A caution

[AKR]

I was thinking about this last night, and after seeing Blanquito's comment on this in another thread, thought it merited its own top level post.

My caution is this: be careful taking credit risk from wine retailers and storage facilities.

Some people suffered losses in various prior cases of this e.g. Premier Cru, Carolina, Rare Wine, Vallejo warehouse fire, Domaine etc. So these can flare up even when times are ok. During bad times it's not just the frauds+incompetents that fail, but also the well intended, yet overextended.

If one followed a checklist manifesto to avoid getting nicked with losses

a) avoid pre arrivals
b) get items shipped pronto, plenty of losses were suffered from people thinking they were getting 'free storage'
c) keep good records
d) use credit cards you will keep over the long run (chargebacks on closed cards are difficult)
e) situations where others have access to your storage needs to be thought through, and maybe you need to inventory on some regular cycle. this may blow up the whole concept for certain remote/intl collectors.
f) shipping continues to be stressed/delayed

Specialty retail of all kinds is considered a deep cyclical industry, and suffers when the economy turns. Depending on how you look at it, unemployment is already at 15%+ and may end up hitting 25%. We're already harder hit than the GFC, and it may end up being Great Depression type of numbers. It will be hard for firms selling non essentials to get through unscathed. (in the real world, fine wine is not essential, even if alcohol may be)

I'm actually mildly concerned about storage facilities (that are not wine centric, which are already higher risk). Storage Lockers do have some bonding/regulation around them in most states....but they're not safe deposit boxes nor the strongest sponsors in all cases. At least they have some mild counter-cyclical strength i.e. when people downsize they keep on paying the storage facility, or need to add new units.

So bottom line: be really thoughtful about laying out money today for wine that is promised in the future. Credit risk is going up in this sector. Bankruptcies, restructurings, and general chaos are only beginning. There isn't going to be in any shortage of deals, no matter how urgent the email buskers cry.

[Chateau Vin]

Thanks Arv...I just have 6 bottles of 2016s that I am waiting on, but nothing expensive (from jjb and k&l)...