The age of the truly free New York sommelier might be over. The New York State Liquor Authority recently announced that it will change the state’s beverage laws, making it impossible for restaurants to craft wine lists based around wines from private collections. In other words, New York restaurants will only be able to buy wine from approved commercial vendors, having been banned from shopping at private auctions. Why make such a law? According to the SLA, the law is designed to combat wine fraud and ensure that all wine sold at state restaurants is safe and authentic. What they perhaps don’t realize is that this will lower the overall quality of wine lists in the state, and will impact collectors in a number of ways.
The Law Doesn’t Impact Only Restaurants
What makes New York City one of the most vibrant wine cities in the United States are its diverse and utterly unique wine lists. It’s rare for two fine restaurants to have more than a handful of wines in common. Restaurants like Veritas, Charlie Bird, and Racines are famous for hiring sommeliers to make wine purchases based on customer tastes without regard to price. Charlie Bird’s Grant Reynolds told New York Eater, “I am willing to pay 10 percent more for a bottle from a private collection and not make as much money on it because it is important to have that wine on the list.” Yet, in the future, New York sommeliers will no longer have the freedom to choose any wine they wish; they will be forced to give up rare, privately-owned bottles in favor of commercial bottles. This changes the dynamic between customers and sommeliers, making it harder for sommeliers to build relationships with customers.
Restaurants are not the only ones that will be impacted by this new law; private collectors will also be affected, though indirectly. First, most fine New York restaurants buy their privately-owned wine bottles from older collectors who want to sell off their vintages quickly through estate sales or auctions. The goal is often to sell the bottles as quickly as possible so that relatives of the collector can gain an inheritance from the sales after the collector’s death. Without New York restaurants in the bidding, the process will be significantly slowed down, since fewer buyers will participate.
A second factor will impact wine collectors from Europe. Many countries in Europe are experiencing massive economic recessions, especially in countries such as Greece, and as a result, many collectors can no longer afford to keep their wines. There is a huge market right now for European private sales in countries where economics are poor, as those who have amassed collections wish to liquidate their bottles in order to survive in the downturn. Not only will these sales likely slow down without New York restaurant bidders, but collectors will likely make less money on auctions overall. New York restaurants like Charlie Bird are usually willing to pay a premium for bottles, while private collectors are typically more frugal, since they have no guarantee of a profitable resale.
For collectors who wanted to turn the best profit, selling wine to New York restaurants was a good bet, since many restaurants have specific customers in mind for whom they buy premium bottles. As a result, restaurants are willing to spend more than average for desirable wines, which they then sell to customers at a markup. Restaurants can afford not to be worried about initial investment prices on luxury bottles because they already know that a specific customer is willing to pay them enough to make that money back. The third factor impacting collectors is that, despite a booming market for premium wine bottles, collectors will now be unable to take advantage of this highly profitable and simple sales process, and must turn to peers or to less competitive cities.
Possible Benefits of the New York Wine Law for Collectors
Although the law will have largely negative consequences for restaurants and the collectors who rely on restaurants’ wine budgets, collectors will benefit from the new law on the buying side. In the past, it was often difficult for collectors to compete with New York restaurant representatives at wine auctions, since restaurants are usually willing to spend top dollar. This new law will likely keep private sale prices lower on average for collectors, and will decrease the competition over the rarest bottles.
Similarly, private collectors will be able to get involved in more liquidation sales from European sellers without worrying about an artificial uptick in prices due to restaurateurs. Time will tell whether the law will remain or whether lawmakers will realize the crippling effects it will likely have on the quality of New York wine in restaurants.
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