Author: Christy

The 3000 Word Silicon Valley Bank Explainer That No One Asked For Is Here

Hi wine industry friends (and anyone else who comes across this blog.) You thought the tariff process we went through was complicated? Well welcome to a whole new level of complication: the Silicon Valley Bank failure.

If you’re wondering why this bank sounds familiar, it’s likely because the Wine Division releases an annual State of the Wine Industry report. It’s a cornerstone of data-driven trend reporting within an industry niche not typically known for its access to hard data.  The report usually kicks off a social-media flurry of industry-related thought pieces, comment wars, and meme activity and this year’s report, released in January, was no exception.

But right now, the headline story is about the bank’s collapse, a news story that goes well beyond the niche world of wine blogs and meme accounts. And of course, there are many, many, MANY pieces about what happened but a lot of them tend to be deep on jargon and light on detailed explanation.

So that’s what this piece is: an explainer that starts with a lession on bank balance sheets, touches on the accounting principles of bond valuation, and winds its way through what happened in the days before the FDIC closed the bank’s doors.

Scintillating? Maybe not. But it should give you an overview of what’s happening and why, how this bank is unique, and at the very end, a wee bit about how the Wine Division fits into all. (TLDR: it’s a casualty, not a cause.)

Happy reading!

– Christy Frank

Banking Balance Sheet 101

Commercial banks take cash deposits from individuals and businesses. They then use that cash to make loans to other individuals and businesses. They collect interest from the loan holders and pay interest to the deposit holders. They make money because the interest they take in is more than what they pay out. They’ll certainly have other income streams, but the main one will be based on this spread between these two interest rates.

In the language of accounting theory, those cash deposits are called short term liabilities. They are liabilities, because they’re something the bank owes someone. And they are short term, because if you go into the bank and ask for your money, it has to give it to you… pretty much right away.

All those deposits sit on the liability side of a bank’s balance sheet. On the other side of that sheet are the assets – including the portfolio of interest-bearing loans the bank holds. As the phrase “balance sheet” implies, these two sides need to, well, balance.

For most banks, most of the time, this balance is like a slow-moving seesaw. If the deposits are from a wide range of customers across a diverse set of industries, the risk that everyone will want access to their money at the same time is quite small. A further stabilizing force is that deposits under $250K are guaranteed by the FDIC – no matter what happens, that money is safe. And on the asset side, diversification also ensures that the loans come due on a regular, rolling basis, allowing for a constant stream of funds.

If this sounds like it might involve a lot of fancy math, you would be correct – which is why many banks have risk management departments working to make sure this all works smoothly.

In the case of Silicon Valley Bank (SVB), things didn’t exactly work so smoothly. Let’s explore…

Silicon Valley Bank’s Balance Sheet – Part 1

If we were to peer at the SVB balance sheet, we would see the bank had $173 billion in deposits on the liability side of its books. On the asset side, they had issued around $74 billion in loans to various companies. This left about $100 billion in deposits to be invested.

Now remember… to make money, banks need the interest on their loan portfolio to be higher than what they have to pay out on their deposits. $1 billion can’t just sit in a vault not drawing interest. That is not a money-making proposition.

So SVB invested that $100 billion in government-backed bonds. Were these assets low risk? Yes they were. Were they short-term? No they were not. Did this matter? It didn’t, until it did.

A Primer on How Bonds Work + Some More Accounting Theory

I know, I know…. you’re not reading this explainer to understand how bonds are priced or how they are valued on a balance sheet. But I’m going to tell you anyway. This is the first and potentially only time I’ll be able to put my London School of Economics degree in theoretical accounting and finance to use so I’m going with it. But trust me… it’s important.

Let’s say you’re a bank and you buy a $1000, 2% interest, ten-year government bonds. (You’re a very small bank.) You give the government $1000 (the face value of the bond) and the government gives you a piece of paper that says “IOU $1000 in ten years.” In each of those ten years, you collect 2% interest (or $20.) At the end of ten years, when the bond matures, you get your $1000 back and rip up the piece of paper. (Actual paper isn’t involved, but you get the idea.)

But meanwhile… more of that same bond is being traded on the bond market. Other banks and companies and individuals are buying and selling those $1000 face-value bonds. But as with any market, their value goes up and down. Some days you could sell yours for $1500 and other days, you might only get $500.

So what’s the main determinate of any bond’s value? Interest rates! I’ll spare you the details, but it is a truth universally (and mathematically) acknowledged, that if interest rates go down, the value of a bond goes up.

And if interest rates go up? The value of the bond goes down. This is very important to the mechanics of this story so I will repeat it: if interest rates go up, the value of a bond goes down.

Which way have interest rates been going? Up, up, up! Which means the value of those imaginary $1000 bonds trading on the bond market have been going down, down, down. Let’s say today, if you wanted to sell your bond, you would only be able to get $750 for it.

We’re now going to zoom back to the asset side of your very small bank’s balance sheet. You have to decide what your bond is worth. Which is it? The $1000 that you originally paid for it? Or the $750 that you could get if you sold it today?

What??? You don’t know the answer? Well hold on tight… because we’re about to go down a jargon hole and explore the world of Generally Accepted Accounting Principles.

Hold-to-Maturity vs Marked-to-Market: on which side is your bond buttered?

The answer to the question (what’s the balance sheet value of my bond?) is: IT DEPENDS!

If you intend to hold your imaginary bond to maturity, you get to classify it as, wait for it, “Hold-to-Maturity” and value it at its $1000 face value – no matter how high or low it’s trading on the bond market. Over the course of its lifetime, it could swing from a low of $5 to a high of $3000. (There’s pretty much no possibility a government-backed bond will swing that much, but I like to go for impact in my examples.) But it doesn’t matter, because you still get your $1000 once the bond reaches the end of its life.

But let’s say your plan isn’t to hold your bond – it’s to actively trade it, selling it and buying it back, essentially placing bets on whether it will go up or down. If this is your intent, then financial accounting rules require you to revalue it on your balance sheet, or “mark it to market,” every single day. One day you might value it at $1000. The next day, $1500. The day after, $850. (The actual day-to-day swings would likely be much smaller, but hey, impact!) This is logical – you might sell that bond at any time, at any price, so your balance sheet needs to reflect that risk.

The bonds used to balance a bank’s deposits are typically classified as Hold-to-Maturity. Also logical, right? Sure it is… as long as reality doesn’t intrude on intent.

Silicon Valley Bank’s Balance Sheet – Part 2

Remember those $173 billion in cash deposits on the liability side of Silicon Valley Bank’s balance sheet? They were drawn mainly from a slate of Venture Capital (VC) firms that invest in tech-driven startup companies as well as the startup companies that they were investing in. Startups get advice from their VC investors and in this case, the advice was “put your money in SVB.” A portrait of diversification this is not, but as a niche strategy to become the “go-to financial partner for investors in the innovation ecosystem and beyond” it was working very well. Deposits increased from $49 billion in 2018 to $173 billion in 2022 as the industry went into overdrive during the pandemic.

Business seemed to be chugging along nicely, but the proverbial train was poised to go off the rails. Actually, since we’re in the startup world, let’s shift from train analogies to airplanes.

Trains, Planes, and Exit Strategies

Startup businesses always talk about their “runway” – how many months they can operate before they run out of cash. As they burn through cash – and approach the end of their runway – they need to raise more funds or they’ll go out of business. This additional cash usually comes from VC investors and is part of an on-going fundraising strategy.

But VC firms don’t want to pave endless runways. Eventually they expect their investment cargo to take off, exit the airstrip, and provide the original investors with a return on that investment. Typically the startup company will be sold to another firm or “go public” and get a listing on a stock exchange through an IPO. Either way, a chunk of the returns from an exit goes back into the VC fund – and into their bank accounts. And everyone flies off into the sunset!

Except…

For reasons that I’m not going to get into now, but are tied to interest rate increases in fairly predictable ways, those exit doors were starting to close. Companies weren’t so keen to buy startups and IPOs weren’t happening. So more runways needed to be paved for longer periods of time – and the VC firms needed cash to do this paving.

Silicon Valley Bank’s Balance Sheet – Part 3 (or Run, VCs! Run!)

Let’s head back to the SVB balance sheet, shall we?

VC firms needed to use their cash deposits to fund their current portfolio of startup companies for longer than expected. And a lot of that cash was part of the $173 billion in deposits at SVB. Or more specifically, that cash was now sitting in bonds owned by SVB – bonds that were classified as Hold-to-Maturity.

Meanwhile, out in the open bond market, due to recent interest rate increases, those bonds were trading at much lower values. (Remember: interest rates go up, bond values go down!) So what happens when SVB has to sell some of those bonds to generate that cash? Well those “unrealized losses” had to be realized. And reported. Out loud. In public. The bank had sold $21 billion in bonds resulting in a $1.8 billion loss. This was announced on Wednesday, March 8th.

While the remaining bond portfolio didn’t need to be marked-to-market, some quick mathematical calculations could show that the remaining $80 billon (if my math is right, which it probably isn’t) wasn’t worth $80 billion in the open market.

Suddenly, the balance sheet doesn’t balance. Or more accurately, suddenly the world knew that the balance sheet didn’t balance. There weren’t enough assets on that side of the balance sheet to balance the deposits on the liability side. SVB had to somehow raise funds to fill that gap. On Thursday, March 9th, they announced they would do this by selling $2.25 billion in stock.

Word began to fly through the startup “innovation ecosystem” that SVB was in trouble. VC investors had once recommended startup companies in their portfolios open accounts with SVB. Now they were urging them to get their money out of those accounts – and fast. (And remember, this is a tech-based innovation ecosystem. That “ecosystem” is really, really small. And “fast” is really, really fast.) To add to the fun, remember that the FDIC only insures deposit accounts up to $250K – and nearly all of SVB’s deposit accounts were more than $250K.

So if you’ve watched It’s a Wonderful Life, you know what a bank run looks like and this was that. However, Silicon Valley doesn’t have a George Bailey to explain to the good-hearted VC townspeople why they should leave their money in the bank. So the spiral continued and by Friday, March 10th, the FDIC had taken over SVB and all deposits above $250,000 were potentially SOL.

Awkward Pause: What Exactly is the FDIC??

There’s no elegant way to work this into the story, so let’s just take a break to explain. The Federal Depository Insurance Corporation was created in 1933, after the great bank runs of the Great Depression. It’s exactly what it says it is – an independent federal government “corporation” that insures bank deposits.

For all my wine folks reading, think of it as wine marketing board, similar to Wines of Austria or Wines of Australia. All the wineries pay into a funding pool which is used to promote and grow the profile of the county’s wines. Except in the case of the FDIC, it’s banks. And the funding pool is used to make payments to the depositors at failed banks. Because banks fail more than we realize – they just tend to be smaller, with most of their deposit accounts under $250K. The fact that we don’t hear about them is silent proof that the FDIC is doing what it was established to do.

The Aftermath: A Bailout or Not a Bailout?

OK, back to our story. On Sunday, March 12th, the FDIC made it clear it would guarantee all SVB’s deposits – including those over $250K. That collective sigh of relief you might have heard that evening? It was an entire network of companies, their employees and their vendors that wouldn’t have to scramble to make payroll, pay their suppliers, and keep their lights on.

Is this a bail out? As with so much in financial accounting: IT DEPENDS!!

Yes, uninsured deposits are now being insured, but that comes out of the FDIC insurance pool. The $74ish billion in loans on the asset side of the balance sheet still exist and the companies that owe that money will still need to make their regular payments. The $80ish billion in government bonds, also on the asset side, will be used to pay back the deposits (although I’m not entirely sure how this works and that’s too much minutia for even me.)

What’s different from the situation in 2008/2009 is that SVB is gone. Poof! The FDIC stepped in to guarantee the deposits, but the owners of the bank are not being protected. Its equity – including the shares that traded on the stock market – no longer exist. If you were a mutual fund or a hedge fund or an ill-advised grandma holding SVB shares, those are now worth $0. Period. End of story. And any debt that the bank issued on itself, that’s gone as well.

So is it a bailout? Kind of. But if it is, it’s a much more limited sort of bailout than what happened in 2008/2009 when the failed banks were kept alive in ways that could be the subject of an additional 3000 words.

The Aftermath: To Panic or Not to Panic?

Now here’s the thing. A $1.8 billion asset write-down (a fancy term for “a loss”) on a $21 billion bond portfolio is indeed a lot of money. But remember – SVB still had about $80 billion in remaining bonds as well as an additional $74 billion in other loans. VC investors and startup investors are theoretically quite savvy in their understanding of how these things work. It was nowhere near insolvent. But a panic is a panic. And no one wants to risk being the last rat on ship that seems to be sinking, even if it has plenty of life vests on board.

Will the panic spread to other banks? Logically, it shouldn’t. Most banks’ deposits are much more diversified than SVB’s. Most banks haven’t built their strategy around being the go-to for a single, tight-knit clubhouse of an industry. And (hopefully) most banks are doing a better job of stress-testing their asset portfolios to ensure they can handle the bigger swings that come with higher interest rates. And while the recent increases in interest rates makes it more difficult for any business that benefits from cheap financing (i.e. almost all businesses), the startup world was especially at risk (which is a story for another time.)

(This story is moving as quickly as I can type so I’m not even going to try to keep up. Keep your eye on the news – and this is important: check the date and time stamp of everything you read. It might be old news by the time you read it!)

So What’s the “So What?”

I’m tired of writing, so now that you have a good understanding of how this all works, you can dig into all the speculation about near- and longer-term impacts on the innovation ecosystem of VC funds and tech bros, startups in general, risks to the regional banks of California, and regulatory impacts.

But let’s talk about how SVB relates to the wine industry, since there’s a good chance that’s why you started reading this piece in the first place. (Is this what they call “burying the lede?)

SVB’s Wine Division was established in 1994. Over those nearly 30 years, it made about $4 billion in loans to hundreds of wineries. This represented about 2% of the bank’s total loan portfolio, so if you’re doing the math, you’ve already realized this made the division a very small part of the overall SVB business.

But within certain niches of the wine industry, the Wine Division was an important partner, providing loans and lines of credit to a complicated, inventory-intensive, equipment-heavy industry that’s not well-understood by or terribly attractive to more traditional banks. The head of the division, Rob McMillian, also put together an annual State of the Wine Industry report which generated data-driven insights for a segment of the industry that tends to be light on data.

As I write this, the FDIC has promised that all customer deposits will be protected, even those above the $250,000 threshold, so the immediate threats to winery payroll and other operations is less intense than it was when I first started typing on Friday, March 10th.

But longer-term? It’s unclear whether the SVB Wine Division could have offered the sort of financing and partnership it offered – if it wasn’t part of the larger SVB. And if the conditions that allowed the larger SVB to exist, well, no longer exist? What does this mean for the overall sustainability of this niche of the wine industry?

Conversations for another time… because I need a drink.

A Wine Store Owner REALLY Looks at 40

Originally published on October 7, 2010.

A NOTE FROM THE FUTURE: This turned out to be a very good party. We wound up having it at the apartment, and as the night went on, we wound up on the roof. We needed ore wine so I told a couple friends they could go bring up anything they wanted from the wine fridge. “Anything?” they asked. I did a quick mental inventory and said sure, anything. Of course they came back with the one bottle I had forgotten about: Krug Clos du Mesnil. Yeah, no. Not that one. So they went back down and resurfaced with the bottle I had expected them to come up with: Krug 1996. And it was good. I’m now 50 and still haven’t opened that bottle of Clos du Mesnil. Soon. Soon. Certainly before I hit 60!

A couple of years ago I wrote a post about helping a customer select a birthday gift for a friend turning 40. At that point, the store had been open for less than 6 months, I was less than two months away from popping out my third kiddo, and the big 4-0 seemed a very, very long way away.

And now it’s less than two weeks away. (I actually had to check the calendar to confirm that small detail.)

But while I may not be diligently counting down the days to the milestone day, I have been diligently collecting the wines. I’ve scrounged up several bottles of things from 1970, my birth year. I have the good fortune of being born in a decent year for old wines, so I’m not related to the Port bin for birth year wines.

On tap from 1970:

  • Lopez de Heredia Tondonia and Bosconia
  • Carema Produttori
  • Cappellano
  • Chateau d’Yquem

I’ve also picked up some other milestone wines over the years – 1989s for high school graduation, 1993 for college.  I love old wines, not just because I love the taste, but because I love pausing to remember what was happening in my life – or the world in general – when the grapes were being picked. 

It’s time in a bottle in the most literal sense.

A TALE OF TWO TRANSITIONAL REDS

Originally published on September 26, 2010.

Yes, this is a direct cut and paste from the Frankly Wines newsletter that was just sent out earlier today.  But hey, I’ll recall rules from my old corporate days – when I actually had money to manage a media buy.  This cut and paste job is not laziness…this is FREQUENCY!  And it’s good – and necessary – and cuts through the clutter.   So if you’re really paying attention to Frankly Wines missives, just ignore this.  If not, read on.

When fall weather hits, even the staunchest “crisp white wine” person may start to crave something red in the glass. But, like Goldilocks, you want something not too big, not too light…but just right. These two wines, both from stand-out vignerons, are just right.

CATHERINE ET PIERRE BRETON TRINCH! 2009 1.5 Liter (Bourgueil, Loire, France):
A double bottle of red wine happiness. The Bretons are tip top producers in the Bourgueil sub-region of the Loire Valley. This region is where Cabernet Franc stands on its own, unblended with its usual partner, Cabernet Sauvignon. While the Bretons make some complex, age-worthy versions from single vineyards, their Trinch! is meant to be drunk young, fresh, and in quantity. It’s an ideal introduction to Loire Valley Cabernet Franc, with red berry fruits and the underlying aromatic earthiness that sets the grape apart from Cabernet Sauvignon – but not so much as to scare off a Cab Franc beginner. And the name? Trinch! It’s the sound that glasses make when clinked together. Which should be done frequently.

Price: $42.99 (equivalent to $21.50/bottle)

MARCEL LAPIERRE RAISINS GAULOIS VIN DE FRANCE IX (Beaujolais, France): Beaujolais has a bad reputation. Much of it tastes like bubblegum and bananans. While this might sound like an excellent new lollipop flavor, it’s not what most people want in their wine. But this is not one of those Beaujolais. This from Marcel Lapierre, one of the masters of Beaujolais that tastes like real wine. We carry his Morgon from time to time and at under $25, it’s one of the great bargains in the wine world, capable of graceful aging, if you can keep your hands off it when it’s young. This one, which translates to “French Raisins,” is meant to be drunk now, like this afternoon.

Price: $11.99

From the Frankly Wines Shelf Talker Files

Originally published on September 18, 2010.

A NOTE FROM THE FUTURE: Wine puns, they never get old.

OK, they’re not really shelf talkers (those actually attach to the shelf.)  They’re more like neckers, which slide on the neck of the bottle.  Except my neckers are actually price tags with just enough room to scribble a tiny little tasting note. 

Or a warning. 
Or a pairing suggestion. 
Or sometimes just a piece of near total nonsense.

The latter would be the case for the tag we’re putting on the Les Clos De Tue-Boeuf “La Butte” Gamay 2009 tomorrow.  Now this is very tasty wine.  It’s made by Theirry Puzelat, generally considered to the man among the too-cool-for-school natural wine kids.  Maybe because I get a little annoyed by the whole too-cool-for-school thing (perhaps because I haven’t been in school for a very, very long time), I haven’t spent much time with the Puzelat wines.  And these are wines that you really do need to spend time with – to try them at a trade tasting really doesn’t do them justice.  They’re not stand-and-spit types of wines.  They need a little thought.

But a little while back, I was at Ten Bells, bastion of vin natural, and decided to order a bottle of La Butte. And it was so crazy good that I spent most of the night ignoring my husband and friends while trying to keep the bottle very close to my glass. It was just bright and good and fruity and slightly funky and everything that is best about natural wines.

So I went and ordered a bunch for the store.  Because that’s what you do when you own a store and spend the evening with a wine that you really, really enjoy.  Especially when you can sell if for less the $15.

But…I was talking about shelf talkers. 

So here’s the shelf talker soon appearing on this wine….because potty humor never goes out of style:

La Butte…kicks ass.
La Butte…is the shit.
La Butte……we’ll stop now.

Much, MUCH more useful (and entertaining?) than a corporate shelf talker with a numerical rating!

Guys You Need to Know if You Want to Open a Wine Store: A Delivery Guy

Originally published on September 1, 2010.

Delivery service is the bane of any small wine store. You want to offer the service to your customers because 1) they like it. 2) everybody else does so it’s necessary to be competitive and 3) you can sell more cases if customers don’t have to worry about how to get them home.

Bigger stores can have a stock/delivery guy on staff. But I’m not big enough to warrant that expense. Not yet at least. But my business has grown to the point that it’s inefficient to have my wine sales staff running around lower Manhattan with a hand truck. Not that that doesn’t still happen. But at some point, most wine stores eventually need another option. And that option is usually an outside delivery service.

I have several lined up.  Just in case.

There’s Hi Powered Delivery, which is good and reliable, but mainly for case deliveries beyond the neighborhood with decent advance notice and a big delivery window.  And I really like saying I need to make a call to a Higher Power to check on a drop off between 2pm and 6pm.

Then there’s the nearby downtown service which is best for local deliveries or “renting” a guy with a hand truck for a few hours. But their guys are highly variable – there’s the unfailingly polite, tie-bedecked dude who somehow manages to avoid cracking a sweat on the hottest day of the year. But there’s also the fellow who could give a Tasmanian devil a run for his money in terms of sheer crazy and high speed rotations per minute.

But my favorite service, and the one I’ve started to turn to the most regularly, is Urban Mobility Project, run by the ever cheerful Shelly Mossey. He lives in the neighborhood which is cool because I like to go local whenever possible. He’s reliable and knows downtown, even the street numbers (not just the names) of all the new buildings on North End Avenue. (I bet you didn’t even know there was a North End Avenue in Manhattan.)  And even better….he does his deliveries on a recumbent bike. He’s like the ant of delivery services, able to pull more than 10 times his weight in wine bottles – I think he can manage up to five cases in his trailer. I would explain further, but in this case, just check out the picture below.

Photo by Robert Simko

But my favorite service, and the one I’ve started to turn to the most regularly, is Urban Mobility Project, run by the ever cheerful Shelly Mossey. He lives in the neighborhood which is cool because I like to go local whenever possible. He’s reliable and knows downtown, even the street numbers (not just the names) of all the new buildings on North End Avenue. (I bet you didn’t even know there was a North End Avenue in Manhattan.)  And even better….he does his deliveries on a recumbent bike. He’s like the ant of delivery services, able to pull more than 10 times his weight in wine bottles – I think he can manage up to five cases in his trailer. I would explain further, but in this case, just check out the picture below. 

Buying on Faith

Originally published on August 26, 2010.

I have tasted about 98% of the wines stocked on the Frankly Wines shelves. When a customer brings a bottle to the counter and asks if I’ve tried it, I’m always surprised when they’re surprised when I quote this statistic. But I forget that I operate in a very specific realm of the already rarified New York City retail scene. Most of the store owners I know taste everything on their shelves – and since the shelves aren’t all that big, it’s easier to do than if you owed a warehouse-sized space in the suburbs.

But there is that other 2%. Wine that I wasn’t able to try before buying. Wine that simply has to be bought on faith. Most of the time, I’ll get to sample a specific wine, either with a sales rep at the shop, at a trade tasting, maybe even purchased from another store because I’m too lazy to call in a request and set up an appointment. Most wines, even many really wonderful ones, just aren’t so highly in demand that you can’t take your time getting to know them.

But some wines are like NY real estate – at least NY real estate back in the good old days of, oh, 2008? You have to claim them before the boat has even left the dock on the other side of whichever ocean they’re coming from. Generally, I have some experience with the specific producer (vigneron, winery, whatever specific term applies). I’ve had past vintages, or a different blend or vineyard site – and trust the producer enough to not turn out some complete crap this time around.

But sometimes, I really am making a leap of faith. Like Tuesday night. I went to check out Eric Asimov’s “The Pour” column in the New York Times and it was on Bordeaux. Small, independent Bordeaux producers.

Now I love Bordeaux – mainly old-ish Bordeaux from good-but-not-glamorous houses that I can pick up at auction. It’s not in fashion, but I love it anyway. But Bordeaux from more recent vintages is a trickier proposition. Many of the producers that were turning out elegant, classic claret in the 1990s have evolved into a more modern style over the most recent decade. And style aside, they’ve also gotten very, very expensive.

But these smaller producers have been on my list of “wines to get to know.” I just haven’t had a chance to get to know them yet. So on Tuesday night, when I see the New York Times piece, I know there’s going to be a giant sucking sound and by Wednesday evening, there will be no more of these Bordeaux to be had until the next vintage rolls around.

Time for a leap of faith. I forward the piece to my sales rep at one of the featured importers. This is a guy who has never poured me a bad wine. Who has never misled me on how little of something is actually available. Who watches out for those last little bits of cases of things he knows I can work with. So the conversation basically goes like this:

  • I ask for a recommendation.
  • He makes it.

The Domaine de Jaugaret 2004 and 2005 arrives on Monday.

Photo Credit: laurenatclemson.  Creative Commons terms of use.

What Passes for Exercise in the Wine World

Originally published on June 20, 2010.

OK, not really. Some people exercise very hard and very often. I’m not one of them. But if I did, this is what I would be doing. If anyone knows of Pilates instructor offering this type of class, please let me know!

The cartoon is from Harold’s Planet, where you can sign up for a daily cartoon to give you a little comic relief from your usual daily feed drudgery.

A NOTE FROM THE FUTURE: We’re no longer in the wild days of old school blogging, where we just posted images willy-nilly without regard for copyright. So if you want to see it (and you do), go here.

Frankly Wines Frequently Asked Questions

Originally published on June 19, 2010.

A NOTE FROM THE FUTURE: Most of this still holds true up in Copake-land. Except for the delivery bit. That’s a whole different story up there!

Certain questions come up over and over.  Questions that actually have to do with wine (vs. questions about corks, parking, and how to get to the World Trade Center site.)  So we put together little cards that answer those FAQs.  Below, you’ll find the official answer and the behind the scenes answers (available on this blog only.)

Question: Do you deliver?

The Official Answer: Why yes, we do! And if you’re below Canal Street, it’s free and there’s no minimum order. Otherwise, there’s a minimum or a delivery fee.

The Behind the Scenes Answer: Yes, we’ll deliver one bottle. And yes, we’ll even deliver it across the highway. But we’re not set up like a restaurant, with bike-loads of delivery people on call, so it might take a while. This will be true whether you want one $10 bottle or a case of high end Champagne*. So yes, we’ll get it to you. And we’ll let you know when we can realistically get it to you. But that answer won’t always be “in 10 minutes.” And sometimes, like when you call 5 minutes before close and want one bottle delivered 10 blocks up and 5 blocks over, that answer may actually be no. (Well, the answer would really be “we can get it to you tomorrow,” but that’s probably still not the answer you’re hoping for.)

*To be completely honest, if you order a case of Champagne and we’re working solo, we’ll probably buck up and call in a delivery service. For single bottles, this probably isn’t a mathematically feasible option.

Question: Do you offer case discounts?

The Official Answer: Why yes, we do! 10% off mixed or full cases.

The Behind the Scenes Answer: Yes, I’m perfectly aware that such-and-such a store offers a 20%, or even a 25% discount on cases. But I’m also very well-versed in New York wine store math and if someone is regularly offering a case discount that deep….well….it’s more than a little possible their regular mark-up is a tad too high.

Question: Do you have Champagne?

The Official Answer: Why yes, we do!

The Behind the Scenes Answer: It always amazes me that customers ask this – that they don’t automatically assume that a wine store will have anything sparkling on the shelves. This is a problem for Champagne in particular and sparkling wine in general – that so many customers think of it as something so far removed from wine (and “wine occasions” to get all marketing-speak on you) that they don’t even expect a wine store to carry it.

Question: Can you keep track of my purchases?

The Official Answer: We try to, but we’re admittedly not very good at it.

The Behind the Scenes Answer: We’d really like to be better at this but simply put, it is a pain in the ass using an off-the-rack Microsoft Point of Sale system. First we need to get you in the system. And it’s tough to do this without raising the fear of spam in most people. Then once you’re in there, we have to remember to ask you if you’re in the system. And then even though you just told us you think you are, we have to remember to add you to the transaction. And if we don’t, we have to manually add what you just bought in the “notes” field because there’s no way to add you to a transaction after the fact. And if you order on-line or call in an order, that’s a totally different system and we have to track it manually anyway. And that system can securely store your credit card info. But only if you reorder within 3 months. Which is a pain, but it keeps your credit card info secure in a way that storing it forever on an index card can’t. So that’s a good thing, really.

Anyhow, we’ll get better at it. And eventually, we’ll cough up the really big, huge bucks for some sort of fully integrated system. Until then, if you want us to track your purchases, just let us know and we’ll do the best we can.

Sometimes You Can Find a Needle in a Hay Stack!

Originally published on June 13, 2010.

So I’ve been going on about various versions of That Customer #4, the one who comes in looking for the vinous equivalent of a needle in a haystack. While coming in with a picture makes it much easier to track down a given wine, it doesn’t make it any more likely that this wine will be on the shelf. But today, That Customer was very very lucky.

The conversation started as usual, “I’m looking for a specific wine.”

But…he had a picture (and it was a very clear picture.)

And…..I actually had the wine! The very wine in the very clear picture!

It was Robert Sinskey’s Abraxas, a very cool white field blend from California.  Abraxas is an Egyptian Gnostic god and the letters in his name represent the seven classical planets. Apparently today, the planets were all well aligned.