Article By: David Singer
TO CELLAR OR NOT TO CELLAR, that is the question. There have been more than a couple beverage programs I have worked with that I've tried to encourage putting away a small percentage of wine to improve their list for the future. More often than not the response has been a financial one in the negative. So I recently decided to investigate this a little further and look at wine worthy of cellaring at its release price and its cost three years later. I hoped to conclude that for retail and restaurants there is a financial argument as well as an incentive for prestige and better client service if they cellar wines before being made available to clients.
My results were a little surprising. I consulted my Harvard MBA business manager (aka my wife), and got a mind-numbing crash course in how to assess the wisdom of an investment. I left that tutorial with a means to counter the impact of inflation and to account for the fact that there's always something else to invest in other than cellared wine. Because this isn't a Doctorial Thesis, the financial argument and research has to be more than slightly simplified. Essentially, if the price of a wine released in 2OO3 now costs 25% more or higher, you should have bought it three years ago. Then I looked at two major regions to see if it would have been a good financial decision to cellar certain kinds of wine.
The first area that I naturally examined was Bordeaux. Certainly one of the most age-worthy wines, Bordeaux has an excellent integration of sales, from En Premier to library sections available from multiple outlets. Using the much sought after, and yes overpriced, 2OOO vintage as a recent benchmark, the results were quite interesting. What wasn't surprising was that the 1st Growths, and Garagistes weren't even available from the distributors. The only way you could get those today is through auction, which would certainly surpass that 25% hurdle.
Other blue chip names were available as of the March 2OO6 issue of beverage, such as: L'Angelus, Palmer, the great 2nd label of Leoville-Les-Cases; Clos du Marquis and Pavie. What was surprising was the difference in the pricing between early 2OO3 and March of this year - namely, that there wasn't one. The prices from one of the main distributors of Bordeaux here in Massachusetts were exactly the same - it didn't even keep up with inflation. Is this an aberration limited to this state? Possibly, the auction prices steadily increase for most 2OOO Bordeaux. As this article is aimed at wholesale buying, it only reinforces the idea that you should buy from the wholesaler. Unless you are buying 1st Growths and cult wines, it's more profitable to buy as needed from the distributors.
Moving on to California also led to some very interesting conclusions. Most of the high-end Cabernets did sell out on release and were not made available again until a library selection was made from the winery itself. That offering of the library selection was more expensive - above my 25% hurdle - than the initial offering, especially factoring in that the selection sometimes had less wine per case with a mix of vintages. What was surprising was that the library selections from some of the wineries then didn't change in value over the next three years. These were notable producers that have proved that their wines do age. This is good news to new establishments trying to create a foundation for their program. Past vintages of California Cabs seem to be available to be picked up and put on your list today at the same cost (or less when you consider inflation) as in the first library selection offering. However, most other varietals weren't available after release: Pinot Noir, Syrah, Zinfandel, and Chardonnay. So if you have a favorite cult producer of these, buying at release in quantity is a sound strategy.
Of course, the financial value of individual bottles is only one angle. The old adage "Sell the Sizzle, not the Steak" applies to this argument - to cellar or not to cellar - and it takes a savvy owner to make a cellar sizzle. The prestige and awards that come with an excellent beverage program, ergo the "sizzle", are elements that are hard to measure. How much business does free marketing from getting a Grand Award give you? I don't know what the dollar value would be, but in my experience, awards are a powerful differentiator. In this age of increasingly informed clients, many look at wine stores that have won "Best of Boston" or check the wine spectator for your award level before choosing where they spend their time and money. Having exclusive wines and deep verticals that can only be built by buying certain wines on release are part of a winning strategy in the awards arena.
So, my conclusion? It pays to cellar when: A you have the ability to cellar top-of-the-line Bordeaux, and B you can short-term cellar for cult producers in California that are not Cabernet. If you are looking at Cabernet, check and see if they have a library program. And sometimes, just sometimes, it is better to sell the sizzle and not the steak.