Who Gives a Flip? When High-Value Cult Wines Tempt Buyers to Resell for a Profit ...

How much would you pay for a bottle of California Sauvignon Blanc?

The only wine from that category to ever earn a classic rating, the 2007 Merry Edwards Russian River Valley (96 points), cost $29, and the current vintage, 2011, is $30. So would you pay more than eight times that for a bottle of Screaming Eagle Sauvignon Blanc Napa Valley? No? Well what if I told you that you could immediately turn around and resell it for 10 times that price? (That's more than $2,500 for a single bottle of Napa Sauvignon Blanc, for those still trying to do the math, at a profit of $2,250 per bottle.)

That was the conundrum facing a select group of Screaming Eagle mailing-list members this past summer when California’s most famous cult label released 100 six-packs of a 2010 Sauvignon Blanc priced at $1,500 each. The wines started showing up at auction soon thereafter, with a six-bottle lot in its original wooden case selling for $15,535 at a Spectrum auction in June. Screaming Eagle’s representatives weren't happy, announcing that they would limit the 2011 production to just 300 bottles.

“[The Screaming Eagle Sauvignon Blanc] was for their personal use only,” Screaming Eagle direct-to-consumer manager Patrick Chapman told Wine-Searcher.com in June as the Spectrum auction bids were coming in. “And, of course, people said it was for their personal use only, but the reality [is] that it wasn’t. People are turning it over for profit, for their own selfish greed.”

Without getting into a discussion of black pots and glass houses, the frustration of having sold something for one-tenth its value is completely understandable, as is the temptation to resell a severely undervalued commodity. Your perspective all depends on which side of the cash box you're standing on at the yard sale chockablock with misidentified Murano glass, Roseville ceramics, Eames chairs and Tiffany lamps.

Just how halving the Screaming Eagle Sauvignon Blanc production will serve to deflate the hype around the wine is a mystery. If anything, the 2011 bottling's rarity will only push demand—and its auction value—even higher. Some Internet commenters have suggested Screaming Eagle's disdain for profiteering was a feigned show to further publicize the wine's desirability and secondary-market value.

What has given any potential Screaming Eagle gray market traders pause, however, is what happened a few months later. In September 2012, a small but vocal constituency of the membership claimed they had been kicked off the Screaming Eagle mailing list because they had resold their allocations for a profit, an unseemly little facet of the cult wine market known as "flipping." Some of the ousted took to online wine message boards, including the WineSpectator.com Forums, to express their outrage and suggest there may be legal recourse to be had. (There isn't.) Perhaps telling, none of the recently removed mailing-list members I contacted were willing to speak about their experience on the record.

Flipping is nothing new—in fact, its heyday passed with that of the cult Cabernets and the Clinton-era economy—but newer brands like Scarecrow, Saxum and Kosta Browne have filled the places of Napa Cabernets whose release prices have caught up with their aftermarket value. The Internet and social media have changed the game as well—it's easier than ever for wineries to spy and purge careless flippers, and the red-handed haven't been shy about lambasteing their no-longer-golden geese.

Screaming Eagle estate manager Armand de Maigret clarified the winery's policy last Friday, telling me that the members removed from the mailing list in September had been flipping their allocations during the hot summer months, when the wine could easily be cooked in transit. "If the temperature of the wine goes above 85° F, the wine is killed," de Maigret said.

"If you do not respect the wine, from the flower to the cork to the table, then the wine will suffer," de Maigret said. "If somebody has our wine and doesn't respect it in transportation from place A to place B, we suffer from it. If we realize that someone is flipping the wine in a month that it is super-hot … or when it's super-cold, and all that person is interested in is a quick buck and they don't care about the health of the wine, then we don't have any respect for that person and we will remove that person from the list."

Flipping isn’t unique to the cult wine industry. You see it virtually everywhere that demand greatly overwhelms supply, from ticket scalpers to people queuing up days in advance to buy the next Air Jordans, Apple product or Tickle-Me Elmo.

But wine lovers spend years on winery waiting lists, hoping to be offered the chance to buy just a few bottles of Screaming Eagle, Sine Qua Non, Marcassin or any of many others. Shouldn't their patience be rewarded with the freedom to do with their property as they please in America's market economy?

Or should vintners be commended for charging their loyal customers below-market prices and protecting the provenance of their products—for the benefit of those willing to shell out big bucks for wines at auction—by keeping them out of the hands of those who would profit off a spoiled product?

In part 2 of this blog, find out what Screaming Eagle's Armand de Maigret, Sine Qua Non's Manfred Krankl, Marcassin's John Wetlaufer, Kosta Browne's Michael Browne, Saxum's Justin Smith and Cayuse's Christophe Baron think about the secondary-market value of their wines, and how they deal with mailing-list members caught flipping them.