good morning. It’s Tuesday. We look at a famous New York store – and its recent problems.
Two words come to mind: caveat emptor. English buyer beware.
I was listening to one of the most famous and famous business journalists in the country explaining a story he wrote. It was about Sherry-Lehman Wines and Spirits, the famous New York store. He wrote that he was unable to supply more than $1 million worth of wine to prepaid customers.
One of those clients was the person I was talking to – New York Times reporter James B. Stewart, who wrote the story.
As he said, the story was unusual because it began with his own experience with Sherry-Lehman, a long-respected New York store. Sherry-Lehman writes that she takes Tiffany & Company for jewelry and FAO Schwarz for dolls. The store, located in an Art Deco-ish building on Park Avenue at East 59th Street, has name recognition. Many New Yorkers who don’t know wine know about Sherry-Lehman.
So are the sages. “One of the reasons I went there was because it had a good reputation and it had a wide variety of wines from France and Italy that I like,” Stewart told me. “I wouldn’t dream of paying more than $100 a bottle, and there were good wines out there for $15 or $20.”
But there are times when you can’t judge a store by what you see on the shelves. Sherry-Lehman’s problems predated the pandemic, but New York, the gateway to more sophisticated cities, told me the company was “particularly affected.”
“The customer base on the Upper East Side has left town,” weakening the company’s bottom line, Stewart told me. That’s the biggest annual increase in more than 50 years in a year when alcohol sales rose 2.9 percent, according to the National Institute on Alcohol Abuse and Alcoholism. Sherry-Lehmann’s problem was that the champagne stopped flowing because large gatherings like weddings and holiday parties were out of the question.
For those who knew their wine, Sherry-Lehmann was more of a Park Avenue prestige than a retail store. He was a broker who dealt in commodity futures. Just like there are corn futures and soybean futures, there are wine futures, a concept that one business reporter likes.
Stuart bought some, paying Sherry-Lehmann for the wine he would give a few years later – four cases of 2015 Bordeaux to be shipped in 2015 Bordeaux within three years after the wine arrived in the bottles. He later bought 2016 and 2019 futures on the 2019 and 2022 vintages.
There is risk in wine futures, just as there is in commodity futures: A vintage may not live up to the initial buzz. “It’s not like FDIC insurance,” he said after I mentioned the Federal Deposit Insurance Corporation, which, among other things, insures deposits of up to $250,000 at most banks. But Sherry-Lehmann said they thought it would be “deadly to their case” if they didn’t hand over the future of the wine.
“Once there is a rumor that you have denied something, that will be the end of it,” he said.
But the wine he paid for did not arrive.
Even after they expired, he spent $400 or more on a supposedly stocked white burgundy wine. When that purchase didn’t arrive, Sherry-Lehmann told him the burgundy was on back order and would arrive soon — and the store wouldn’t offer refunds or credits.
In 2018, he also heard from two customers who sued Sherry-Lehmann in 2015 for deliveries that did not arrive when originally promised or in 2019. At that time, the 2016 wines they ordered in 2017 did not arrive. , wrote that they wanted either the $801,264 valuation of the wine or the fair market value.
“I didn’t know people would spend that kind of money in the future,” he said. “That was bigger than me.”
That’s when Sherry-Lehmann decided it was history — and the store’s successor refused to serve the wine. (Sherry-Lehman has argued that the contract with the two plaintiffs does not guarantee any delivery date. Shida Gilmer, a co-owner of Sherry-Lehman, said in court filings that Sherry-Lehman “anticipates being able to deliver the wine in 2023.”)
Stewart wrote in the report that Sherry-Lehman also ran a storage business called Wine Cave, where customers tried unsuccessfully to retrieve their wine. Four former employees told him they believed Sherry-Lehman was selling rare bottles from the wine cellars to other customers. Gilmer told Stewart that the company would not have sold the bottles in question without first obtaining permission from the Wine Cave.
The store closed earlier this year after its liquor license expired. Stewart wrote that Sherry-Lehman owes New York state $2.8 million in unpaid sales tax and that several wholesalers have told the state liquor authority that Sherry-Lehman is delinquent on payments. The agency requires liquor stores to pay wholesalers within 30 days of receiving their products. Stuart told me that the wholesalers have started to insist on paying on delivery; Some ultimately require certified checks or wire transfers. Or simply stop doing business with Sherri-Lehman.
Gilmer told Stewart in an interview that the business was struggling but that he had recently invested more money to make Sherry-Lehman “the No. 1 fine wine retailer in the world.” He blamed the pandemic and tariffs on many European wines imposed by the Trump administration for the company’s problems. He said the company has made payments to distributors and will offer refunds or store credit to customers who did not receive the wine they were paid for.
As for the wine futures he paid for, Stewart told me, “I was very modest.”
“I don’t care how prestigious the brand name is. You can’t just blindly trust them. “Many people suggested this idea to me,” he said after the article was published. “I guess it’s an old lesson, but I guess we should remember it.”
Then he said, “I’m not going to invest in any more wine futures.”
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I was reading a magazine. And there we were, hands next to each other, sipping our drinks, flipping through the pages. We nodded our heads in acknowledgment of our membership in the unspoken club.
My meal arrived: a six-slice mushroom pizza. I closed my magazine and began to eat, savoring each bite while appreciating that there was no hope of talking to anyone.
Halfway through my meal, the woman next to me turned to me.
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