THE BURGHOUND TALKS AND WE'RE LISTENING

Allen Meadows is likely the world's foremost authority on Pinot Noir and Burgundy. At least, he's the one we know about. There could be someone out there just as passionately consumed with the quest for the best, but unpublished and not sharing or caring to help the rest of the world find their way through the complexities of the subject matter. Lucky for us that Meadows is published and is out there exercising his tastebuds so that we can buy with confidence. He is the Burghound. Burghound.com was the leader in specialized and “exhaustive coverage” of a specific wine region. I quote exhaustive because that's how the Burghund website describes Meadows work. However, despite long flights (he has just returned from Burgundy) and a hectic schedule, Allen Meadows himself doesn't appear even the slightest bit exhausted. He's a natural conversationalist - with an easy demeanor and interesting to talk with.

There's plenty to talk about at the 9th  Annual World of Pinot Noir. Everyone's buzzing about the excellence of the 2007's and not-so-excellent global economic crisis; Meadows is a good person to talk with on both counts.  In his former career he was a finance executive. With two and a half decades of experience including as senior vice-president and director of corporate development for Great Western Financial and chief financial officer for Fidelity National, he can connect the dots between declining portfolios and the impact on producers, exporters and everyone else in between.

In 1999, he retired to write a book on Burgundy but a year later decided to start Burghound.com. This is his 30th year visiting Burgundy where he spends four months a year and visits more than 300 domaines (whew, that's exhausting just writing the number) and then sorts through everything to keep his many followers informed.

We sat down to talk about what buying opportunities may be out there right now for buyers.


A CONVERSATION WITH ALLEN MEADOWS

DIEHL: YOU'VE BEEN COMING TO WORLD OF PINOT NOIR NOW FOR ABOUT SIX YEARS. WHAT IS THE CONVERSATION ABOUT THIS YEAR?  IS IT ABOUT THE MARKET, FINANCIALS AND THE GLOBAL CRISIS?

MEADOWS: I THINK SO. WITH SOME MUCH NEW ACREAGE BEING PLANTED IN PINOT NOIR IT CLEARLY HAS PEOPLE'S ATTENTION IN IS THERE ROOM FOR MORE FIFTY DOLLAR PLUS BOTTLES OF PINOT NOIR AND THERE IS GROWING CONCERN THAT PEOPLE ARE EITHER GOING TO HAVE TO CUT THEIR PRICES OR THAT THE GRAPE SOURCES THEMSELVES ARE GOING TO CUT THEIR PRICES. MY GUESS IS THAT IT IS BOTH.

DIEHL:  I'M ASKING YOU ABOUT THIS BECAUSE OF YOUR YEARS IN THE FINANCE WORLD AND BECAUSE WHAT WE WERE TALKING ABOUT EARLIER - IF YOU'RE STARTING TO PLANT A VINEYARD: THE COST OF LAND,THE COST OF BOTTLING, THE COST OF EVERYTHING IS MUCH MORE THAN HAD YOU STARTED TWENTY YEARS AGO.

MEADOWS: THERE'S NO QUESTION THERE'S AN OLD SAYING IN THE WINE BUSINESS PRETTY MUCH NO MATTER WHERE YOU'RE FROM IS THAT THE FIRST GENERATION LOSES MONEY,THE SECOND GENERATION BREAKS EVEN AND THE THIRD GENERATION IS THE ONE THAT ENJOYS THE FRUITS - NO PUN INTENDED- OF THE FOREFATHERS OF THEIR GRANDFATHERS BECAUSE BY THE THIRD GENERATION MUCH OF THE LAND HAS BEEN PAID OFF MUCH OF THE EQUIPMENT HAS BEEN AMORTIZED DOWN AND SO  THE NORMAL COSTS ARE PRETTY MUCH OPERATIONAL AS OPPOSED TO CAPITAL INTENSIVE COSTS OF BUYING LAND AND EQUIPMENT.

DIEH: WITH THAT SAID, THIS YEAR THERE IARE SOME TENSE MOMENTS OUT THERE WITH PEOPLE TRYING TO FIGURE OUT IF THEIR WINE IS IN THE RIGHT PRICE POINT TO MOVE IT OUT THERE ARE SOME GREAT BARGAINS TO BE HAD IF YOU HAVE SOME MONEY TO SPEND TO STOCK A WINE CELLAR.

MEADOWS: I THINK SO BECAUSE THE RETAIL TRADE WANTS TO MOVE IT THEY HAVE CAPTAL NEEDS, AS WELL. THE IMPORTERS ARE GOING TO HAVE TO TAKE NO PROFIT IN ORDER TO BE ABLE TO CONTINUE TO BUY AND SO I THINK BOTH BURGUNDY AND PINOT NOIR IN GENERAL IS GOING TO BE AVAILABLE FOR LESS THE BIG PREMIUMS THAT PEOPLE HAVE BEEN WILLING TO PAY IN THE PAST ARE JUST NOT THERE. JUST BEFORE I LEFT FOR BURGUNDY I VISITED A LARGE RETAILER WHO HAS AN ENORMOUS BUSINESS - HE IS ONE OF THE LARGEST RESELLERS OF BURGUNDY IN THE UNITED STATES - AND I ASKED HIM HOW IT WAS GOING AND HE SAID THERE VERY TOP LINE WINES ARE STILL MOVING BUT THE BIG DIFFERENCE IS THE FELLOW WHO WAS TAKING SIX BOTTLES BEFORE IS NOW TAKING TWO BOTTLES AND THAT THE ENTRY TO THE ENTRY LEVEL BURGUNDY WHICH IS THE VILLAGES WINES AND THE BOURGOUNE IS ALSO SELLING QUITE WELL BUT THAT IS A PRICE POINT OF 35 DOLLARS AND LESS. AND SO THAT RANGE IN THE MIDDLE IS BEING SQUEEZED PRETTY HARD AND I THINK AS THINGS GO FORWARD WE'LL SEE MORE AND MORE OF THE PREMIUM OR PROFIT MARGIN THAT IS ASSIGNED TO THOSE WINES IS BEING SQUEEZED DOWN.

DIEHL: YOUMENTIONED JUST COMING BACK FROM BURGUNDY WHAT DID YOU DISCOVER IN YOUR TASTINGS? AND YOU TASTE A LOT OF WINE A YEAR.

MEADOWS: THE '07 VINTAGE ITSELF EXTREMELY ATTRACTIVE. IT'S CLASSIC BURGUNDY. AND FOR THOSE WHO ENJOY SOMETHING THAT HAS A BIT MORE ACIDITY AND FRESHNESS TO IT WILL VERY MUCH LIKE THE O7'S. THE SECOND MOST OR PERHAPS EVEN THE QUESTION THAT WAS ASKED MORE THAN ANY OTHER DIRECTED TO ME PERSONALLY WAS HOW'S THE ECONOMY IN THE UNITED STATES? AND THE RESPONSE IS THAT IT IS CERTAINLY NOT DEAD IN TERMS OF THE WINES OF BURGUNDY OR FINE WINES PERIOD PRUDENCE IS THE WORD OF THE DAY.

DIEHL: THEN WHAT ADVICE WOULD YOU GIVE TO THOSE THAT ARE OUT THERE LOOKING FOR A GOOD BOTTLE OF WINE TO BUY RIGHT NOW.

MEADOWS: WELL THERE IS NO POINT PUTTING OFF YOUR LIFE. WHICH MEANS WHEN YOU SEE SOMETHING THAT IS INTERESTING ASSUMING YOU CAN AFFORD IT YOU SHOULD BUY IT.  BUT IN TERMS OF BUYING QUANTITY THE WATCH WORD THAT I WOULD OFFER YOUR VIEWERS IS PATIENCE I THINK THAT WE ARE GOING TO SEE LOWER PRICES GOING FORWARD SO I WOULD BUY SPARINGLY NOW AND WATCH FOR BARGAINS THAT I THINK ARE INEVITABLE BECAUSE AT SOME POINT IMPORTERS ARE GOING TO HAVE TO LIQUIDATE THEIR STOCK AND RETAILERS WILL PICK THOSE UP AND OFFER THOSE BARGAINS ACCORDINGLY. #