Interview with Stephen Tanszer

Adviser Q&A


Bordeaux Bubble?


Missy Sullivan,
05.17.02,
1:30 PM ET

	Stephen Tanzer

Stephen Tanzer, editor of International Wine Cellar newsletter, says his greatest fear is catching a cold. "It's like having two broken legs," says the wine critic and writer, who samples and rates more than 10,000 wines annually. "If I plan a tasting trip, set up 50 or 60 appointments, then catch something on the plane and lose my sense of smell, I am completely out of action." (Fortunately for Tanzer, that's only happened once.) His bimonthly newsletter, the first American wine periodical to be translated into both French and Japanese, requires him to be on the road more than 100 days per year. Its online archives feature tasting notes for more than 25,000 wines, all rated on a 100-point scale. Before starting International Wine Cellar in 1985, Tanzer was an editor and wine columnist for Food & Wine magazine and a wine columnist for Forbes FYI. He also authored the 1998 and 1999 editions of Food & Wine magazine's Official Wine Guide.

Forbes: I read recently that it really only costs about $10 to make a bottle of even the best wine--and that any price over $30 is based on speculation, snobbishness and hype. Why is wine so expensive now? And who's making money on it?

Tanzer: The actual cost of making wine varies tremendously, the first key variable being the cost of land. If you're translating your tech-boom millions into a Napa Valley property, then you're going to be paying a premium for land. But if you're running a small French vineyard that has been in the family for generations, and you sell a bottle for $150 to $300 or more, it's highly possible that wine might cost $5 to $6 to make. The cost also includes planting, labor, new barrels, sometimes irrigation. All of these costs become multiplied as importers, distributors and dealers all take a cut along the way. If you lived in France, you could drive down to Burgundy, buy directly from the grower and pay 30% to 40% of what we pay here. That's why investing is tricky. Here we're likely to pay full retail.

After 9/11, you started writing in your market commentary that consumers' wine buying was becoming more modest and that wines had begun chasing consumers, rather than the other way around. Is there a market correction in the making?

I think prices at that point for the most in-demand auction items, particularly Bordeaux, were already off their peaks. A lot of fat went out of pricing after 9/11. Expense-account purchasing in restaurants--a lot of that dried up. People started drinking better-value wines. A lot of the excess went out of the market, and that's not a bad thing.

How would you describe the current auction markets?

There tends to be a single worldwide auction market for the best wines, which are hotly pursued by collectors around the world. The key difference by market is that there is a handful of California wines that have become collectibles, which are less important to London collectors. In London they have a better idea of what these wines are really worth, whereas here in the States, there seem to be folks who want something at any cost. After a crazy runup, Bordeaux pricing has finally lost some of its fat. I would describe that market as stable. But one interesting development: I have seen a small number of limited-production Burgundies skyrocket recently.

Why is that?

Burgundy has always been less important at auction for two reasons. First, historically, the wines used to be very uneven in quality, with only a few good vintages--and they were unpredictable as they aged. Secondly, quantities are often so small. You need a certain level of production to make a market. Whereas a big Bordeaux producer like Lafite Rothschild makes 20,000 cases, many Burgundy producers make only a few barrels of their prestigious wines--translating into a few hundred cases.

But in recent months I've seen freakishly high prices for some of the best-regarded cult producers of Burgundy. A year or two ago, there was an instance of Coche Dury's Corton Charlemagne, a Grand Cru white. A case of that wine from a good vintage sold for $36,000 a case. There are small producers of red Burgundies whose wine get high prices, like Hubert Lignier, whose Clos de la Roche routinely changes hand at auction for $500 a bottle. Why? In most instances, because a handful of collectors want the wine at any price. Then you've got wines by Claude Dugat and Georges Roumier that do tend to appreciate in price if you're lucky enough to get their top bottlings at the official opening price. As far as investment goes, though, I don't see Burgundy predictably going up in price; it's becoming strong, but not consistent.

The 2000 Bordeaux are very expensive, not only because it was a great vintage, but also because of the whole millennial appeal. Can we expect any appreciation here?

To make a comparison: When I bought 1982 first-growth futures, I bought them at $400 a case. For 2000 Bordeaux futures, it's $400 a bottle. It's an extreme example. But if people who haven't bought wine in ten years start calling their retailers and saying they have $10,000 to invest, and what should they buy, that's the same thing as a top in the equity market. It's a sign that the market is overbought. You're going to get excesses when novices start throwing money into these vintages. If people are buying to make money, they probably won't because they're starting so high. If they're buying them to drink, they'll have to wait. These wines don't hit their peak for 15 to 20 years.

What about Bordeaux bargains? Since 2000 was such a strong vintage across the region, isn't there's a lot of excellent wine selling in the $20 to $50 range that will appreciate?

Sure, but these don't tend to be wines that make a collector happy. They're not sexy resale wines at auctions. I like the Sociando Mallet Haut Medoc, which was a steal at its opening price. In ten or 15 years from now, it could be a real ringer. I also like Haut-Bailly from Graves. And Leoville-Barton from St. Julien. There are literally dozens, because the vintage was so good across the board that wines that would be normally be green or thin are still good to drink, cheaper and better even than California.

I never recommend that people invest in wine to make money. Invest in it for future enjoyment and education. Unlike investing in equities, where you could conceivably win with the dartboard approach, investing in wine takes a lot of knowledge. You're not going to accidentally find the right wine. Even if you do a lot of research and identify the right wines, then you actually have to ferret out the bottles. It's not easy.

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Should people be buying wine futures for 2001?

In America we're too obsessed with vintages. We'll pay a huge premium for the right wine of the right vintage. The next vintage may go unsold and have no secondary market--even if it's a good vintage--just because it isn't as sexy, or doesn't catch the imagination. It's healthier to look at it in terms of how vintages differ from each other. Of course, that describes the drinking experience, not the likely investment outlook.

That said, 2001 is a very good vintage, with a handful of outstanding wines, some even better than 2000. But it doesn't make much investment sense unless prices go down significantly from 2000--which are still very expensive by historical standards. If people got 2000 futures at opening prices, then they got good deals. The current prices may have doubled since then. That simply isn't going to happen with 2001. There's just less interest. When the chateaux offer the wines, they will offer more of the production. In 2000, the vineyards only offered 10% to 20% of their production in the first offering, before they got their critical ratings. Once the press machine was in motion, the prices went up significantly and then they released the rest.

You've said that many California wines are currently overpriced and lacking in personality. Which wines do you think defy that trend?

There are a few hotly pursued collectibles in the area of California Cabernet. They are the so-called cult wineries like Harlan Estate, Araujo Estate, Bryant Family Vineyard, Colgin Cellars and Screaming Eagle. Until recently, Screaming Eagle changed hands in the $1,000-per-bottle range, while the rest traded in the $300 to $500 range. Screaming Eagle has come down a bit since then. For people who want to buy great California Cabernet with rising investment value, the exciting thing is to find something you like among the many new vineyards, and get on a mailing list early. These wines tend to be made in small quality, maybe only 300 to 1,000 cases. Most are fully subscribed, so the only place you can buy these wines is at auction if you're not on the mailing list. This is how to look for the new Colgin or Screaming Eagle.

Any top candidates for the next wave of cult California wineries?

Blankiet is one. Verite is another. That's one of the Kendall Jackson properties. The breakthrough there was the 1999 vintage. I happened to taste a bunch of 2001s from properties that make good wines; 2001 will be a great year.

Your fellow critic Robert Parker attacked Robert Mondavi's son Tim last year for making weak-hearted wines, and "ruining" the best winery in California. What's your take?

Parker likes a certain style of wine, and indeed a lot of the market prizes California for wines with extreme ripeness that have a roasted, chocolatey, tannic flavor. Those wines are big and overpowering to food. And none of them has less than 14% alcohol. Parker's point is that these flamboyantly ripe, deeply colored wines are what California does best, and to try to make another style is to not take advantage of the raw materials. Tim Mondavi is saying that the purpose of wine is to accompany food and not knock you out. The question is: Can he make less-heavy wines that are still complex? At the level of his top Cabernets, you're talking about $100 wines made in a more polite, user-friendly style that won't go up in value on the secondary market. And drinkers won't find them any bargain: If they're intended for complementing food, there's an infinite number of fine red wines in the $15 to $20 range to accomplish this goal.

What's happened to the Champagne market since the millennial boom?

Champagne obviously had this huge peak as people bought wine in the fall of 1999. But that means there's a lot out there, and wine doesn't have to be rushed to the market. While the bulk of Champagne is nonvintage--it's blended--I get excited about vintage Champagnes and luxury Cuvees. I'm just not sure how widely available they are. The most important long-established Grand Marques Champagne houses still dominate the market here. When you get out of top retail shops in urban markets, you're not going to find the smaller, more interesting makers like Pierre Gimonnet, Jean Milan and Rene Geoffroy--the so-called Champagne microbrewers. Of the vintages, 1996 is a great one. Not a lot is shipped yet because normally the best prestige Cuvees are shipped six to ten years after the vintage. The other great years were 1990, a very rich, outstanding vintage, and 1985, which has it all: It's wonderfully elegant, has great acidity and real soil character.

Are New Zealand Sauvignon Blancs still a relative value?

With its good climate, New Zealand has the most interesting Sauvignon outside the Loire Valley. And it's somewhat less expensive, too--not cheap, though, since labor there is expensive. But it's a fresh taste, not oaked. I'm also tasting interesting Sauvignons from South Africa as well. Those prices tend to be in the $10 to $15 range, while the New Zealand ones can be had in the $15 to $20 range.

What's your take on South American wines?

Chile is a great disappointment to me. They've lost an opportunity. Fifteen years ago, people were discovering these great, cheap $5 Chilean bottles. Now, the makers have pushed all the good fruit up into their prestige bottlings. But it's hard for them to compete at that level against France and California. Meanwhile, they've drained the more modestly priced level of production of the good fruit. I prefer Argentinian wines. They're more expensive--$20 to $30 per bottle--but the Argentinian Cabernets and Malbecs are more concentrated than the Chilean wines, ripe and slightly rustic. They're real wines, with more character than the more commercial Chilean bottles.

Is there any way to say which will be the next unknown wine to become a collectible? Will we ever see, for example, a collectible Long Island wine?

The problem with the auction market is that it is so conservative, it doesn't seek out the new. The most important trend of the last 20 years is the rise of the California collectible, and the arrival of the top Rhone wines. New categories at auction? At the moment, it's Brunello, an Italian, which has generated a lot of interest in its 1997 vintage. Eventually, that could translate into more of a secondary market for those wines. Previously, that market didn't exist. I'll be doing a comprehensive piece on the 1997 Brunello in the next issue. The problem with Long Island wines, say, or Vancouver ones, is that they're not available outside a certain number of regional markets.

If you could drink only one kind of wine for the rest of your life, what would it be?

Probably a great red Burgundy. In terms of range of aromas and flavors, I could quite easily live on Pinot Noir for red and Riesling for white wine. So much is said about wines tasting so alike today, but at the same time wine has never been better. There is so much great wine being made over the world.

Thanks.

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