The Passion Index

We've discussed investing in wine using traditional methods, such as investing in a wine business through the stock market. Yet, there are other methods for investing in wine. Rare coins, luxury cars, and fine art - these are just a few examples of items that make up what some investors call the "passion index". These tangible assets act as direct alternative investments that  - like any other investment vehicle - after purchase appreciate (or depreciate) in value over time. Interestingly, wine is a non-trivial category in this space. It even has it's own exchange: the London International Vitners Exchange.

You might ask, what drives the valuation of a bottle of wine? Essentially, supply and demand - that is, the rarity of a bottle relative to other wines and the shifting demand for it as a collector's item. If done right, parking one's assets in expensive wine bottles can actually be a smart move (as high as 50% returns in some cases, with commiserate risks). However, wine is not a fast-turn or cheap investment. One can expect to wait between six and ten years for a bottle to significantly appreciate. Further, getting started in the wine investment space is not cheap - a first investment costs at minimum ~$8000.

Interestingly, startups have been shaking up these traditional barriers to the investment wine space. Cult Wines, for example, essentially acts as an index fund for wine - spreading participants assets across a diversified portfolio, managing  portfolios towards risk preferences, and insuring bottles. Indeed, if one is knowledgeable about the space, wine investments are certainly not the worse way to spend your investment dollars.

Our reds are too warm and our whites are too cold

The day will inevitably come when wine is taking up so much room in your refrigerator that you'll have to decide between whether to store that next bottle, or your quart of milk. When that day comes, it may be time to investigate giving your wine a special home of its own inside a wine fridge.

After a successful trip to several wineries in the Santa Cruz mountains this weekend (including Ridge! A must see/taste!) I returned with too many bottles and decided it was finally time to invest in a wine fridge myself.

Here's what I found out about them:

1. Size matters. The size of your apartment, that is. These things can be pretty bulky - and typically they are quoted as holding between 18 and several hundred bottles. For our standard living arrangements here in Palo Alto, you should probably look at the smaller end fridges, of between 18 - 50 bottles.

2. Dual Zone fridges aren't totally real for small wine fridges. The idea between dual vs. single zone fridges is for the wine lover who wants to store their reds and whites at different temperatures (vs. sometimes only storing one type of wine). But, when it comes down to the smaller fridges (<50 bottles), the temperature is actually really difficult to control in separate compartments. Vinepair.com spot tested several dual zone fridges and found that the temperature was actually consistent throughout. So, if you're looking to save some money, you could go for the smaller single zone fridge until you have bigger space to upgrade. Just set it to 60, a relatively good temp for both reds and whites.

3. Cost? Typically in the low to mid hundreds for the smaller sized fridges. Expect them to last only a few years.

4. System: Thermoelectric vs Compressor. Thermoelectric is the silent one...and tends to be more expensive...but apparently doesn't actually cool the bottles very well. Compressor fridges are louder (they sound like a regular mini fridge) but almost all sites I visited preferred them. I still opted for thermoeletric, but I'm a sucker for silence.

Mine arrives tomorrow, so if your'e in the market you're welcome to come check it out!

Coffee & Wine

I was on a recent trip to Hawaii (The Big Island), and paid a visit to the Kona region to taste and explore a few coffee farms. One of our visits was Kona Joe, known for its patented growing technique: trellis-grown coffee. Inspired by winemakers, Joe spent years developing this unique growing system to grow award winning beans.

As a coffee enthusiast, this got me thinking of the many similarities of these two beverages:

·       Variety – Just like wine, different types of coffee beans are suited to different terroirs, affecting aroma and taste of the brew.

·       Growing patterns – Wine & coffee are both suited to best grow in specific regions (belts to be specific)

·       Flavor & Tasting – both beverages are tasted and described in terms of key flavors, aromas and acidity, and “Q Graders” are quality tasters that reflect the wine industry’s leading sommeliers.

·       Roasting / Winemaking Process – The roasting process reflects the winemaking process in its role in highlighting flavors and influencing “boldness” of a brew

However, despite all these similarities, wine has far outpaced coffee in developing a robust and complex economy, while coffee is primarily traded as a commodity (the world’s top traded commodity). While the wine economy has greatly implemented the practice of appellations and protected designation of origin, coffee has yet to cultivate a formal appellation system. One reason for this is its long history of primarily being produced in developing regions, and primarily being sold as a cheap commodity. For most people, the primary purpose of coffee is fuel. Wine is for enjoyment. However, we’re seeing a shift as coffee connoisseurship and focus on quality coffee grows.

As for the trellis grown coffee? Fascinating, and tasted very different than what I’m used to. However, despite my enthusiasm for the beverage, I couldn’t get into it for the additional price. I’d much rather spend the extra cash on… well, a bottle of wine.

Ampelography

Ampelography is the science/art concerned with the identification and classification of grapevines. An art in the pre-World War II era, it became a science thanks to the work of Pierre Galet who systematically assembled unique identification markers for 9,600 vine types back in 1952 in his book "Précis d'ampélographie pratique." Shapes and contours of leaves get you a surprisingly far way, but inputs such as shoots, petioles, cluser shape and color, etc., also assist in the identification process. For example, Cabernet Sauvignon has "a downy growing tip, with a deep rose-colored margin... the leaf looks like it has two eyes and a mouth [when held by its stem]," but Chardonnay has a "shield-shaped leaf, with sawblade-like teeth and... 'naked' veins."

Although an arcane skill, ameplography was once part of the core playbook of viticulturalists since it was essential to confirming that the clippings/roots for replanting and grapes/vine samples were what the grower claimed they were. As you can imagine, DNA technologies (specifically, "DNA fingerprinting") have made grapevines more easily and confidently identifiable with quick and harmless sampling and remote testing. Ampelography, therefore, is dying off.

Despite its decline, ampelography is still incredibly useful especially for wineries that source their grapes (i.e., don't own/know the vineyard intimately). When it's picking day and Gary the Grower, for example, decides to give you a different subplot and asks if it's okay, it's critical to ensure you're getting the grape you ordered and not some other careless planting. I'm glad my co-founders Corinne and Katie paid attention in ampelography class at Davis, because I was helpless in the situation.

Top photo below is our Verdelho leaf and middle is our (replacement) Carignan. Even though we don't produce it, I included a Cabernet Sauvignon at the bottom for reference - you can see how difficult it might be to make a confident identification even vs. the Carignan (not a particularly difficult comparison) especially for a novice on the fly!

Sources: Wikipedia, GuildSomm

Why is there no on-demand late night wine delivery?

Pretty much every time I have wanted to get wine (or any other alcohol) delivered, it has always been a last-minute, ASAP-type of guest entertaining need. And almost every time, I have been disappointed.

The reason was always about timing. This would usually occur in situations where I was already in the middle of hosting people at my place and ran out of wine, or in those moments of spontaneous post-event afterparty offerings. Each time, I would half-heartedly reach for my phone to open (insert booze or grocery delivery app here), and each time, I would see the same error message: "Unfortunately there are no stores in your area delivering at this time. Earliest delivery: Tomorrow, 11am."

I checked Drizzly, Instacart, and Saucey, and each of these apps' latest delivery time is 9pm. This is with the exception of Amazon Prime Now, which would deliver up until midnight within a one hour window for a $10 fee. However, I was only offered this late delivery window for the following evening, and was told there were no available delivery times for that same night when checking the app at 10pm.

Could it truly be that there is not enough of a late-night, impulse-buy booze market to make this profitable for these companies? Maybe not on a weeknight, but on the weekends I find it hard to believe that there is not a lot of pent-up demand for convenient and fast alcohol delivery. Eaze, the on-demand cannabis delivery app, has delivery times until 10pm with delivery windows as small as 5 minutes. If weed can do it, wine should certainly be able to do it too.

Especially in California, where alcohol can be sold off-premise until 2am, why are there not late-night wine and liquor store fronts that are operated primarily as late-night delivery outlets? Their drivers could drive around with a streamlined collection just like Eaze drivers do with cannabis. I think there is a huge opportunity in urban markets as well as in suburban areas where grocery and liquor stores close as early as 8 or 9pm. I suppose Amazon is the most likely candidate to get the job done here. Next time I have this issue between 9 and 10pm, I'll give Amazon Prime wine delivery a try, and I'll let you all know if I manage to receive the wine in any sort of reasonable time frame.

Vine Training 101

During my and Greg’s emerging wine region project on the Canary Islands, one of the most curious facts we learned about was the unique trellising method that is used on the islands. Centuries ago, locals there developed a signature, horizontal grapevine braiding technique called ‘el cordon trenzado,’ or the braided cord. The longest cordon trenzado vine alive today stretches over 80 feet, and some vines in this braid are thicker than a child’s wrist. Since fruit only grow from the ends of these long tresses, this design was useful in the past because the vines could be picked up and moved to make room for planting other crops like potatoes.

I found images of these ancient, rapunzel-like vines to be enchanting and imagination-provoking. The idea of so many gnarly, old vines pouring over volcanic cliffs was almost fantastical. I was not surprised to see images of the cordon trenzados on many a label of the local wines we perused from the region.

The more I reflected about the cordon trenzado and how different it was from the vineyard systems I had seen before, I realized I knew basically nothing about vine training to begin with. Why are these practices needed? Why are some styles used in some places instead of others? To help grapes grow, I figured, but I was curious to look further under the hood to gain a better understanding of this key aspect of the viticultural process.

So I did some research, and here's what I learned:

Vine Training 101

Why do we need vine training? Grapes naturally grow upwards towards the sun, climbing up other plants, trees, or physical structures. Vine training is a way for humans to control otherwise far-reaching vines, enabling us to optimize yield and making the grapes easier to harvest.

A grapevine’s performance is maximized by balancing the amount of fruit development with the amount of leaf production. The leafy part of the canopy is the energy-producing part of the vine. Too much fruit and too few leaves results in an imbalance, in which there is not enough energy produced in the vines to fully ripen the grapes.

On the flip side, too many leaves is not good either. Grape vines should be trained in a way that somewhat exposes the grapes to sun and wind. Too many leaves can create excessive shading, which inhibits grape ripening, and can trap excessive moisture, which can promote grape diseases.

When deciding what vine training system to use, growers will consider which systems can provide their desired yield control, which is best for the local climate, humidity, and wind, and which can suit any desired mechanization of tasks like pruning, irrigation, pesticide and fertilizer application, and harvesting of the grapes.

The terms ‘trellising’, ‘pruning’ and ‘vine training’ are often used incorrectly and interchangeably. ‘Trellises’ are the actual stakes, posts, wires, or other structures that the grapevine is attached to. Most ‘vine training’ deals mainly with the ‘cordon’, the woody, arm-like part of the vine, and the fruit-bearing ‘canes’ that extend from the cordon. ‘Vine training’ systems are the combination of trellising and pruning practices that are applied to the grapevine to influence the quality and yield of that year’s crop. Cordons can be trained in unilateral or bilateral fashion (one arm or two arms), and are usually trained horizontally along wire trellises. In winter, pruning determines the number of buds that are allowed to grow into grape clusters. The exact number of buds is regulated in some wine regions. For example, in France, the number of buds is controlled by AOC regulations.

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That’s far enough down the rabbit hole of vine training research for today. I hope this is helpful to other classmates that might be curious about the grape-growing process. I think it’s time to plan a vineyard trip so we can see some vines through the lens of our newfound viticultural knowledge!

Sources:

https://winemakermag.com/article/1388-backyard-vineyard-trellis-and-training

http://www.fruit.cornell.edu/grape/pdfs/Canopy%20Management%20for%20Hybrids%20-2007.pdf

https://en.wikipedia.org/wiki/Vine_training#Common_vine_training_systems

Wine, Health, and Changing Perceptions

There was once an age when wine was more commonly consumed than water, as a safer and healthier alternative. Today, particularly among younger demographics, wine is seen more as an indulgent "splurge" than a daily drink. What are some drivers, particularly in the health space, behind this changing trend?

One factor I found interesting was wine's altering health perceptions within the United States in recent years. Red wine was once perceived as a heart-healthy beverage, in no small part due to the "French Paradox". The French Paradox refers to the notion, popularized in the 1980's, that drinking wine may explain the relatively low rates of heart disease among the French despite their fondness for cheese and other rich, fatty foods. This theory helped spur the discovery of a host of beneficial plant compounds known as polyphenols. Found in red and purple grape skins (as well as many other fruits, vegetables, and nuts), polyphenols theoretically explain wine’s heart-protecting properties.

According to the Harvard Health Blog, however, these claims are becoming increasingly dubious. A 2014 study of older adults living in the Chianti region of Italy, whose diets were naturally rich in polyphenos said to protect the heart, found no link between these compound levels and rates of heart disease, cancer, or death. While the benefits are far from being disproven, it is likely that Millennials are less certain of wine's health benefits, adding one other factor behind wine's slow growth among this demographic compared to competing alcoholic beverages.