Sour Grapes

Before Tuesday's class I spent a bit of time poking around Tyler Coleman's blog (http://www.drvino.com/). One of his posts recommended Sour Grapes, a documentary about fraud in the wine industry that came out in May of last year. As luck would have it, Sour Grapes is available on Netflix. Tuesday night plans: check.

The film follows the rise and fall of Rudy Kurniawan, who burst onto the US wine scene in 2006 seemingly out of nowhere. He hobnobbed with rare wine collectors and frequented wine auctions, quickly making a name for himself as a prominent wine connoisseur with "arguably the greatest cellar on earth." In 2006, he made $35.3 million from two auctions at Acker, Merral & Condit.

Turns out, his wines were counterfeit. When the FBI arrested Kurniawan at his home in 2012, they found hundreds of bottles of inexpensive wine, along with fake labels, corks, wax, and stamps. In 2013, Rudy was convicted of several counts of mail and wire fraud and sentenced to 10 years in prison. On the civil side, Bill Koch, who bought at least two fake bottles from Kurniawan, sued Rudy for willful fraud in 2009; the parties settled for $3 million in 2014. Today, an estimated 10,000 bottles from Rudy's cellar are believed to remain in private collections.

The fact that Rudy's luck ran out is not at all surprising (the film documents a few particularly egregious label mistakes). What is surprising, however, is how long his luck lasted. How did no one notice the fraud for three years? And how did it take the FBI another three years to charge him? 

And, more pertinent to our class discussions, what does this say about (some) industry experts? Even after Rudy's fraud was unearthed, several characters in the film who apparently had extensive experience with fine wines had a hard time identifying the wines as fake (based on taste alone - careful label and bottling analysis quickly revealed the fraud). 

The film suggests thats the answer lies with the consumer's willful ignorance. That is, people don't want to believe they've bought a counterfeit, so they don't. They staunchly stand by the integrity of the wines in their cellar to avoid feeling like "dumb money," like they weren't expert enough to see through the fraud, at the price of thousands or even millions of dollars.

I'm sure willful ignorance plays a role, but I also wonder whether Rudy's fakes were just that good (the film hints at this). This leads me to wonder whether there might be space in the market for non-fraudulent imitator wines (i.e., blends sold under new labels). If Rudy's fakes were good enough to fool consumers with relatively extensive experience with fine wines, might non-fraudulent imitator wines be good enough to bring enjoyment to your average consumer? 

This of course begs the question of who would produce imitator wines, which couldn't command the prices garnered by Rudy's fraudulent wines (e.g., a 1945 Chateau Mouton-Rothschild). But that's a question for another day.

Written from Uncork'd (SFO Terminal 3), over a glass of Stags' Leap 2014 Petite Sirah:

(Vino Volo is only in Terminal 2 - reason number 100 to stop flying United.)