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Winebits 346: Lawsuits, drunks, cheap wine

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wine lawsuitsGet off my horse: Chateau Cheval Blanc, the top-rated Bordeaux producer whose wines can cost thousands of dollars a bottle, is suing Domaine du Cheval Blanc, a small family-owned Bordeaux winery that hardly anyone has heard of, claiming the latter must change its name. The Wine Curmudgeon mentions this because of his interest in wine lawsuits and their inherent foolishness, in which the biggest companies pursue legal action for no other reason than they can. Because, honestly, who would confuse this wine with this wine? But not this wine with this wine? Wine-Searcher.com reports that Chateau Cheval Blanc, which lost the case once, won on appeal and has returned to court to force Domaine du Cheval Blanc to pick a new name. The story is complicated, as most are for those of us who aren’t trademark attorneys, but the upshot is that it looks like Chateau will win. And people wonder why I get so cranky.

Turn up the Beethoven: Commit lots of alcohol-related crimes in London? Then you’ll be forced to wear ankle tags that monitor the levels of alcohol in your sweat. Yes, it’s all very “Clockwork Orange,” but London’s mayor, Boris Johnson, has other concerns. Drunks deter “law-abiding citizens from enjoying our great city, especially at night.” The impetus for the idea? The success of similar ankle systems with drunk drivers in the U.S. So glad the British can learn something from us, especially after all they have given this country.

Drink that cheap wine: English wine consultant Jerry Lockspeiser writes in Harpers, a British trade magazine, that consumers are perfectly happy buying cheap wine, noting that there is no correlation between price and wine people like. Then he asks: If consumers are happy, why does the wine business try so hard to sell them expensive wine? The Wine Curmudgeon practically swooned when he read that. The interesting bit, of course, is the question, which he answers in two parts: That the business is convinced it will make more money off pricey wine, which may or may not be true, and that they’re snobs: “… we pity the poor souls who have not see the light. We know, because we are chosen.” I should send this guy a cheap wine book, no?

When cheap wine tastes cheap

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cheap wine tastes cheapThe quality of cheap wine is better than ever, but that doesn’t mean that all cheap wine is worth drinking. Or, as the erudite Lew Perdue has noted: “Crappy wine holds back the wine market far more than any other factor.”

So how can you tell when cheap wine tastes cheap?

• Quality is not about style. Sweet wines should taste sweet; that’s their style, and whether they’re poorly made has nothing to do with whether they’re sweet. Dry wines that taste sweet are poorly made, no matter how many cases they sell. The Wine Curmudgeon doesn’t like alcoholic, over-the-top zinfandels, but that’s a style preference, not a reflection of quality.

• Bitterness, off-flavors, and green or unripe fruit, in both red and white wine. This is not nearly as common as it used to be, and is rarely seen in California anymore. But it still happens with imported wine.

• Missing tannins in red wine. The winemaker uses technology to remove tannins to make the wine “smooth,” because a focus group said smooth was a desirable quality without actually defining it. In this, tannins and tannic acid are perhaps the most misunderstood part of cheap wine. Quality red wine, at any price, needs tannic acid for structure and balance, and when the tannins are right you may not even notice them. But it’s usually too expensive or too much trouble to deal with tannins properly in $10 wine, which is why so much of it is astringent. So the winemaker takes the tannins out, and you get a flabby, boring wine.

• Fake oak. Again, this is not a style preference, but a winemaking decision, sometimes used to cover up poor quality grapes. If your chardonnay smells like Adams Best vanilla, then the oak is there because something else isn’t. Also, be wary of red wines that promise chocolate cherry flavors, also an oak trick. If producers could make $10 wine with those flavors, why would anyone need to buy $100 wine?

• Sweetness for sweetness’ sake. The best sweet wines have something to balance the sweetness, in the way that iced tea with lemon and sugar is balanced. They’re not supposed to taste like Coke. What made this $7 Sara Bee moscato so enjoyable was not that it was sweet, but that it had a little orange fruit and some bubbles to complement the sweetness. Sweet wine that is just sweet is as about as cynical as winemaking gets.

Image courtesy of Cheap Wine Records, using a Creative Commons license

Treasury Wine Estate’s plan to avoid a hostile takeover

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Treasury hostile takeoverThe Wine Curmudgeon mentions Treasury’s scheme for two reasons. First, and most importantly, it doesn’t seem very sustainable. The troubled Australian multi-national wine company, whose holdings include California’s Beringer, has been losing more millions than most of us have socks.

Yet, despite its problems, Treasury wants to boost business to fend off a hostile takeover from private equity firm Kohlberg Kravis Roberts, which tried to buy Treasury earlier this year and made another offer this week. The second offer was a little higher, but probably won’t scare anyone.

Treasury’s anti-takeover plan features selling heavily discounted wine refrigerators to customers in Australia. The Brisbane Times newspaper reports that the company’s new boss “labelled the wine cabinet promotion the biggest consumer-facing promotion ever undertaken by the company.” Which should tell us all we need to know about Treasury’s lack of marketing ability.

How does it work? Buy six bottles of a Penfolds Bin wine, which cost from AU$30 to AU$80 a bottle, and you can buy a AU$650 wine fridge for AU$200. In other words, buy six bottles of AU$30 Penfolds Bin 51 Eden Valley riesling and the refrigerator and pay AU$380 — just 58 percent of what the refrigerator would cost by itself. Given retail discounting, in fact, you could probably get the fridge for at least 50 percent off. Is it any wonder that Treasury wrote down AU$260 million earlier this year and fired its CEO?

The second reason I mention this? The Wine Curmudgeon, financial genius that he is, bought 100 shares of Treasury stock in hopes KKR (as we high-flying investment types call Kohlberg Kravis Roberts) would make another, much higher offer for Treasury. My retirement to Burgundy never seemed so close.

I paid about what KKR offered the first time, so news that Treasury seems to be throwing away money on the refrigerator promotion is not welcome. The company is reducing inventory and margins to increase cash flow, which will not boost its value or make me rich. KKR’s second, not much higher, offer confirmed this.

In the wine business, the old joke always seems to apply. Or, as one actual real-life financial type told me: “With a little luck, you might get a nice bottle of wine out of this.”

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