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March 20, 2005 - Are These People Mad?

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"In the 1930s, people in Chicago paid a dollar a pop just to sniff the Louis XIII."  The cognac that is.


Glancing around the news on the net one night last week I came across this AFP wire story from France at The Tocqueville Connection -


Received Thursday, 17 March 2005 04:27:00 GMT


COGNAC, France, March 17 (AFP) - It's at the very top end of the luxury market, with cognac distillers deliberately targeting the world's richest people, many of them in Asia.

One French distiller is selling its finest cognac at 40,000 euros (54,000 dollars) a magnum, a bottle containing about 1.5 litres ... but that comes with a 4.75-carat diamond attached.


What’s that about.  A spokesman for Remy-Martin is quoted as saying, "No other product has the luxury of waiting around for a century before being put on the market” – and the communications chief at Courvoisier is quoted as saying, "Cognac is 'the' luxury liquor."


No kidding.


Some of this has to do with fancy packaging, with diamonds, of course.  But something else is going on.  We’re told Remy-Martin “now produces 1,200 different cognacs aged for 40 to 100 years. One, sold in a crystal decanter, goes for 1,500 euros, another for 7,000 euros; a tiny five-centilitre (1.75 fluid ounce) flask with a diamond-studded stopper sells for 1,000 euros.”


Yipes!  And the fifty-four thousand dollar cognac mentioned above is readily available at London's Heathrow airport, aboard the Queen Mary II, and in Japan.  And of course we find that Courvoisier has produced only two thousand bottles of "Succession JS" – and that one comes in mahogany boxes worked by master-craftsmen that are, we are told, small-sized replicas of a box said to contain the secrets of Napoleon I.  Of course.  (What secrets?)


Then there is this:

"It is rare to find outlets that have brandies older than 100 years, or were produced before phylloxera (a disease which destroyed French vines in the 1860s), with an exceptional level of quality and conservation," said Stephane Denis, the proprietor of a specialist shop in the town of Cognac.

The cognacs on display in his shop include Hennessy's Ellipse, which he sells at 3,500 euros a bottle, and Frapin's Rabelais vintage, at 4,200 euros.

Only 600 bottles of the Rabelais vintage were produced. The bottles are gilded and look like pocket-watches, designed to appeal to collectors as well as connoisseurs.


Oh, have to have one of those!

Or maybe not.


A friend who has written a column or two on wine comments –


They are mad.  I don't know much about cognac but to put this in the context of wine, my personal view is that most people can't taste the difference in quality when the price tag gets above $50 a bottle - in my opinion its mostly just prestige of the maker.  For example we went to the Opus One winery in Napa where they sell $150 bottles of wine.  I'm sorry, it didn't taste any better than a $30 or $40 bottle of wine to me.


Yep, and I feel the same way about audio equipment.  My ears aren’t good enough to tell the difference between the good speakers and the ones that go for ten thousand a pair.  The old Charlie Parker records sound about the same.


Phillip in Georgia points out this all may not be what it seems –


Here in Atlanta cognac is a very popular drink among black chick blues singers who mix it with Coke - the drink.  It has all the class of a gold tooth, in a culturally ethnocentric way.


Yeah, same here in Los Angeles.


And Dan, presumably still on that cruise ship off Vietnam adds this –


Yikes!  I knew there was a reason I drink beer.  Okay, there are a bunch of reasons - so just add the price of cognac to the list.


And Joseph, our expatriate friend in Paris add this -


Yep, these people are nuts.  It's a market purely based on rarity which has nothing to do with enjoyment.  I always keep a bottle of the cheap stuff around, cheap being in the $30 - $40 range, as sometimes I do deviate from beer.  Beer and cigars just don't mix.


Last year I bought quite a special bottle of cognac direct from the maker at wine salon.  Very small production, carefully made, far superior to my usual.   I think I paid 40 euros.


What the article fails to note about super-super premium cognac is that one of the principle target markets at this price range is the Russian drug king /  American rap star market.  Those people can't get enough of it.  This tidbit comes to me from a reliable industry source.  Normally, it's the very, very new money from the most dubious of sources going for this.  The families of industrial and otherwise legitimate (?) wealth didn't get rich, and certainly don't stay rich by drinking $10,000 bottles of cognac.


On the other hand, we were walking just last night on the rue du Faubourg Saint-Honore, just behind the American Embassy at the place de la Concorde, were I spied a shop that made shoes for 7,800 euros. That's 10,000 bucks. Don't get me wrong; they were nice, but am I missing something?


I've seen places in NYC and London where you can pay $2000.  Still a lot, but considering what you pay for the "Scribe" line at Bally which is only "hand made" in the broadest possible sense of the term, not unimaginable.  But ten grand?  The style was very traditional.  I could only imagine a rap star going for these if he was going to be knighted.


Final anecdote: I walked past a Mercedes dealer and stopped to look at an unfamiliar car in the driveway.  It turned out to be (name plate forgotten) made in Austria, built on a S-Class chassis for half a million bucks. This example, it turned out, was owned by the ambassador from the Ivory Coast.  Seems these diplomats are quite generously compensated, at least those from the Ivory Coast.  Is it too late for me to join the diplomatic corps?


In a word?  Yes.


From Rick, the News Guy in Atlanta –


Those ten thousand dollar shoes in Paris?  Is Joseph missing something?


Just a thought:


Every once in awhile, I see a sign on a fast-food restaurant around here that reads something like, "Hamburger & Drink, $295!"  I always wonder if someone for whom English is not their first language would look at this and wonder who would pay almost $300 for a quick lunch that doesn't even include wine.


My point being, is there any chance they left off the decimal point, and that the shoes were actually 78 euros, or about 100 bucks?


Anyway, I do sort of like cognac, and I also like really good fresh-squeezed orange juice, but in neither case would I pay that kind of money for a bottle of it.


(Whoops! I take that back!  After writing that, I noticed on my shelf a 1-liter bottle of French Grand Marnier - made with a mixture of cognac and, I think, orange peels - that still has the price tag on it: $48.99!  Then again, my wife insists I buy this stuff every time she makes her famous cranberry sauce on Thanksgiving, which is to say this bottle should last a good decade or so.)


From our Wall Street attorney –


I am a single malt scotch drinker by nature.  I think I once paid $75 (USD) for a bottle.

Regarding shoes, I work at One World Financial Center next to the big pit formerly known as the World Trade Center.  There is a wonderful discount shoe store, two doors down from the American Stock Exchange, Inc. They sell Alden's (the last New England shoe company).  I certainly don't pay anywhere near 10,000 for these shoes.

My theory on all the conspicuous consumption is that these people suffer from what I like to call LD Syndrome.  You may ask yourself what this syndrome is and I'll tell you.  Years ago, when I first started working on Wall Street, I worked out at a sports club downtown known as New York Health and Racket.  In any event, I noticed that those individuals who pumped iron (I run) and made all sorts of noise while doing so had one thing in common.  When in the showers afterwards and walking around the locker room one couldn't help but notice that these guys were not particularly well endowed in certain areas; hence the LD designation.  I explained this to my daughter once.  Shortly thereafter my brother-in-law bought a huge Cadillac Escalade.  She took one look at it and couldn't stop laughing.


From our World’s Laziest Journalist, Bob Patterson –


What's it worth?


Once, while photographer David Douglas Duncan was photographing Pablo Picasso, they took a break and had a chat.  Picasso asked Duncan for a buck from his wallet.  He examined it.  "What's it worth?"  They considered the question.  Picasso painted a little something (a bull?) on the bill and signed it.  "What's it worth now?"  Why was it worth more because it had been desecrated, Picasso wondered.


Obviously it was worth considerably more, but why?


A bargain is only a bargain if you want to buy the product.


Yeah, but what is the product?  Most all above is a symbolic exchange, or rather, an exchange of lots of money for a symbol.  It seems one isn’t buying the liquid or the packaging. 


To belabor the obvious, you are buying the ability to rightly claim you have the means to seek out what others say is fine stuff and rather ridiculously expensive, and then buy it.  What that says about you is what you have just purchased. 


Visit Los Angeles.  Look at the automobiles people drive around Hollywood and Beverly Hills – the massive SUV things that can climb mountains, and only climb shallow driveways at best.  Look at the white-haired fellow in the Rolls convertible with gold chains and the Rolex.  Look at the rap stars in their Escalades (minor stars) or their Bentleys (major stars).  Look at the guys from East LA in their tricked-out low-riders that hop around.


We are talking symbolic exchange of status information here.  That is not to be confused with transportation. 


And ultra-premium cognac is not to be confused with nice stuff you can get in a reasonable liquor store.  The latter is for enjoying on a cool evening by the fire.  The former is meant only to exchange information.



Copyright 2003, 2004, 2005, 2006 - Alan M. Pavlik
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