. No, don't consider
not complaining. But it's been fascinating to.
It's kind of interesting. I never would have. Would have had a. Let's just say
the average bottle of wine that we drink at home is probably over a hundred
dollars. That would have never occurred during my days in
business. Just. I wouldn't have done it. I sold wines that
(50:36):
were $20 and that's what I had. But it's fascinating to
taste through these things as I can now.
I paid for them a long time ago, so it's, it's okay.
But I was interested to, to know how your, how your customers typically do
that, because I do. I had this conversation yesterday with this, this
gentleman who was on the show who's a brilliant, brilliant man, I sort of
(51:00):
mentioned at the beginning of the show, who just invested $300 million
in Salt Dominion, in some vineyards and some. And. And
mentioned to me he threw away his first vintage. Just tossed it. Didn't even sell,
didn't resell the juice, just tossed it.
And I thought, well, how, how committed,
you know, to this industry to invest that kind of money? I mean, what
(51:22):
do you think? You're never going to get it back? Probably, right?
Probably. Probably a good chance of that. So what's the next step for you as
you navigate this industry? Are you.
Branch, you said you put on tastings and you invest
collectors, you invite. Is there any on Horizon
you're looking at venturing into in this industry or just perfecting what
(51:43):
you're doing? Yeah, there's these
various projects, discussions going on,
and there's a lot of appeal from
the financial areas in Geneva, Switzerland,
banking world. A lot of interest
(52:04):
for them to offer wine investment to their clients
for a variety of reasons, status reasons and
diversification, and also as a way to offer
something else than a dot on. On a trend line.
So it's also. That's what they've been telling me. I'm not
(52:25):
inventing. We don't have any. We basically. We don't have
anything sexy to sell to our, our clients. You know, we're
always saying the same, you know, mixture of stocks, et cetera, et cetera. So
if we could offer some, some wine investment, you know, that would be helpful because
that would provide some, you know, some appeal and. But it's,
(52:45):
but it's difficult to
standardize and scale collections of
very rare items. You can build
funds with a lot of Bordeaux because they're produced in large
quantities and they're rather liquid, but then the performance is
not that great. So that doesn't work either. Right. So
(53:08):
there's discussions in that direction that might be one of the
next projects to come. Come alive. Yeah, rather. Was
that rather liquid? A pun? Say again?
Was that a pun? That Bordeaux investment's rather liquid.
So actually, I'm going to finish with this thought
and we'll just discuss real fast. We're already out of time. But there's
(53:31):
been, over the years, through my career, one in particular
in America and California in particular, this group of,
of of investors, Well, I guess they were investors
that were going around, they're buying pallets and pallets of things and nothing, nothing of
any pedigree, just wines that they expected to go up in value
(53:52):
as they store them. And you paid these people to buy these wines for you,
and then you would, they
would hold on to them for you, and then they would claim that they would
resell them in the future to restaurants
or retail. And it, it failed
miserably. In fact, it failed so much that at the Wine of the Month
(54:13):
club, I was able to make a fair amount of money buying
them back from them at pennies on the dollar, what they paid.
And here I am now offering these incredible invested,
incredibly aged wines that were not of any pedigree, but just nicely
positioned as a quality product.
Because people bought off on this idea of just
(54:35):
buying wine, aging it and it getting more valuable.
And nothing can be further from the truth, at least at
this, at least this level of wine. And here
we are. You're able to show,
and I think wine. Didn't wine outperform the stock market?
It did. Yeah. I did. For
(54:59):
especially during the 2016, 2022 period.
But what is really important is to understand that
there's no magic. Every asset evolves by
cycles. There are periods that are more favorable, others that are less
favorable. It's a little bit more volatile
(55:20):
than one would think. The fine wine investment market,
which is a good thing because it offers windows of opportunity
to the space. And also I think that the
most important thing to have in mind is that investment grade wines and those that
really have the potential to perform are
so, so small in terms of volumes versus what
(55:43):
is produced at global scale, that just to piggyback
on that story you told, you just shared is,
no, you cannot just go out and buy pallets of wine and Hope that
in 10 years you'll sell them at a better price. There's
most wines, the vast majority of the wines,
they will not take any value over 10 years.
(56:06):
It's just because there's too much volume, because
there's no global traction, because it's not of a
certain pedigree. It doesn't have status for many reasons.
So picking the right items
is quite a complex job
and it requires a lot of knowledge of data.
(56:28):
And even there, you can also go wrong.
We're going to leave it that great thought and what a pleasure to have you
on the show and have a chance to talk about this segment of our industry,
because it's an important one and it brings value to the industry
and to your client base. It's been fascinating. I hope we can do it again.
Likewise, Paul. It's been enjoyable. Thank you so much.
(56:52):
I look forward to more controversial posts. Yeah, yeah, there'll be a few.
Yeah, there'll be a few. There'll be a few. I have some ideas coming up,
so. And I love them. I mean, it's great talking and seeing everybody
jump in. It's good. Yes.
Cheers. Thank you, Paul.
You cannot just go out and buy pallets of wine and, you know, Hope that
in 10 years you'll sell them at a better price. The vast majority of the
wines, they will not take any value over
10 years. Sit back and grab a glass. It's
Wine Talks with Paul Kay.
Hey, welcome to Wine Talks with Paul Kay. And we are in studio today in
(00:21):
beautiful Southern California about to have a conversation with Marc Lefleur all the way out
in Geneva, Switzerland. Hey, have a listen to a couple of shows that just put
out one coming up with Zaya Yunan.
And this story is unreal when it comes out in about
a week and a half. I mean, it's really, really quite interesting.
But not while we're here today. Here to have conversations with Mark Lafleur. Welcome to
(00:43):
the show. Thank you, Paul. Honored to be with you. From
Geneva, Switzerland, along the way. Yes. So it's
nighttime there, I think, right? 7 o' clock, 8 o' clock. Evening, evening, 7 o'
clock. Beautiful sky. It's summer, summertime
today. Are you
Swiss by birth? No,
(01:05):
I'm American by birth, actually. Born in
Guadalupe, West Indy. My parents traveled a lot when I was a child
and we ended up in Switzerland when I was 4 or
5 years old. So I've been here for quite some time. Wow.
How interesting is that? So what languages do you speak? We speak
a few different languages in Switzerland. Obviously you have to
(01:28):
learn mandatory German when we go to school
and then we have a few options. So it's quite common to speak
a fourth language, if not more. And my fourth language is Italian.
In French. In French, obviously. Yeah, yeah, yeah. Wow. You
know, I just had this guy I was talking about whose show is coming up,
(01:48):
incredible story from Iran and
he says, I came to America. I was 13. I did on my own. I
showed up, I and they put me in German
class in, I think it was in Illinois when he,
where he landed at 13 by himself. He didn't bring his parents or anybody. He
just decided he was leaving Iran and coming. I said, why would they put you
(02:09):
in German class in Chicago
when you're coming from a country that speaks Farsi?
So it didn't make any sense to me. But my father's
from Cairo and he spoke five languages as part of the culture, which is
not a very American thing to do, to have a multicultural,
the background in languages as you're, as an American. So it's really interesting. Do
(02:32):
you find that that language skill set
is an important skill set in the wine trade? Yes.
Well, in my, in my in my situation, it is
because especially the Italian. I.
I'm personally very fond of Piemont
wines. I travel there very, very frequently.
(02:54):
And obviously, speaking Italian opens a lot of doors in terms
of building relationships with the producers. There's just a whole different
way of being welcomed there when you speak the language.
I'm saying this, the Italians are very welcoming to everyone.
There's no doubt about that. But surely speaking the language
helps. Well, we were in Piemonte
(03:19):
just a few months ago. I opened my big mouth because
we like to go to Monaco for the Grand Prix. And I told some
friends because every year we've told them that we've gone, they said, no, you know,
it's too expensive or whatever the reasons are. This time, five of the
couples said, yeah, we want to go. So I was straddled with 12
people to move around, and I, of course, wanted to do some wine events.
(03:41):
And we started in Pomonte and had an incredible time there. Dropped into
Monaco for the race, headed to Bordeaux for some tasting and
podcasting there, and then came home. It was very
gracious. But what a world of difference between
wine cultures such as Piemonte. I don't know if
you want to call Pimon to Piedmont, Pimonte, and just
(04:04):
to say Bordeaux, you know, just a world of difference in the
rural aspect of it, obviously, the grapes and the. In the
terroir. But how do you. How do
you define that with your clients when it comes to collecting and investing
wine? Yeah, we can still. We can start from there. That's a
good. That's. That's a good comparison. I think
(04:26):
there are differences, I would say,
in all areas. You mentioned terroir, you mentioned grape varieties,
all these aspects, of course, but I think
the production in Piedmont is still very
artisanal compared to what Bordeaux is doing.
Bordeaux is
(04:49):
at the top of the pyramid. It's a rich man's game in a good
way, in the sense that there's a lot of capital available for the.
For the. For the classified chateaus.
They are competing for excellence, they are
innovative. They are doing a lot of research to
understand the environment in which they're growing the grapes, to
(05:11):
understand how they can better in terms of wine quality.
It's high tech in Bordeaux for the top tier
chateaus and in Piedmont is
more, I would say,
reminiscent of what's happening in Burgundy in terms of approach.
And all the Piedmont producers have gone to
(05:34):
Burgundy to see how things are done over
there, to be able to learn
more and replicate quite a few of
the Burgundy approaches in Piemonte, that's an interesting comparison.
And for the listeners, I don't think we properly introduced what you do as an
investment consultant and building
(05:57):
investment portfolios around wine, which is a really interesting concept. And
we'll peel that back a little bit later. But when
my dad was selling wine in the 70s in his wine shop
as a French speaking, you know, his French was a second language or third
language and a key understanding of the
French culture. But he always sort of not complained, but he always sort of
(06:20):
would say, hey, you know, the way the Bordelaise have positioned themselves, they've sort
of not over romanticized, but romanticized the
value of a good glass of Bordeaux and
not exclude the rest of the wine world, but to sort of position itself, as
you said, as king of the hill. And I think that's still true,
that certainly they've been able to
(06:42):
elevate their status in the world of wine based on the
classification. And I guess the
natural rarity of the wines is that, I mean it seems like it's always
been a solid investment for someone to invest in a top
growth Bordeaux.
That's a topic I love speaking about. And
(07:06):
Bordeaux wines are not that rare as one would believe.
And I think there's a misconception around
the top. The first growth, for instance, as to
their, their scarcity.
Muto hot shield is is produced to about
(07:26):
300000 bottles per vintage. Margaux is
150 000. I think Lafitte is probably the smaller
producer out of the first roast, it's still 100000 bottles.
We're not talking about super rare bottles at all. And I think
this is where Bordeaux faces issues,
is when there's a global slowdown in market demand, they rapidly
(07:49):
into oversupply situations and
stress on pricing. That's when we see prices go down. Right.
Whereas Burgundy and Piemonte producers,
well, historically in Burgundy and
now for different reasons in Piemonte, we'll get to that. But
(08:09):
Burgundy has top wines
globally celebrated that can be produced
at levels of what, two, three, four barrels, a thousand bottles, up to
5,000. So I mean the, the scale of what Burgundy
and Piemonte is producing on single site vineyards is
completely different from what Bordeaux is doing with hundred
(08:31):
thousands of bottles of the, of the first growth. You
know, there's so many directions that take that thought because
again, these classified growths, they're
positioned as you know, I think in general, the general public when it
comes to wine would barely know how to pronounce them, let alone
they would certainly say that the rarity of them would be,
(08:56):
would be the eminent feature. And here we are saying
there's no up to 25,000 cases of one and
115,000 cases of another. And that, that's
quite voluminous. But it's still, it's still, they, they still have a
demand and they still have a rare, an
exclusivity to, around them. And if you talk to,
(09:18):
let's say, novice collectors, novice investors, that's where they're
going to go first, is to say, oh, well, I have, I
have Lafitte in my cellar and I have Petrus in my cellar and I have,
I have, you know, Margaux in my cellar. It.
And that's not changed in a long, long time. Does Barolo in
Piemonte have that kind of, I don't know, what's
(09:40):
the word I'm looking for? Do they have a kind of intrigue?
Yeah, well, I think what you, what needs to be factored in is
that Bordeaux has 150 years
of marketing ahead of Burgundy and Piemonte.
That's fair amount, you know, so there's, there's, it's.
(10:02):
They started selling bottles in the 19th
century. Right. So we're talking about a
status that has grown ever since. Right. Whereas
Burgundy is probably building a status
at global scale in the past 50 years, maybe. And the
Piemonte past 20, 30 or so. Right. So
(10:24):
Piemonte is amongst what I call the
investment worthy regions, the emerging, the
emerging region because they're very new to, I would say
the, the global public. And when you say of investment, are you talking about financial
gain in the, in the future or quality or a little bit of
(10:44):
both? Aging potential. I've got this in my
cellar. I can't wait to taste it in five years, 10 years, 15
years kind of thing. Or like we're going to spend some money on some
wine, put it in the cellar and then we're going to see how it does
in the future. Yeah, exactly. I
think it's very important to, to, to make a distinction
(11:07):
between what could be seen as a speculation and investment.
Speculation would be
betting on a few high priced bottles and hoping for a
quick return in two, three years or so.
Wine investment doesn't work like that.
Returns are when they do actually
(11:29):
happen in the expected way, or rather
at the 10, 15 year horizon, if not more. So
investing in wine, in essence. What does that mean?
That means whether you're collecting at home, whether
you're using a managed storage solution,
(11:50):
usually in bond, the, the essence is
placing capital in wines that have a strong potential to
age 20, 30, 40 years in terms of developing
quality, while at the same time they will become
rarer and rarer on the global market marketplace.
So the, the, the, the, the target is to be the owner.
(12:16):
Preserved wine that can age well, and of which
you may find yourself being the only owner to have a case to sell on
the market in 20, 30 years down the road. So that's
interesting. So you, you have to sort of, not only, I mean,
I guess the Bordeaux classified gross going back
to that would be sort of the blue chip stocks, you know, everybody knows what
(12:37):
they are. There's no, there's not necessary to predict their value
in the future in the sense of quality, certainly not in financial gain or at
demand for those aged Bordeaux in the future.
But man, if you're predicting potentially what a
Barolo might be worth or, you know,
(12:59):
another part of the world, Burgundy for instance, as well,
that takes a little bit of skill and a little bit of understanding of
where wines are, where the vintages, where
the terroir is at the time that those vintages are made, in order to not
only predict the quality of them, but potentially predict
the rarity of them. When that happens, is that kind of your
(13:23):
skill set? Is that what you're trying to invest into your, for your clients?
Yeah, I think, I mean, no, no, no one can guess the future
in terms of valuation.
You cannot draw a continuous line from the past, hoping the future
will mirror the past. So the,
the one thing that
(13:45):
we can't put on the table is the understanding of
terroir quality of aging potential of the wines in the
volumes of production and potential demand going forward, I
think we can
use the data at hand and make an assumption
rather than a prediction. Right. And
(14:09):
in the case of Piemonte wines, Barolos and Barbarescos, what
is interesting today is
climate change, which is very honestly rather
playing favorably to that region for the time being.
And I can see that for the next 10, 20 years, obviously
if it gets much warmer quicker, it might be an issue. But
(14:33):
the Nebbiolo grape variety that goes into the Barolos and
Barbaresco is a late ripening grape.
And historically on some cold vintages, the,
the producers had a hard time to reach maturity
with their grapes. And sometimes on the colder vintages, well,
those Baros and Barbarescos would always remain rather
(14:55):
austere and difficult to drink, even after
some decades. Right. But the few degrees
or degree and a half perhaps, that we're having on average today
and in the Piemonte region is actually,
in my opinion. And you can, you can see, you can hear that from producers
(15:16):
helping the, the quality of, of the
grapes generally. So we have a context here where the wines
are absolutely superb coming out of the past vintages
and long aging potential. Softer tannins,
more approachable because both of. Both because of
riper, riper grapes and, and
(15:39):
improved white making, of course. So we have top quality,
good, good climatic conditions, long aging potential
in the wines versus Burgundy at,
I would say, comparative caliber,
maybe. Yeah. A quarter to, to
half the price. Yeah. You know, it's kind of interesting. I. I did.
(16:02):
I did this for 35 years, tasted every Tuesday from
9am to 2pm you know, amassed
100,000 wines under my palate. Excellence.
It took a long time for me to. To grasp
the value of good Barolo, good Nebbiolo.
And it almost wasn't until we went on this trip where
(16:24):
I started to understand, you know, that terroir differences and how,
how special the grape is to produce these rather
unique wines in that part of the world. Does when somebody comes
to you, it says, I want to invest in wine.
Is that what they say? Or I want to create a cellar that might have
future financial value. What's their typical purpose of coming to Marc
(16:46):
Lefleur and, and trying to figure out what they're going to do in the
wine world? Well, usually
they, they are already collectors.
They have knowledge around wine, and they do have a
feeling that they can probably do something a little bit more rational
than purchasing by compulsion and
(17:09):
drinking and enjoying, which they do, and they will continue
doing. But if they have some extra cash to, to lay aside,
they. They may be looking for a route
of purchasing wines that is
very simply backed up by a little bit more of data and
analysis. And usually there's, there's a. There's
(17:32):
an understanding that storing the wines in bond far away from
home, not only for avoiding to drink them, because
if you start drinking your investment well, then, well, that's great because you're drinking great
wines. But the idea is to keep them aside. Usually
they come to me to organize a managed inbond storage solution,
(17:52):
which is kept. So wines are kept in professional storage.
That's interesting, because my career, look, my business
was the original Wine of the Month club, and it was. Wines were 15 to
$20 retail. That's what people bought, which is obviously a very important
segment of the market. But I found there were two types of
sort of unophiles that were really into wine There was the one type
(18:15):
of unophile, which I see a lot, which is they just
chase the biggest brand they can to say in the next
conversation with somebody at dinner, I only drink this. I. I have this
in my cellar. And that's one type of collector. And then there's the other type
of collector that actually seeks to understand
the value of that glass of wine, not just to talk about the brand
(18:37):
name, but to actually talk about the wine you have. Are those
two segments that exist, or are there more when it comes down
to collectors and people investing in wine? No, I
think you're. I can see those. Yeah,
those. Those two polls as well. But what.
What often happens is that investing in wine and has a lot to do
(19:00):
with deconstructing false beliefs. What. What I like to
call. We talked about Bordeaux just before, but
most often collectors who want to start
investing in wine with a view not necessarily to drink the bottles,
but to. To have them as cash in the bank.
They. They would come to me and say, oh, you know, I love this wine.
(19:23):
I would like to invest in this wine. Or, I've heard about this.
Is this a good investment? And usually it's not the case, because the wines
that you love continue loving them, but
they're not necessarily a great investment for different reasons. I mean, we talked about
Mouton, which is an amazing wine. There's
many great reasons to acquire Mouton on a regular
(19:46):
basis, because it's one of the top Bordeaux that can be found,
and it's fabulous. But that's not
necessarily where you want to put your. Your cash today. If you have a view
of. Okay, I want to see some valuation over 20. 10, 20
years. All right, so there's. There's. There's. There's
conversations I have with my clients around these
(20:08):
topics. Sharing data,
deconstructing false beliefs and. And showing them a route
which is
going towards properly rare products versus
perception of rarity. You think there's social
and political pressure on the perceived value of these wines.
(20:29):
And what do I mean by that? It's currently the. The sort
of social view of Bordeaux is that
anybody can go there. There's lots of Chateau for sale. You can invest if you
want. And. And there certainly was some
degree of exclusionary practices when it comes to real
estate in Bordeaux. Burgundy's always been that way. Burgundy is very
(20:52):
tightly controlled, as you know, there's people standing in line to get access to vineyards.
Does any of that play into what. What you talk about with your investors?
Yes, yes, there's a bit coming Back to Bourdeaux. I think
there's a lot, there's too much generalization, like there is too much generalization
in the world of wine
everywhere. I think there's been
(21:16):
last year a lot of talk, the media was talking about it,
well, here in Europe, but I think in the US as well, of wine growers
taking the vineyards out to replace it with other agricultural,
whatever they, they could go for. But the French
government, they subsidized, you know,
(21:39):
taking the vineyards out. So the, the picture of Bordeaux was, was,
was widely damaged because of, of that
situation. But we're not talking about, we're not talking about the top
level, but we're talking about the entry level. Right, which is
a very different business, a very different segment that has nothing to do with investment,
by the way. It's a, it's a different segment that
(22:02):
has produced wines in large quantities.
The Bordeaux appellation is very big in itself. And they did
suffer from competition from Italian wines that
probably, yeah,
cheaper entry points, better value for money, Spanish wines,
New World wines as well. And
(22:26):
I would say when I say entry category, we're talking about bottles,
let's say €10, €15, a little bit
dollars is 1.2. I think today
these wines suffered from huge competition
from European wines and from wines from beyond.
And obviously in that segment there are
(22:49):
some producers, some wine growers who were probably
very ambitious, creative, but did
not necessarily have the financial, you know, the
capital to actually improve the wines
that they were producing. And
they did suffer from the competition at the end. And then many others
(23:12):
did not even seek to improve what they've been doing for ages. Right.
And for during the 80s, 90s and the beginning of the century, all of
the entry category, Bordeaux was selling easily. And
now suddenly it's a wake up call and say, well, it doesn't work anymore. Yes,
well, you've been doing the same thing for 40, 50 years and well, the world
is changing and competition is there. There's great wines from
(23:33):
elsewhere coming into France as well. And, and, well, what's your plan?
Well, I don't know. I've been doing this for 50 years and it worked so
well. Not going to work anymore. Right, so
this is one story about the entry category
Bordeaux on the other opposite side.
The
(23:55):
all classified chateaus for large
majority are, as I said, I think earlier in the call,
are really engaging. Passion, determination,
capital, technology, whatever's out there to
improve, perform and come out vintage after vintage with the best
possible product. Right. And so these chateaus are
(24:19):
obviously still there, suffering from the global
economy, that's a different story.
The market is not great for top
end wines right now. When you're a seller
for the buyer, it's fantastic. Right. So it's a great time to invest.
It's a great opportunity, great window of opportunity to,
(24:42):
to collect at this point of time. But
you said something interesting, I want to pause you there. That
made me see the marketplace a little clearer. And
as a vendor of wine, I always felt, you know,
margins were important. Buy it as least expensively as
I can. As long as I keep maintain what's in the bottle as quality and
(25:04):
sell it for a fair value. You know, I was not the type that would
sell it for as much as I can. It would be what I thought its
market value was. And so the whole idea of my club at the time that
was started, you know, 50 years ago was we're going to send you the best
of what's on the street for the price that they were offering. So we would
compare $20 cabernets with $20 cabernets and $50 bordeaux
(25:25):
with $50 bordeaux and tell you amongst those segments,
these are the better values. And so that's what, so
that that marketplace is convoluted,
congested, influenced by all kinds of market
forces which, not the least of those things like white claw and bubbly flavored
drinks and the non alk movement and the low elk movement and all the other
(25:47):
things that are happening sort of in society.
But then as I got out of the industry or started getting more mature in
the industry I'm talking About the last 20 years, you start to realize the value
of this honest glass of wine that reflects terroir, that tells you about the expression
of where it came from and when it came from. And
these, those market forces tend to start to dilute a
(26:09):
little bit. Even though you're saying there's pressure in that area as well,
of course, because general consumption is down and you know, the lots of
societal changes, but less volatile
than that congested part of the marketplace that, that.
I will talk about your response to one of the posts in a minute. But
is that, do you see that as accurate? Yeah, yeah,
(26:32):
absolutely, absolutely. I think it's. Now it's,
it's correct. I think that the congestion is
clear. The, and
I don't know if I like, I like this comparison because I
use it every now, now and then. But the,
you know, it's like I'm into cycling. I love cycling. The Tour de
(26:55):
France is starting in a month, right. So we'll, we'll all have our eyes on
the Tour de France. But you know, it's a, I love. Watching it, by the
way. It's a three week, it's a three week race, right?
And the, at the start of the race you have 180 or 200,
you know, cyclists. And as, as the race goes and
they hit the mountains and you know, the hills get steeper. Well,
(27:17):
at the back of the peloton, you know, those who are not well
prepared, well, they, they drop off, right? And some drop out of the
race. And at the end of the race when they reach Paris, well, way
less cyclists than they were at the beginning. And it's every year
like that, right? And well, the Tour de France is still
not great, but those who are not well prepared, well,
(27:39):
they, they kind of drop out, right? And, and in the
congested wine segment, it's, it's, it's the same, it's the same
thing, the same reality. If you're not pre, for, for competition,
for change. And I'm not saying change in terms of,
oh, we have to do things completely different, but when I say change, it's just
other, other product production regions coming out with great
(28:02):
products at better value for money. And so,
yeah, that obviously, you know. It'S, it's an interesting problem and
I, this is the part that drives me crazy. In particular, why, why we got
in touch with each other. Your response to one of the posts or somebody's response
to your post. Because
wine, it's slow, right? It's once a year
(28:23):
that you have a chance to do something with it and you
can't predict all the things that are going to come from your vintage
and what the market's going to be ready to take on. Because you're looking
five to seven years down the road. Like, if you think
Syrah is going to be hot, a hot product, I
mean, for instance, look at Sauvignon Blanc or Sancerre, for example. 20 years ago,
(28:45):
15 years ago, you couldn't sell Sancerre to save your life and only to collectors
or at least aficionados. And now I see people ordering
Sancerre, you know, in Spanish restaurants and, and it's like,
okay, when did that happen? Well, it's slow. It's very slow.
And so when it comes to innovation in our industry, what does that
mean? I don't, I don't know what it means. And here I am, I've spent
(29:07):
35 years doing this. I don't, I don't think new
packages, you know, are innovation. I don't think putting things in a tetra
pack is innovation or cans or low alka. I don't think that's
innovation. That's just a response. I'm not sure what the word
innovation means, but because it's so slow and because we have little
chance, it. Sometimes the dynamic has changed before you can
(29:29):
respond to the previous dynamic. Now, in this particular
case, in your case, with investment wines, that has been, yeah,
Bordeaux through some tough times. And we have this, you know, it is
cyclical. It's like any industry that level
of wine seems to be not immune from, but
pretty close to the general consumption of
(29:51):
wine is a problem. And that leads to this question.
You responded to a comment about terroir. You posted a comment about
terroir and how it's driven, how it's, you know, as you
and I would see it, being in this industry as long as we have, is
the critical part of a wine and what it should be expressing.
(30:11):
I'm going to stop for a second. I threw this out at a winemaker,
a Bordelaise winemaker the other day and I said, you know, there's really no such
thing at that level of a bad vintage. It's certainly
there are vintages that are better than others to your palate. But when it comes
to the idea that a successful vintage is explaining to the
taster, this is the year and this is the place that we grew it,
(30:33):
that's a success. And we might like the
15s bread in the 14s, but that 14 can be pretty good.
You know, it could be a great expression of 1940,
2014. So when you see those
comments, like, well, we have to be more innovative. We have to, you know, we
have to respond. We have to. And your comment was
(30:54):
like, no, it's. What are you going to respond to?
What, what are we doing? We're not going to put Lafitte in a can.
Exactly. Yeah. You know, it's like,
yeah, let's, let's repatch. Yeah, let's repackage the 15 again, see if that
works. And I don't think that's going to help the market too much. Yeah, no,
(31:15):
right, so what are they, what are they talking about?
Do you know what this idea of
terroir, the idea. Let's just take one comment that was just made that the idea
of terroir is past his prime.
Yeah, again, again, there's so much to say on, on the topic, but again, let's,
let's, let's make some
(31:38):
differences, some distinctions here, which are really important. I Think there is.
I did this post on terroir which was, I think it
was important just for me
to refresh everyone's memory on the importance of
the notion. But it is true that the terroir really applies
to wines that do really have a
(32:01):
terroir that specifically
provides a set of wine profile and taste
inside whatsoever. A good example, a good example here in
Switzerland is Geneva. Geneva is a wine
producing region, but they have a very, very poor soil.
In terroir, Nothing remarkable. Whereas
(32:24):
50km away in the next canton, there are
really nice
terrace vineyards bathed by the sun. Great terroir,
it's a different, it's a different ball game. Right. So clearly
Burgundy has one of the most
(32:44):
richest terroir in the world, Piemonte as well,
Bordeaux as well. There are other regions that have
poor terroirs, poor soils, but the climate
is favorable to wine growing. And you can grow wine very well.
And then you may produce wines that are
less influenced by the terroir because there's not that much under
(33:08):
the soil that will influence the taste. Right. So it's
more about winemaking and
choices of grape varieties and blending.
So I think that the notion of terroir is
absolutely essential to
many of the great wines, but that does not mean that it's always
(33:30):
an essential component. Right.
Then coming back to the question about innovation
in wine,
I think the most important thing
that anyone could do is go and see the wine growers, speak with the wine
(33:50):
growers. It is such a stressful
job to actually start from
January with a new vintage. You don't know what the climate is going to
give you. Climate is changing. There are more storms,
there's more hail, there's more ups and downs, there's colder weather
patterns, unexpectedly frost, heat waves, is
(34:13):
going in all directions. And what was always
a stressful job, meaning that you start the year hoping
that the, you know, the year will be successful
all the way up to September, October, the harvest, and
every day of, of, of the year is,
is a stress, is a challenge for the wine grown and it's become even more
(34:36):
challenging. How am I going to do to ensure that
my vineyard is going to produce quality grapes in the
climatic conditions that we have today? And
to ensure that it requires a lot of adaptation
in the way the vines are
trimmed, in the way the soils are plowed, treated
(35:00):
and so on. And so innovation,
there's no time for innovation there. How
do you. It's about taking care of,
of your land, of your 10 hectares or 20 hectares of vineyard.
Right. And the decisions the
(35:22):
radical decisions that can be taken
could go as far as, well, we're going to take this grape
variety out and replant it with another grape variety
because we believe the soil will handle it.
Also in the context of global warming, and
also perhaps because the demand, the
(35:44):
market is perceived as
more welcoming for another grape variety. But by
taking such a decision, as you said, it's a very, very long shot.
If you plant a different grape variety, it's going to take you
5, 10 years to produce the first
vintage of a wine that you will deem
(36:07):
grape good enough to commercialize, and maybe 20 years to
see it become, you know, the wine that you envisaged at the
beginning. So it's not about, oh, well, the market is changing,
next year we'll do this or. Yeah, right, exactly.
What. That's the part that's driving me crazy. And I was
(36:29):
like, if you took this, that'd be an interesting study. I don't know if you'd
be able to figure this out, but if you took the segment of
consumers, just segmented them, and you said, okay,
well, in America, if you pulled a hundred thousand people and said, do you drink
wine? The common knowledge is, at least according to the Wine
Institute, 25,000 would say yes. But of that
(36:50):
25,000, that includes the person that goes to the local
Olive Garden chain restaurant of Italian food and orders a house
Chianti. You know, they would say, I drink wine. But are they a
candidate to care about wine? Probably not. And
so the segments of consumers,
there's always been a certain amount of people that want to learn about wine
(37:13):
and are, are challenged by learning and just want to
learn. There's also the group that's completely intimidated by it and stays
away from it, and then there's people in between. So I don't know if that's
ever changed, if it will ever change. And if, if, if today's
generation thinks that, you know, innovation changes
that. It just hit me as you're speaking
(37:35):
that if you, if you try to take terroir out of the conversation
and somebody responded to your, somebody responded to one of your
responses of your last post about terroir, and the person said, if
wine isn't dumbed down soon, it's going to be out of business. I completely
disagree with that because it's always been the same. It's always been the same product.
It's no different than it was when Noah landed on Mount Ara. And that's what
(37:58):
it is. It's fermented grape juice. Maybe we've improved the production value
and the quality, et cetera, but it's still the same product. And so if
you try to dumb it down and take all that out of the conversation of
wine, which I think is innovation in its own self, then all you're doing
is Talking about a 14 or 12% alcohol beverage
and that then you're lost everything because White Claw is
(38:21):
6% and there's RTD cocktails that are 20. I mean, you're,
you've just put wine into the mix of,
of all the rest of it. If you can't discuss
grape varietal on terroir, I mean, you've ruined it.
And it's. Why would you do that? I think
there's a question in there or not. I think there's, there's room for everyone.
(38:45):
And there are multiple segments, as you say, there's multiple segments there.
There are. There, there's a segment that
doesn't need to look very far beyond the glass
they're enjoying, and that's fine. Others,
others want to know whether the wine has been organically
(39:05):
grown and what was the winemaking process,
because. Not so much because of the, of
the wine knowledge that they want to acquire, but they just need it to be
organic because they believe everything should be organic, which is fine as
well. So they, they may be sensitive to that
aspect and others are looking for more knowledge.
(39:28):
And so, yeah, there are many different segments.
But I think that the response of dumbing down is
because we see that, we read that.
I think it's a little bit, I would say,
the end of civilization. I'm glad you're
(39:49):
so glad you said that. I just wrote that. I just wrote that. I'm telling
you right here in this paper. I wrote civilization as a word. No, but I
mean, great empires have gone down, and most often
by dumbing things down, you know,
I don't think there's a great future for erasing what
makes the richness of whether it's wine or anything else
(40:12):
might. You know, it's kind of interesting because you probably, as you
in Geneva, when you sit with your friends or family and you start having a
nice meal and there's a good bottle of wine there that quite often,
if not all the time, that that conversation ends up
about that bottle of wine. And what's interesting when those happens
here, in fact, I have a big event in my home tonight. We're going to
(40:34):
be exposing some new Armenian wines that have come to America.
Obviously, this event, that's the conversation. But
amongst the regular conversation, the topic
of Wine comes up. And even though there are. Everybody at the
table's got a different level of knowledge of wine, that conversation is not
intimidating by most people. And most people, because of the environment,
(40:57):
you're sitting, having a meal, and you're relating, and there's a lot of
camaraderie there that the intimidation
goes away, regardless of your study of wine. And
the reason I wrote down Civilization is when I was interviewing
Florence Catiard from Chateau Smith Old
Lafitte, they also own a winery in Napa.
(41:20):
I had a similar question, and she said, yes, of course. We think that.
Because it's. Because when you have that glass of wine, it is welcome to
civilization. And. And I go, what? That is so
profound. I hope I can use it. Which I just did. And then there's a
movie out that I saw on the plane recently. It's a French movie. It's about.
I think it's about the first restaurant ever or something, or the first chef that
(41:41):
broke away from. From. And it's a woman chef at this point.
But anyway, the. The protagonist in the
movie says, wine is the intellectual part
of the meal. And I thought that was very profound.
So White Clock cannot be the intellectual part of the meal.
A tetra pack, wine sold, or bag in the box.
(42:05):
Imagine this, Mark. You're sitting at dinner and you've got this big box on your
table, and you pull the spigot out and you put your glass under. And that's
supposed to be the intellectual part of the meal.
Yeah, but sadly, I think the.
The word intellectual is. Is. Is. Is negatively perceived
by
(42:27):
a segment. Whereas I think the. There's
joy in the intellectual conversation. And
all the tastings I organize because
I entertain my clients, I do tastings
for institutions, different
formats, and people enjoy
(42:50):
drinking and tasting what I'm serving. But
people like to talk. People enjoy the conversation.
They want to listen, to participate. And some of the
tastings I do in my cellar, I can't kick
people out because. Not. Because they. Obviously they're enjoying the
wine, but they enjoy the conversation.
(43:13):
And this is what wine is about. Right. So if. If there's
nothing to say anymore because everything is dumbed down,
where's. Where's the conversation going, you know? Yeah, it's a
really good point. It's a really good point. And I was annoying to see
that word. We're gonna have to dumb down wine. Dumb it down. What is that
saying about the people you're dumbing it down to? So that's
(43:35):
another point. Right. You know, in the investment world,
I'VE had some interesting people on the show. And I got a text not too
long ago from a. Actually one of my good clients who is a great collector.
He's got one of those sellers where you put your thumb on the thing and
the door opens. And whenever I find an interesting vintage that comes our
way or offer, I'm offered something from one of the suppliers that's
(43:56):
unique. He usually takes up. Takes me up on it. But he
sent me a picture of a recent dinner in, I think it was
Singapore or Shanghai. And he's with Rudy, you know,
the famed fake wine guy. And you know,
I don't know if you know the whole story, but he is. The initial
chink on the wall when he got busted was because he produced an
(44:19):
1890 something burgundy in the chateau.
Confessed they had never made that vintage. Yeah. And he got turned in. Right.
So do you, do you. And then I had. Richie
forgot his first name from Sotheby's on the show. And we've talked about
how Sotheby's might vet wines. And
(44:40):
he admitted that probably some fake wines got through even
their scrutiny. And there's a lot more forensic
opportunities now than there were in the old days to detect
fake wine. But do you subscribe to
this NFT and blockchain
management of vintages with. Not only with wine, but Scotch and
(45:03):
places, things like that? Not really.
I think, I think all these. I think
as long as there's not, I would say, a globally
adopted protocol where all
producers agree on, you know, the
methodology of authentication.
(45:26):
You know, if you use a blockchain, you have to use it from
out of the gate. Right. If you
buy a wine that has been traded two or three
times and you put a, you know, you put your transaction on the blockchain, it
doesn't change the fact that before you don't know what happened. Right. So it's.
(45:46):
And so then if you
acquire today only
exclusively wines that are
blockchain certified from day one today,
while you're closing the door on the majority of the wines you would want to
drink. Right. So it's a bit of a.
(46:08):
I would say it's too young of a process
to be able to implement it across all valuable
wines. And. And again, we're talking about.
Yeah, there would need to be a commonly
adopted protocol, but try to get the French to agree
amongst themselves. That's a tough one. Trying to get Italians
(46:30):
in French to agree on. Forget it.
It's not happening. Well, I think it's interesting. Sorry to interrupt you. I think
it's interesting. I think there's certainly some value to it. At least
it's stored properly and there's provenance there. But like you
said, as soon as it is released from that, then
all provenance is gone. And you have no idea. And there are
(46:53):
limited number of winers that have taken up these blockchain companies
to supply, supply. Plus it's sitting somewhere that you're not sure
always about what it is. And the way I've handled it here,
I think some people would have a great level of confidence and
comfort using a Blockchain Company and
NFTs to protect their wines. That's perfectly fine.
(47:16):
My strategy here in Los Angeles has been that I only do
business with really reputable known
Bordeaux houses that, that are import. Like there's one here called
Duclos, which is part of the Moex group. And I know
those wines are coming direct from the wineries because of
the, the trust factor, which is almost the same thing. Right.
(47:38):
So that's important. Which, which kind of scares me
a little bit. I did buy some Margaux a few years ago and I'm. The
more I have discussed this, the more I realized I didn't buy
it one of my regular suppliers. And so
I have to assume it's real just because of the percentage, you
know, play on that. But I didn't get it
(48:01):
from Duclos, one of the guys I know. I mean, you would expect Southern Wines
and Spirits, the largest supplier in America, to only have
documented wines as well as R, D, C and some other players.
But I thought it was an interesting feature
and different than other blockchain ideas. But
I can see people saying, look, I feel comfortable with it. They
(48:23):
pay good money to do that. You have to pay off site storage, do that.
Do most of your collectors have their own sellers that they store in
or do you have them in Bond somewhere?
They do both. Because most have, I mean, all wine
investors are wine lovers. So they have
either a seller at home, small or large.
(48:45):
Depends on. And they have. And when they come
to me, they actually open a storage account, professional storage account in Bond, so that
they have the, you know, they have the two sides. Yeah. You know, it's interesting.
I had not. I was not a collector. I had no interest in
collecting. I was just, I was a vendor. I. I never
had a seller of my home. I had a warehouse here with 30 or 40,000
(49:07):
miles at any given time in it. And so what did I need a seller
at home for? Right. And. But when I sold the company
two years ago and during COVID since we did so well and people, you know,
everybody was buying everything. I, I started to order some
interesting wines, a lot of Grand Cru Burgundies and some classified growth Bordeaux
and all kinds of interesting things. And the buyer of the company
(49:29):
wanted none of it. They want none of it. They like. No,
whatever you have that was for sale through the club subscription model.
We'll take that. Which my average cost on those wines was
three to four dollars. And we're not
interested in anything in your cellar. And I built a cellar here at the office,
which was, you know, obviously temperature controlled. Etc. So now
(49:52):
I was going, whoa, I have like almost 3000
bottles, 2800 bottles of wine that
I had to find a home for. I don't have the space of my
home. I was able to build a cellar that would hold about
900 and now I have still about
1800 here at the office under
(50:13):
temperature control. And I'm not complaining. No, don't consider
not complaining. But it's been fascinating to.
It's kind of interesting. I never would have. Would have had a. Let's just say
the average bottle of wine that we drink at home is probably over a hundred
dollars. That would have never occurred during my days in
business. Just. I wouldn't have done it. I sold wines that
(50:36):
were $20 and that's what I had. But it's fascinating to
taste through these things as I can now.
I paid for them a long time ago, so it's, it's okay.
But I was interested to, to know how your, how your customers typically do
that, because I do. I had this conversation yesterday with this, this
gentleman who was on the show who's a brilliant, brilliant man, I sort of
(51:00):
mentioned at the beginning of the show, who just invested $300 million
in Salt Dominion, in some vineyards and some. And. And
mentioned to me he threw away his first vintage. Just tossed it. Didn't even sell,
didn't resell the juice, just tossed it.
And I thought, well, how, how committed,
you know, to this industry to invest that kind of money? I mean, what
(51:22):
do you think? You're never going to get it back? Probably, right?
Probably. Probably a good chance of that. So what's the next step for you as
you navigate this industry? Are you.
Branch, you said you put on tastings and you invest
collectors, you invite. Is there any on Horizon
you're looking at venturing into in this industry or just perfecting what
(51:43):
you're doing? Yeah, there's these
various projects, discussions going on,
and there's a lot of appeal from
the financial areas in Geneva, Switzerland,
banking world. A lot of interest
(52:04):
for them to offer wine investment to their clients
for a variety of reasons, status reasons and
diversification, and also as a way to offer
something else than a dot on. On a trend line.
So it's also. That's what they've been telling me. I'm not
(52:25):
inventing. We don't have any. We basically. We don't have
anything sexy to sell to our, our clients. You know, we're
always saying the same, you know, mixture of stocks, et cetera, et cetera. So
if we could offer some, some wine investment, you know, that would be helpful because
that would provide some, you know, some appeal and. But it's,
(52:45):
but it's difficult to
standardize and scale collections of
very rare items. You can build
funds with a lot of Bordeaux because they're produced in large
quantities and they're rather liquid, but then the performance is
not that great. So that doesn't work either. Right. So
(53:08):
there's discussions in that direction that might be one of the
next projects to come. Come alive. Yeah, rather. Was
that rather liquid? A pun? Say again?
Was that a pun? That Bordeaux investment's rather liquid.
So actually, I'm going to finish with this thought
and we'll just discuss real fast. We're already out of time. But there's
(53:31):
been, over the years, through my career, one in particular
in America and California in particular, this group of,
of of investors, Well, I guess they were investors
that were going around, they're buying pallets and pallets of things and nothing, nothing of
any pedigree, just wines that they expected to go up in value
(53:52):
as they store them. And you paid these people to buy these wines for you,
and then you would, they
would hold on to them for you, and then they would claim that they would
resell them in the future to restaurants
or retail. And it, it failed
miserably. In fact, it failed so much that at the Wine of the Month
(54:13):
club, I was able to make a fair amount of money buying
them back from them at pennies on the dollar, what they paid.
And here I am now offering these incredible invested,
incredibly aged wines that were not of any pedigree, but just nicely
positioned as a quality product.
Because people bought off on this idea of just
(54:35):
buying wine, aging it and it getting more valuable.
And nothing can be further from the truth, at least at
this, at least this level of wine. And here
we are. You're able to show,
and I think wine. Didn't wine outperform the stock market?
It did. Yeah. I did. For
(54:59):
especially during the 2016, 2022 period.
But what is really important is to understand that
there's no magic. Every asset evolves by
cycles. There are periods that are more favorable, others that are less
favorable. It's a little bit more volatile
(55:20):
than one would think. The fine wine investment market,
which is a good thing because it offers windows of opportunity
to the space. And also I think that the
most important thing to have in mind is that investment grade wines and those that
really have the potential to perform are
so, so small in terms of volumes versus what
(55:43):
is produced at global scale, that just to piggyback
on that story you told, you just shared is,
no, you cannot just go out and buy pallets of wine and Hope that
in 10 years you'll sell them at a better price. There's
most wines, the vast majority of the wines,
they will not take any value over 10 years.
(56:06):
It's just because there's too much volume, because
there's no global traction, because it's not of a
certain pedigree. It doesn't have status for many reasons.
So picking the right items
is quite a complex job
and it requires a lot of knowledge of data.
(56:28):
And even there, you can also go wrong.
We're going to leave it that great thought and what a pleasure to have you
on the show and have a chance to talk about this segment of our industry,
because it's an important one and it brings value to the industry
and to your client base. It's been fascinating. I hope we can do it again.
Likewise, Paul. It's been enjoyable. Thank you so much.
(56:52):
I look forward to more controversial posts. Yeah, yeah, there'll be a few.
Yeah, there'll be a few. There'll be a few. I have some ideas coming up,
so. And I love them. I mean, it's great talking and seeing everybody
jump in. It's good. Yes.
Cheers. Thank you, Paul.
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