Premier Cru, Berkeley

This is just a heads up in case anyone has prearrival (or instock) wine at Premier Cru in Berkeley.

I started buying wine at Premier Cru (in Emeryville at that point ) in late 90s -based on recommendations from WLDG and alt.food.wine. Often best prices in nation, reasonable shipping charges, good condition bottles. Most of what I bought was instock, most prearrivals arrived in a reasonably timely manner. I had a couple of orders that they alerted me there was a problem with, but reasonable substitutions were made.

In about 2005 I (and several others) mentioned PC as a good source on AFW. A longterm Bay area person contacted me to say he had a friend who had been shorted a top Burgundy when price had skyrocketed in late 80s. We had a disagreement over whether I was morally culpable by continuing to buy at PC, but after that I noted others' poor experiences whenever I was asked about PC, though I had always had everything delivered.

About this time there seemed to me to be a shift in percentage of great deals - previously they had weekly blasts with good deals, with once a month or so some real steals. Mostly those deals were instock. But now Bordeaux futures and pre-arrival trophy Burg seemed to dominate the real steals. And wait times people reported seemed to get longer. By the 2007/2008 financial crisis I didn't want to be an unsecured creditor, traded my couple bottles of overdue PA stuff for instock (at a substantial loss to current value of PA stuff, but a plus for my peace of mind) and started limiting my PC buying to an occasional instock wine (and only did limited prearrival anywhere, primarily with stores where I knew owners personally like Grapes the Wine Company and Chambers St Wines). And started advising others to do same. When PC bought own building and moved to Berkeley in 2010, many pointed to it as a sign of financial health. But I wondered would bank really understand extent of PA owed- PC's business was unlike any other.

Things churned along, and the % of PA to instock kept shifting in offers. They'd do 20 and 25% off sales, but you'd scroll past 50 or 60 prearrival items, and there would be 4 or 5 instock (and the more expensive instock were in small quantities). Last few years (especially last 6 months) in debate on another forum I've been a vocal "doubter" (along with many others, particularly some in the business who know realities of pricing) as sales offers went past my ability to suspend disbelief. Others defended, based on idea that "in the end they had always delivered." Rumors of slow payments, deals that were never consumated because PC didn't pay, etc convinced me that things were not well. Then the volume of sales emails picked up, and the hard-to-believe PA stuff dominated. Things like futures of 2014 Bdx at 10-15% under negociant cost, prearrival recent Fourrier and Ponsot at 25% less than lowest WS Pro,  and prearrival of things like 2002 Comtes, '89 Clinet, '90 Petrus (in case or 2 case quantities) at less than auction net to seller. I only had some (not very expensive) instock bottles that were ordered over 2 years (finally enough to ship) but decided not to wait for October. When Betsy went to CA, got stepson to pick up my bottles (and pay sales tax) and and Betsy checked a case when she returned. I offered a couple of weeks ago to bet a friend that PC (at 3:1 odds) would be in bankruptcy within a year. He accepted, but we never set terms, and I am glad about that, as I wouldn't want to take his money or wine, and think at moment I'd give 10:1 odds

Because info that emerged over last week is far worse than what I expected:
A lawsuit by Lawrence Wai-Man Hui for almost a million dollars in undelivered wine (with repeated missed deadline)
Several other lawsuits, including one from Dr. Shirlin Wong for more than $200K (apparently now with a writ of attachment)
A few other smaller lawsuits
A past due property taxes of $125K.
A lien from the Board of Equalization (sounds like sales tax)

Tax liens, writs of attachment, lawsuits of customers seeking to become secured creditors is not good news. It's possible there are multiple containers of highend Bdx, Burgs, and Champagne about to arrive in Port of Oakland and everything will be cool, but it's also possible that I'll win the Megamillions drawing even though I buy maybe one ticket a year. I wouldn't count on either. I'd encourage anyone who has wine at PC to think about getting it shipped or picked up ASAP. If anyone has pre-arrival wine, possibly think about contacting your credit card company now. Or maybe converting to instock.

Hopefully this is wasted typing, and no one here is waiting on Premier Cru to deliver!

[David M. Bueker]

Only ever ordered from them twice. Both were "in stock" wines, though one of those took 8 months to deliver.

Thanks, Dale, for taking the time to thoroughly yet succinctly summarize this. Unlike the many divisive opinions expressed on the other forum which I couldn't support, I completely concur with your write-up.

I was a big Premier Cru champion and long time customer, I used to buy the majority of my wine there. They came through with a big order of 2005 Bordeaux Futures (most delivered in 2010 with a few stragglers in 2011). This delay and the Great Recession made me sweat, and I had to take some swaps (mostly trading half-bottles for full bottles with a fairly generous increase in the total volume of wine I received). But they came through and the bottles appeared to be utterly pristine, so it seemed that the truism was true: they always deliver but it can take a long time.

Something changed fairly recently, however, and looking back the first inklings of this change seems to have begun in late 2012-early 2013 when delivery times really began to stretch out and my normally reliable source at PC started giving me incorrect estimates and information. Things got a lot worse in the last 6-9 months (which Dale documents), with the last month especially alarming. I have cashed out and I am done.

[Jenise]

Hmmmm...I have only done business with Premier Cru a couple times. The last--something ordered and paid for last summer that only arrived about a month ago--was the worst experience yet, and I have had the conversation with others who have had similar experiences that I/we would never buy from them again.

The wines I was most recently waiting on were magnums of Ponsot, funny you should mention the name. Sounds like I better get my brother who lives nearby to pick these up for me. Waiting until cooler weather, as I'd planned, might be a disaster.

Dale, thanks for this update. The threads I saw were so, ahem, "berserk", but without any proven information, that I had stopped paying attention. Apparently, I did that just as real information, like the lawsuits, came to light. The property tax bill is somewhat unclear, since they are in arrears for 18 months of taxes, but paid up for this year. However, the lawsuit I read was pretty damning. $500K in orders between 2009 and 2014, and less than 10% delivered.

My guess was that 3 years arrears in property tax triggers foreclosure (either by gov't or lender) and they are staving it off. There's a bit over $20K in late fees and interest, so cheaper to pay current year that back year.
Number of instock items down about 15% in last week as people cash out PA stuff. That's just item #, not necessarily indicative of overall stock, but my feeling based on quick glance is better stuff is mostly gone. Bordeaux is mostly gone. 48 SKUs. Classified Bdx is 1 lone mag of Kirwan and a single 3L of 79 Margaux. A few bottles of Conseillante and Canon. A bit more of some Sauternes, some Fronsac, etc. Offhand I'd guess total Bdx inventory worth maybe $6K-8K.
Burgundy a bit better (122 Skus), but no trophies left. Mostly Beaujolais, Macon, things like Digier-R village reds and Fontaine-G whites. Some Louis Michel, etc. The few GCs are mostly F. Esmonin.
Question is if/when writ is used to seize inventory.

I'm really torn about this. I'm a firm believer in that what's too good to be true almost always is, but Premier Cru has been too good to be true for a long, long time. Looking back over my purchases, they've consistently been significantly cheaper than the Cellartracker average, going back to 2004. I can certainly see how a wine business that operates to a large degree on futures can get in over its head, and there's a precedent for that. But another part of me says that it's extremely unlikely they are running into cash flow issues right now. In 2008, when they were moving from dirt cheap office space into an expensive building (including extensive renovations), the dollar was plummeting against the euro, that was the time that they might have gotten into a cash crunch.

Now the euro is weak, so all those dollar-denominated orders are more valuable, the new building has appreciated significantly, why are they suddenly in trouble after 20 years? It doesn't add up. I dunno, I have $300 worth of futures and no plans to "cash out".

The only order I have outstanding (and it may have arrived without getting recorded in CellarTracker) is a half bottle of Chateau Leoville Poyferre.

JC,
easy enough to check. No matter other concerns, PC has best order tracking website of any wine shop I know. Just sign in and check open orders. If curious when a closed order shipped, just click shipments and you can see all shipments back for about 15 years.

Walt, hope you get your wine. Without being inside company impossible to know how it got to this (though if using current funds to fill past obligations a slowdown in orders is fatal), but impossible to say not in a liquidity crisis (at very least). Liquid companies pay property taxes, pass along sales tax, don't bounce checks, give promised refunds on time. Most damning is Exhibit A in the Wong case- they owed Wong wine dating back up to 6 years, John Fox signed an agreement saying they'd deliver the wines or current value (I think about $250000) by April 2015, they delivered a bit by April then suit was filed in May 2015 for $215,000 remaining. No payment. So far sheriff able to garnish less than $10K from their commercial account. Meanwhile the new suit for $1M (with evidence of many broken promises) and close to 100K bottles showing due on CT (not used by most "whales") . That doesn't count the rumored group suit, only public info.

I have enough friends with skin in the game to hope PC survives and delivers. But without about a bunch of containers loaded with top end wine arriving shortly, hard to see that happening. .

Yes, the next few months will be crucial in how this ultimately plays out. If several full containers arrive in late October (as many have been repeatedly promised by PC) and lots of folks suddenly get a bunch of high end wine they've been waiting on, that could crack open the door for PC to survive, though probably in a weakened state without the infusion of some fresh capital.

But if many/most don't get much of what they are owed by the end of the year, I suspect the rout will be on. Everyone with an ear to the ground will stop buying for good (if they haven't already), more lawsuits might ensue, bankruptcy would loom.

FWIW, I have a good friend who is very into wine, but has never bought from PC as French wine isn't his main passion. He has a good buddy who works in the warehouse at Premier Cru, so he called him to ask what was going on and his insider friend seemed to think this was all a tempest in a teapot. The insider acknowledged the liens and lawsuits, but claimed these were all now resolved and everything was fine.