Who is this Rothschild guy anyway?

One little bit of history that I find interesting (and was thus hoping to find in the Rothschild case from last week) is the story of the Rothschild family.

The case mentioned a bit on the family's history, which led me to read up on them a little bit.  I thought the following two bits of history really stand out and demonstrate how impressive (and diversely skilled) of a family the Rothschilds were and are today.

1) The family dates back to the 18th century, where they initially built a banking empire, establishing banks in nearly every major nation in Western Europe.  Ultimately as the family network grew larger with every generation, the family started to split off their respective fortunes into separate empires.  Obviously certain parts of the family focused on winemaking, but others continued working in banking and Rothschild & Co is a major investment bank today.

2) Yes, Lafite Rothschild is one of the best known Bordeaux wines in the world.  Care to know the name of the winery that they are neighbors with?  Mouton Rothschild!  Yes, Lafite Rothschild and Mouton Rothschild are two separate wine labels originally founded by different members of the Rothschild family, both of which produce wines among the best (and most expensive) in the world.  A few years ago I had the opportunity to visit the Mouton Rothschild chateau, and I got to learn a bit about that side of the family.  Not only did we get to walk through the winemaking rooms (we were there in November, so slightly after harvest), we also got to walk through the museum (yes, there is a museum there) and see both an extremely odd art collection and an interesting exhibit on the history of their labels.  Mouton Rothschild is (I believe) unique in that they produce a different label for their wine each year, and commission a world-class artist to produce the work for that year's label.  Past artists include David Hockney, Jeff Koons, Salvador Dali and Pablo Picasso.  This is not surprisingly something they are quite proud of and have tons of information on all the labels on their website: https://www.chateau-mouton-rothschild.com/label-art/discover-the-artwork


Here are a few pictures I could dig up from my visit there:

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https://en.wikipedia.org/wiki/Rothschild_family

Port Tasting in Porto

This past summer I traveled to meet some friends in France and Portugal. While in Portugal I acquired a taste for Port, and who wouldn't! It is deliciously sweet and alcoholic. A fortified wine, Port was actually originally invented by British merchants in the early 1700's, during a time of war with France. The British turned elsewhere for their wine, but found that to make the wine last during the trip back to Britain they had to fortify it, and thus Port was born! The Port houses, which line one of the banks of the Duoro river in the city of Porto, are subsequently almost exclusively British-named brands that were really just exporters at one point, such as Dow, Graham, Sandeman, Cockburn, Taylor, and many more. The Port houses in Porto have also figured out the commercial side of tastings. Lined up next to the river, these producers/shippers provide tours of their facilities, education on the making of Port, and of course, tastings. They make it easy to try the main categories, Ruby, Reserve, Rose, Tawny, and White port. Though they do quite a good business with tastings and bottles you can buy in their facilities, the Port industry has a relatively robust export side as well. In 2018 almost 10 million barrels of Port were shipped abroad for a value of EUR 450 million (annualized figures based on  https://www.ivdp.pt/en/docs/StatVendas/Porto/Table%201_2018.pdf figures). Sweet, very alcoholic, and relatively affordable, Port has become a favorite of mine, if only as a special treat.

Jews and Wine

I come from a giant Jewish family. Something that's always been interesting to me is what I've called the "wine conundrum" in our culture. Wine is an integral piece of the Jewish story - we drink it every Friday for Shabbat, you're instructed to have at least 4 glasses on Passover (and you literally put wine on your prayer book during this holiday), and for Purim, according to the Talmudic tractate Megillah, "a person is obligated to drink on Purim until he does not know the difference between 'cursed be Haman' and 'blessed be Mordechai.' "

So why, then, am I one of three cousins (out of a total of 20+, the other two being my full-blood siblings) that can have more than a glass of wine without getting sick and/or falling asleep? And did you know that Israel has one of the lowest incidences of alcoholism in the world?

It's likely because of a genetic mutation called ADH2*2, which increases the levels of acetaldehyde in your blood stream. Acetaldehyde is a toxic chemical produced when your body metabolizes alcohol - and it causes some pretty nasty effects like headaches, nausea, and flushing ("glow"). Though not exclusive to the Jewish population, about 20% of Jews have this mutation, and the effects are strongest for Ashkenazi Jews (aka my family). 

This mutation is very rare among those with white European descent. Fortunately for my wine-drinking habits, my father is 100% not Jewish, with a Certified Eastern European Liver (pretty sure that's the official scientific term for someone as far away from the ADH2*2 mutation as possible). I confirmed with the 23andMe test that I do not have this mutation, and process alcohol normally.

Thank goodness, and l'chaim!

The juice was worth the press

In 1985 - Kip Forbes, of the Forbes Magazine family, purchased a bottle of wine at auction. Seemingly, this wouldn't be noteworthy as bottles of wine are purchased all the time, however at the time this was the most expensive bottle of wine ever purchased at auction - it sold for £105,000!! Adjusting for inflation, that is ~$367,000 in 2018 US dollars. So why on earth would a bottle be worth so much?

My dad worked for Forbes magazine for essentially his whole career, and working in the finance department was the man responsible for signing the check for this historic purchase. The way he told it, he was 'along for the ride' as Kip was insistent on buying this wine. The thing that made it so special was the inscription "Th.J" on the bottle - oh and that it was also a Lafite! It was a 1787 Lafite allegedly from the estate of President Thomas Jefferson himself. My dad said he had to close his eyes as Kip bid the price higher and higher until he finally purchased the wine. Upon leaving the auction house, my dad called Malcolm (head of the family and Forbes magazine) and told him the price they paid for the wine. Forbes was a huge collector of artifacts, but this seemed to be inexplicable. So, tails between their legs, Kip and my dad boarded their plane to head back to New York from London.

By the time they landed, however, the free press that the family (and magazine) had gained from this absurd purchase had paid for the cost of the wine many times over! Kip and my dad were praised by Malcolm for their genius marketing strategy. The wine, to this day, has not been opened but some controversy has grown around it. There are allegations that the wine is a fraud and not related to Thomas Jefferson whatsoever.

Is WineDirect here to stay?

After reading the WineDirect case and for several days after I couldn’t get the following quote out of my mind. “By now, I thought we would have a $200 to $400 million business. I was wrong about the growth rate. We’re in the business of enabling but these are premium and ultra-premium wineries. We’re in the luxury business, which is a smaller business and a smaller market,” Waechter said. Based on what we discussed in class and what we read about New Vine Logistics I found it hard to believe that even being a $200mm-$400mm business was a goal, as opposed to something much bigger.

Upon looking into the details of the 2019 Direct to Consumer Wine Shipping Report, I found that consumers spent $3bn on DTC wine shipments in 2018, up from $2.69bn in 2018 and that wineries shipped over 6 million cases of wine in 2018, up 9% from the prior year. What I’m trying to get at is that I’m generally surprised that WineDirect isn’t the Amazon of wine, expanding distribution facilities and enabling consumers to legally order most wines on demand. While it will be interesting to see if Amazon decides to make a push into the market, which at the moment seems somewhat unlikely, it would be a great story to see WineDirect continue to grow into a large business, especially with the colored past the original company experienced.

Claret or Port?

Our DBR case stirred memories of my studies in England. After formal dinners, if I was lucky enough to be invited into the Senior Combination Room (where the college fellows retreated to drink and chat), I would be offered my choice of Port or claret. I didn't know much about either at the time, but they were clearly very different in appearance and taste!

Claret, as it turns out, is what the British call red Bordeaux. (And that means you should pronounce it with the "t" at the end, because the British refuse to pronounce French correctly.) The word dates back to the 1100s (!) and originally referred to light red wines. (It comes from the French word "clairet," used for the same purpose.) At the time, those light red wines came from Bordeaux, thanks to a cozy England-Bordeaux relationship established when Henry II married Eleanor of Aquitaine (1151). The term stuck even though many reds from Bordeaux are no longer light.

Of course, the British and the French didn't stay great friends forever. By the late 17th century, things weren't looking good between the world's super-powers. British wine merchants went searching for alternatives to French wines. Port -- a deliciously smooth, sweet wine fortified with grape spirits, from the Douro Valley in Portugal -- was their best find. (It didn't hurt that it was cheap to import, thanks to a 1703 treaty between Portugal and England, and more stable on sea voyages than unfortified wine.) Port, in its many delicious and varied styles, remained a popular beverage even after trade between Britain and France re-opened.

So that's why there were two delicious after-dinner wine options at college! Claret, as far as I know, is a safe choice with no arcane traditions surrounding its consumption. But if you ever drink Port in a traditional setting in England, there are a few etiquette rules you should be aware of: (1) the Port is passed around the table to left, and it should never stop being passed until the decanter or bottle is empty; (2) if someone forgets to pass the Port, the correct way to remind them is to ask, "Do you know the Bishop of Norwich?" They will probably take the hint, but if they give you a blank look, you may add, "Terribly nice fellow, but he always forgot to pass the Port!"

Sources:
Karen MacNeil, The Wine Bible, p. 146 and pp. 511-527
www.decanter.com/learn/advice/what-is-claret-wine-ask-decanter-378401

Mile High (Wine) Club

United CEO Oscar Munoz was sitting in his office on the on the top floor of 77 West Wacker Drive in Chicago (probably) when he heard the worst news a CEO can hear: “We’re running out of wine.”

United had recently introduced “Polaris,” its new wildly-overhyped  ambitious Business Class product. Included was the opportunity for front-of-the-plane travelers to enjoy a “wine flight” - a set-piece sampling of three different wines at the same time.

Perhaps unsurprisingly, serving 3x the amount wine at the same time led to approximately 3x greater demand for wine than the airline expected - causing global shortages in wine stock across United’s fleet.

United, along with the rest of the airline industry, takes wine seriously. Doug Frost is one of the sommeliers retained by United to craft their wine selection - and is one of only four people in the world who is both a master sommelier and master of wine.

Airlines are massive players in the global wine market. The OneWorld alliance of airlines served 30 million bottles of wine and 2.5 million bottles of Champagne in 2017. Emirates has one of the most acclaimed wine offerings in the skies - and has spent over $780 million on wine since 2006, with over 3.8 million bottles in its cellars, and regularly serving famous French wines like Chateau Lafite on its A380’s. They often buy classic French wines directly from producers through the “en primeur” system, even buying out entire vintages and holding them to pour years or even decades later.

National airlines can play a critical role in their country’s wine industry. Quantas invests over $25 million per year in the Australian wine market, with all of the wines on its wine list coming from the Land Down Under. Airlines can also “king-make” certain wine brands by choosing to showcase them onboard - BA’s choice of Bolney Blanc de Blancs as its first white English sparkling wine in 2016 rocketed the small British winery to stardom.

Unfortunately, these fancy expensive wines go to the folks in Business and First class, and we don’t all get to sit up front. But that shouldn’t leave your lowly economy passenger high and dry. Here’s a quick guide to pairing more generic wine with the standard fare we get served in the cheap seats:

Peanuts - the classic roasted peanut, as at-home in 33B of your 737 as in row B seat 33 of Yankee stadium. Did you know not one but two of our 45 presidents were peanut farmers? The saltiness and meatiness demand something rich and full-bodied - I’d recommend going even off-dry, perhaps a nice port. Picture it like an adult peanut-butter-and-jelly.

Pretzels - since peanut allergies exist, some of the more humane airlines that aren’t trying to cause immense suffering on their planes (which seems like few of them these days) are switching to pretzels as your in-flight sustenance. Though inferior to peanuts in every way, pretzels can still pack some interesting notes - sorta-yeasty-sweet, sorta-salty, sorta-sour. So have no fear if your plane lacks legumes - pair your pretzel with an off-dry riesling. The Bavarians know what they’re doing.

KIND bar - you’re smart. A forward-thinker. Never caught unprepared. You carry a dark-chocolate-cherry-cashew KIND bar that you paid $3 at a Starbucks for once with you at all times. Well you’re in for a treat. Snag a glass of Zinfandel. The black-pepper spiciness and alcohol and leather and cherry will absolutely stand up to your bar. Also goes great with a smug sense of superiority.

Crying baby - to be clear, the implication is not that you’re eating the crying baby, just that you're trying to pair something to improve the experience. Wine has no power here. Mini-bottle of Jack Daniels.