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The Screaming Secondary Wine Market

screagle_sb_final.jpgOne of the most difficult winery mailing lists to get on in the world is most certainly Domaine de la Romanée-Conti. Not only are the number of bottles that the domaine has to sell minuscule, but permission to be on the list is typically only granted to people whom the domaine and its agents believe are unlikely to simply turn around and resell the wine. I happen to know this because a friend of mine was recently offered such a coveted position, and when, flabbergasted, she asked why she'd been given this opportunity, the person making the offer simply said, "because we don't think you're the type of person to resell them."

Director Aubert de Villaine's interest in trying to limit the secondary market for his wines stems from two primary objectives. The first is to try to keep his wines from becoming a currency rather than a beverage. Simply put, he wants people to drink the wines and enjoy them. His second goal seems to be a desire to reduce opportunities to counterfeit the wines, with the idea that the fewer times they change hands, the less likely they are to fall in to the wrong ones.

De Villaine's extraordinary efforts are far from common in the wine world. Precious few wineries produce wines that sell for significant multiples of their release price on the secondary market, and far fewer still have any objection to this if it is the case. To some, it's a mere curiosity, to others it's a point of pride.

Had anyone asked, I would have put Napa winery Screaming Eagle into the latter camp. That is, until last week, when news emerged that Screaming Eagle was declining to release additional quantities of its new Sauvignon Blanc because despite requests for its mailing list members to buy solely for their own consumption, the wine quickly found its way to the secondary market at about ten times its release price of $250.

Let's pause here for a moment while we insert the sound of a record needle being pulled off the disc, and let everyone pick their jaws up off the floor at this kind of pricing for a California Sauvignon Blanc. Yes, it's utterly ridiculous, bordering on the obscene. But now that we've all moved past that, let's contemplate Screaming Eagle's reaction to seeing its $250 bottles being hawked for so much more on the web. They've decided to stop offering it to their mailing list members, and sell it under much more controlled conditions.

Irrespective of whether we associate the initial pricing of the wine as a mark of hubris, or merely the pinnacle of capitalism, I find the winery's decision to stop sales of the wine quite praiseworthy.

While not everyone might agree, I think wineries like Screaming Eagle and DRC and anyone else whose wines sell for multiples of their release prices have a responsibility to try to keep their wines from becoming purely trophies. There's only so much they can do, of course, but to the extent they can take measures like Screaming Eagle just did, I applaud them.

Wine is meant to be drunk, not to be hoarded like bullion.

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Comments (9)

King Krak, I Drink it Orange wrote:
06.29.12 at 10:07 AM

Wait? Screagle released an SB for $250?! Seriously?!!!?!

And people bought it? Seriously???

Tom Wark wrote:
06.29.12 at 12:17 PM


Why do you assume the folks that buy the wine at $2,500 are any more likely to horde it than those that buy it at $2,500?

Additionally, SE notes that they will cut production (not end it) from 600 to 300 bottles with the 2011 vintage and then make it available "for personal consumption and special events, ordered through the winery."

I'm not exactly sure what this means.

However, I somewhat disagree with you on this. Whatever Screaming Eagle or DRC hope for their wines, that's fine. However, I don't think there is any warrant for the idea that wine is necessarily always meant to be drunk and not hoarded. There are any number of legitimate uses for wine beyond their most practical, just as autos that can be driven and paintings that can be looked at, can alternatively be made useful by locking them up and using them as investments.

Alder wrote:
06.29.12 at 4:55 PM


That's not exactly my implication. My implication is that if a wine can be sold for 10x what you pay for it, the day after you buy it, you're likely to see a lot more reselling than drinking. And when a wine has that high a value, those who are buying it on the secondary market tend to treat it more like an asset than a beverage.

My sense of what they mean when they drop production and make it available for personal consumption, etc. is that they'll be pouring it at special dinners that their mailing list members hold at the winery, offering it to restaurants who they know will serve it, and using it at promotional events.

Perhaps you have a different philosophy than I do about the utility of wine. Sure, there will always be people who own fancy cars and don't drive them, buy toys and don't open them, buy comic books and don't touch them, etc. But too much of that and we get into the analogy of someone buying a painting and locking it up where no one can look at it. Art is meant to be seen. Wine is meant to be drunk.

Herman wrote:
06.29.12 at 11:52 PM

Alder- I believe this nuance of the wine trade is actually covered under the commerce clause. And we can thank Chief Justice John G. Roberts Jr. for being deeply pragmatic on this issue.

Tom Wark wrote:
06.30.12 at 6:56 AM


Points well made. However I don't think we are in any danger of to much wine being flipped like this. It's a micro niche thing.

I was working at Winebid.com in hey day of flipping American cult wines before the cult producers really appreciated the extent to which their customers were making a killing. Winebid allowed it to happen instantaneously. Many mailing list customers of SE, Bryant, Maya, Harlan, Grace, etc simply put Winebid.com down as their mailing address and gave us instructions to immediately put the wine up for auction. We had auctions every two weeks.

Most of the cults, as I recall, didn't stop selling. They just raised the price and took more profit...for obvious reasons.

The real story here, however, is not how SE handles future vintages. It's how they reacted by calling their customers "greedy" after pricing their SB at $250. Let's face it, there's very little difference between selling their SB for $250 out of the gates and seeing it resold for $2500 down the road.

DH Stockton wrote:
07.01.12 at 10:42 PM

flabbergast is the verb; flabbergasted is she who. And a who I found most puzzling: offered a place on the list, which bowled her over; or, when suspected of romancing the secondary market was aghast? All the numbers, alas, made perfect sense.

Peter wrote:
07.02.12 at 3:16 PM

Anything made in a limited quantity, be it wine or painting, will have a resale value in a free market unless prohibited by law. If the cults truly wish to stop reselling, they need to increase the quantity produced. I am yet to see two-buck chuck sold at an auction.

doug wilder wrote:
07.02.12 at 9:05 PM

In instances where these types of wines sell at multiples on the auction market I question the worth of a future program to limit the wines to the mailing list only since largely that is the restricted list now who are reselling the wine.

There is no feasible way wineries can do this short of selling the wine directly into the auction market themselves. I think a Napa winery did just that several years ago... Beyond the controversy it would likely cause it would succeed in determining the real market price for a wine for that particular vintage. I know of wineries who have had anti-flipper policies when they have watched their high-scoring vintages triple in price on the open market despite their own escalating price structure. It takes only one 'cooling off' vintage to bring those secondary market offers down to a cost value and with the market awash in supply, the price drops even deeper. That is the nature of any commodity, what is someone willing to buy/sell it for? I think the best route for a winery is to price their product for what they think it is worth. I have not tasted Screaming Eagle Sauvignon Blanc but already am at a loss of what I would expect.

Jasmine wrote:
07.03.12 at 11:59 AM

Wow! That's absolutely outrageous!

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