Premier Cru Bankruptcy

originally posted by Steve Edmunds:
I sold Premier Cru 6 cases of wine in 1986, and had to have my lawyer write them a letter before they paid me. So I stopped doing business with them 30 years ago.
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Damn. it took me until '97 when in addition to some case of white burg they never got to me, they completely fucked up my '95 Bordeaux orders.

Of course I got way deep and back-logged with chrish peel at CWC, but that is another (albeit eerily similar) story. And with that one, I was very lucky. Citibank and AMEX covered every $.
 
originally posted by Ian Fitzsimmons:
originally posted by MarkS:
... people ITB have all known for a long time about the PC "business model"...
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Well, I guess ITB-folks are just that much smarter than the rest of us. Not having much of an idea about how the wine business really works, I wish you (and they) would have enlightened us teeming masses a little more and earlier. I had always thought they were simply slow and had a funky business model, but never in my dreams would have thought them criminal.
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One of the points made in the other board is that the ITB folks who did speak out were vulnerable to an appearance of conflict of interest, and vilified on this basis by the PC-faithful.

I'm also not sure that the culture of this board would support extended discussion of a specific active business.
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Folks here don't really swim in the PC waters I don't think.

Also, folks here are much more likely to be ITB friendly.
 
Well according to my CT records, I have bought well over 300 bottles from Premier Cru since Aug 2001 (and probably some before). Many were great deals because most americans only bought Burgundy in "great" vintages (so I was able to buy 01 Rousseau Beze for $125) or only bought big name producers (so i got 02 Bertheau Amoureuses for $60) or thought "negociant" was an epithet (so i got drouhin 02 Griotte and Amoureuses for $80). I also bought a lot of german riesling from them including quite a bit of vdp auction wine imported by Old Vine Wine. The only wines bought and not received were four Prager Bodenstein and chevillon chaignots for which they gave me 10% extra credit, which I used to buy in stock Bachelet, and three bottles of 06 Comte de Champagne, which they still owe me.

Steve Goldun gave me the lowdown on the store's business model in 2004 when we were in Italy together. Anything i bought from them after that i bought only after risk assessment by me.
 
I bought a lot of wine from them over the years. Some of it took a LONG time to show up, several years. But it always did. I got a lot of great deals, and it many ways built our early cellar from them. I was never that exposed with them.

I quit buying from them a while ago, mostly because we aren't set up for long haul cellaring anymore. I just don't have patience for aging anything more than Beaujolais, and even that's getting thin.
 
I've bought a lot of Rhone from them over the years. I count myself lucky in that I've gotten all the wine I've bought. I started buying a lot less in the last few years not because I'd gotten somehow smarter but because most of the Rhones they offered were Parker spoof starts and I stopped caring about Bordeaux a long time ago. The waits on my deliveries always followed a pattern, with the wines coming in around two years after initial releases into the markets. Maybe their Rhone buying program was different. I certainly don't give myself any credit for getting out whole.
 
I guess I was bored because I went ahead and scraped the data from the pdf filing. You can get a .csv file of the data here, and some basic analysis is here.

The largest claim is $837,000 and there are 17 claims over $100k. Bear in mind that the filing only contains claimants with first names beginning with A and B, of which there are 956. These claims alone add up to ~$11 million, suggesting that the $70 million figure might be somewhat low. The median claim amount is ~$1000.
 
originally posted by Arjun Mendiratta:
I guess I was bored...
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Interesting. Thanks.

The Top Twenty list includes two corporations, one of which would appear to be a wine company. I guess they're going to default to their clients, too. And I guess this is a list of Skinner's Pigeons, really, since they just kept pecking and pecking without reward....

The Zipcode by Amount list is also interesting: Palo Alto, Santa Fe, Ames IA.... and hardly correlated at all with the Zipcode by #Claims list.
 
originally posted by .sasha:
I tried and tried to talk people out of doing business over there. Apparently I failed.
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My ITB experience: clients weren't interested in warnings, nor the fact that wines were being offered BELOW ex-cellar price, let alone FOB Oakland. Consensus: "it's a doggedty-eat-doggedty world and I'm getting my own".

For those who exited whole, you need to think about why your kindergarten teachers had you play musical chairs. Someone always loses (pays) in the end and you are part of that fateful reality.
 
There are two things I'm curious about. One philosophical, one practical.

Is anyone who kept buying from PC when they were warned/should have known that the business model was fraudulent and received wines ethically on the hook to those who didn't? I guess it's complicated, but everyone I know ITB has known for at least a decade that PC wasn't in the securing wine business. Sure, they got some great stuff back when it was easy to arbitrage wine prices, but for a long time they'd just float prices and take years to deliver because they never had the wines. I don't know that this was a Ponzi scheme exactly, but they were definitely filing orders with new money to old money. People were warned and didn't care because they "got their wines". But did they, really? Didn't they just get others wines, etc?

The practical question is about fakes. Given where and how they were sourcing wines, I've always believed that there were a lot of fake wines tucked in there. People would talk about how wines "looked perfect" and "were cold to the touch" (one of my faves) with spinning capsules. If I were sitting on a lot of high end PC wines, I'd be nervous. Also, there is no idea about unbroken chains of custody and I definitely had heat damaged bottles back in the day.

Anyway, not going to wade into the berserkers morass since I am semi-ITB and have a devious agenda.
 
originally posted by VLM:
There are two things I'm curious about. One philosophical, one practical.

Is anyone who kept buying from PC when they were warned/should have known that the business model was fraudulent and received wines ethically on the hook to those who didn't? I guess it's complicated, but everyone I know ITB has known for at least a decade that PC wasn't in the securing wine business. Sure, they got some great stuff back when it was easy to arbitrage wine prices, but for a long time they'd just float prices and take years to deliver because they never had the wines. I don't know that this was a Ponzi scheme exactly, but they were definitely filing orders with new money to old money. People were warned and didn't care because they "got their wines". But did they, really? Didn't they just get others wines, etc?

The practical question is about fakes. Given where and how they were sourcing wines, I've always believed that there were a lot of fake wines tucked in there. People would talk about how wines "looked perfect" and "were cold to the touch" (one of my faves) with spinning capsules. If I were sitting on a lot of high end PC wines, I'd be nervous. Also, there is no idea about unbroken chains of custody and I definitely had heat damaged bottles back in the day.

Anyway, not going to wade into the berserkers morass since I am semi-ITB and have a devious agenda.
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You are making a basic error, which is that you are assuming that because you knew x to be true, so must everybody else and so if they didn't act that way, they must have had some ulterior motive. I think a lot of people, I for one, just disagreed with you. The question of whether I ought to have is separable from the question of whether I did. Further, at some level or another, in an obvious flatfooted way, people who did get their wine (virtually all of them for a lot of years, after all) were getting the wines they paid for. The fact that PC's mode of doing business didn't entail (or in some cases didn't entail) using the money in the way they contracted PC to use it does not mean that they were engaged in PC's fraud. I have nothing to say about the second question.
 
Seems like I'm mostly echoing Jonathan but here goes.

I ordered on and off from PC from about 2006-2009 and received everything I ordered. Like most people, I'd imagine, I started ordering from them because the prices were good. I stopped when I finally learned that bad wine at a good price is still bad wine. A couple things:

1) I'm not the most connected guy when it comes to the wine business, but I'm also not the least. If it is true that "everyone" ITB knew about Premier Cru's business model for "at least a decade", all I can say is nobody told me nor anyone I talked to.

2) I think we need to be a bit more specific about PC's business model if we're going to toss around words like fraud. It seems quite clear that they were (sometimes) selling wine that they had yet to source. This may be illegal (and was certainly contrary to what they claimed on their website), but I wouldn't call it fraudulent or inherently unethical. Sure, you could argue that my wines were paid for with someone else's money, but it is just as true that "my" money paid for someone else's wine. Money is fungible. Plenty of businesses operate this way. When you say "I don't know that this was a Ponzi scheme exactly," you are hedging on what is in fact the crux of the matter.

Perhaps a better way to think about this is to divide the wine that PC was selling into three categories:

A: Wine that they owned
B: Wine that they did not own, that they could source profitably on the open market
C: Wine that they did not own, that they could only source at a loss

As a customer, you are abetting a fraud *only if* you have good reason to believe that category C makes up the majority of their business. Is that what your ITB friends were telling you Nathan?
 
originally posted by Arjun Mendiratta:
C: Wine that they did not own, that they could only source at a loss
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IANAL but C is not fraud: lots of business deliver product and lose money. I think the word "fraud" indicates that they signed a contract and did not substantially fulfill it.
 
Jeff, you're right. What I meant to suggest was that if they are predominantly doing C, then the only way for them to continue to operate is as a Ponzi scheme.
 
Well I'm not a lawyer either, but in the end PC's business conduct appears blatantly fraudulent. The mismatch in assets/liabilities is simply too great for this to have been a legitimate business model during the last few years. PC took customer orders in the last year, or more, that they knew they couldn't fulfill and $65,000,000 is a lot of undelivered goods. Lots of people refer to this as a Ponzi scheme but PC was a retail business not a speculative investment fund.
 
I was always a little concerned (and therefore limited my outstanding prearrival purchases) but so many people who I figured knew better than I did were still buying from them and they had been around for so long that I had a certain level of confidence until the news about all the lawsuits hit.

That's when I exchanged my last app. $200 for store credit and spent it on some in stock wine. If that makes me a terrible person so be it.

For full disclosure I had had a 4 year old order for 4 bottles of 2002 Taittinger Comte (app. another $400) which I exchanged for 2004 instead a short time before the news of the lawsuits hit. I had gotten frustrated waiting so I called and asked about that since they sent out an offer for in stock 2004.

Comte was all I bought prearrival from them, my other purchases were generally in stock Germans as they often got some things no one else did (such as Meulenhof Alte Reben ET).
 
... everyone I know ITB has known for at least a decade that PC wasn't in the securing wine business.
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You must be pretty well connected and I guess that is why you have a wine business, most of us do not. Also, I am not ITB nor do I have such connections that ever talk to me about finances and how much people in the business get paid or how they make their money.

Anyway, not going to wade into the berserkers morass since I am semi-ITB and have a devious agenda.
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Thank you!
 
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