I am writing this from my table at the Duckhorn Winery in sunny Napa, California. One of the joys of living in the San Francisco Bay area is that I can pop up here on a slow afternoon and pick up members' bottles from the dozen-or- so wine clubs to which I belong.
Duckhorn does this particularly well. They boil up 200 fresh Maine lobsters in giant vats, and for good measure throw in a few hundred pounds of shrimp, potatoes, clams, corn, onions, and garlic cloves. It is a version of west coast cioppino and is definitely not a "kiss your girlfriend" kind of meal. They then dispense with plates and cutlery and dump the entire spread straight on the table, where you are expected to eat with your hands.
Many locals are unfamiliar with lobsters and were clueless about how to eat them. So I whipped out my Swiss Army pocket knife and became a one man assembly line, shelling the crustaceans by the dozen for my neighbors. During the feed, winery staff liberally top up your glass with their finest vintages. It is definitely an event that requires a designated driver. Despite wearing long, flowing aprons, you have to run your clothes through the washing machine twice to get rid of the smell by the time you get home.
Seated nearby were the captains of local industry, the venture capitalists, private equity investors, angel investors, and the CEO's of the high-tech pantheon -- the people who make this place run. I conservatively estimated the market capitalization of the table at $2 trillion, about 10% of the U.S. total. But discussion of business is forbidden. It is all about the grape. I am not going to pick up any tips about the next iPhone release or hot stock offering here.
I have had a long and fruitful relationship with the grape that spans six decades. My Italian father taught me that wine is a food and religious implement. Our Southern California ranch grew table grapes for Safeway. At the London office of Morgan Stanley during the 1980's, the firm was stuffed with nouveau riche social climbing yuppies hungry to learn more about the nectar of the gods. Who better to appoint to run the in-house syndicate than the one Yank from California?
I quickly became the largest private buyer of wine at the Sotheby's auction house in London, my dominance lasting five years. This was back when the first of the Lloyds of London insurance scandals broke, forcing unfortunate syndicate members to sell century old wine cellars to raise cash. My specialty became mixed cases which lack the investment value of single cases, and could be bought for pennies on the dollar. My commission was one bottle per case, and I'm talking a 1985 bottle of Lafite Rothschild, a 1962 Rominee-Conti, or a 1918 Chateau Yquem.
I was befriended by Sotheby's wine department head, noted expert and author, Serena Sutcliffe. She set up private tours for me at every major wine producing region of Europe, where first growth owners showed me around 150-year-old wine caves and generously dispensed their "wine libraries" by the glass. The end of each weekend trip found me slinging six cases of France's, Italy's, and Germany's best liquid assets into the back of my twin engine Cessna for immediate transportation back to my London cellar.
My greatest coup came when the Czar Nicholas II's private wine collection came up for sale right in the middle of a vicious recession. I was able to load the boat at $25 a bottle with vintages like a 1915 white port and a 1907 Madeira. I have been drinking them ever since and still have several cases. Hey, the Czar didn't drink it and look what happened to him. He was executed by firing squad in 1918!
When I moved back to San Francisco and my hedge fund performance went through the roof, I fell easy prey to sheer hubris. I bought my own Napa vineyard and planted it with pinot noir just so I could plaster my own name on the bottle. It is a road well worn by the successful in finance here.
But the time I did a full accounting and added in all the costs, I figured out that I was paying $1,000 a bottle for mediocre wine. And I really got sick of drinking pinot noir. I came to the conclusion that I was a better wine consumer than a producer, and flipped from the offer to the bid. I sold the property at the top of the market in 2005 along with the rest of my real estate holdings. That brings me to the wine club dilettante that I am today.
I took a few minutes away from the bacchanalian celebration to talk to the manager and get an update on the market. It has been a perfect year for California's premier wine growing region. While the global-warming-driven draught decimated competing vineyards around the country, it created perfect growing conditions at home. Cabernet prices have soared from $1,000/ton at the 2009 crash bottom to $5,000 today, and the quality of the 2012 vintage is the best ever.
Vineyard prices are rocketing as well, thanks to a flood of money spewing out from Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and more-recently Facebook (NASDAQ:FB). However, land prices are still well down from the highs seven years ago.
I said thanks to my friend and said I'd see him again next year. I then staggered back to the feast for another lobster and glass of sauvignon blanc.