A new Napa Valley wine has recently been tipped for ‘cult wine’ status. King of Clubs, a collaborative effort between Robert Mondavi, restauranteur Justin Anthony and entrepreneur Christopher R. King, is likely to follow in the footsteps of wines like Screaming Eagle and those of Harlan Estate and other Napa superstars. But what factors give a wine ‘cult’ status?
A big name doesn’t hurt
Robert Mondavi is one of the world’s most influential winemakers. Other wines that he has been involved with such as Opus One, a collaboration between Mondavi and Baron Philippe de Rothschild, are representative of the Californian blockbusters with which his name is associated. So it’s no surprise that this latest project involving Mondavi is set to be a huge success.
Parker describes your wine as ‘utter perfection’
It doesn’t hurt to have Robert Parker give your wine 100 points, which was the case when little known boutique Californian winery Screaming Eagle found their Cabernet Sauvignon suddenly in high demand. Parker’s ‘utter perfection’ comment was actually about the 2010 vintage, sending its price per bottle skyrocketing and generating interest in older vintages on the second hand market. Due to small production, tiny allocations, and allegedly a waiting list to get on the waiting list to buy a bottle directly from source, Screaming Eagle’s cult status has all but ensured most of us will never see a bottle, let alone taste it!
The elusive artisan factor
Spain’s Bodegas Vega Sicilia winery is the home of the country’s most praised wines, including flagship wine Unico. But the estate’s most elusive wine is Unico Reserva Especial – an extraordinary wine that is a blend of great and often very old vintages. The Reserva Especial is a blend of Spain’s indigenous grape Tempranillo with Bordeaux’s Cabernet Sauvignon. It is impeccably crafted, and has a true artisan quality. It is released infrequently and in high demand, so allocations are small.
For the most part, these cult wines exist as an intriguing distraction to both the fine wine drinker and the investor – the drinker might spend a lifetime trying to secure a bottle and hoping it will meet with their expectations. The investor will do well to remember their names and look out for the next King of Clubs in order to get their hands on it before Parker does.
Few Bordeaux vintages have generated as much speculation and subsequent commentary as 2009. Thanks to Robert Parker’s glowing endorsement, there was a genuine scramble to get hold of the top wines with an unprecedented 21 wines receiving the ultimate accolade, 100 Parker points.
The power of Parker’s endorsement
Although prices were undoubtedly high, Parker’s endorsement ensured that the 2009 campaign was a successful one, just as the market began to peak. So, in the wake of a couple of weaker vintages, and with Bordeaux having fallen out of favour somewhat as the pricing debate continues, is it possible to find good value wines from the 2009 vintage?
Liv-ex points to three specific groups of wines from 2009 – first growths, wines scoring 100 points, and Parker’s ‘Magical 20’, a group of second to fifth growth wines declared by Parker in a fascinating 2011 Hong Kong-based tasting to be punching substantially above their weight. Among the three groups the first growths saw a decline when the 2012 in-bottle tastings took place, but the Magical 20 wines and the 100-pointers’ value started to soar.
First growths overshadowed
The problem that the first growths encountered was that the wines were so expensive when they were released that the prices barely moved until the wines were actually in bottle. Parker’s selection and evaluation of his Magical 20 meant that the first growths fell out of the spotlight, with everyone clamouring to get hold of the wines he evaluated to be the most exciting overperformers of the vintage.
There is some crossover between the 100 pointers and the Magical 20 of course with some wines falling into both categories. Oddly despite the prestige and pedigree of the wines that fall into two categories, there is potentially some value to be found here for those wishing to buy 2009 wines today, with Liv-ex’s blog describing the current prices as recently as July 2014 as ‘off-peak’.
Buying ‘historic’ wines
So if you are considering purchasing wines from the vintage that Parker said ‘may turn out to be historic’, it may not be the worst time to do it. Ultimately we can never be entirely sure what’s around the corner with Bordeaux – factors such as the annual weather, the size of the harvest, the emergence of new markets for the top wines, and whether these markets buy for drinking or investment will all continue to play their part in Bordeaux’s fortunes. Meanwhile, what remains from the extraordinarily good 2009 vintage will continue to improve in bottle for years to come, and those that didn’t invest in those 100-point wines might come to wish they had. And we certainly shouldn’t write off those first growths just yet!
When you buy a wine to drink, do you ever find yourself gravitating towards one that has a little sticker on the label indicating that it has won an award? Lots of people do this – in the same way that they will tend to choose the half-price wines in the supermarket assuming they are getting a bargain, they will identify an ‘award-winning’ wine as better than the alternatives on offer. But there’s often more to that little sticker than meets the eye.
The International Wine Challenge & Decanter
Some awards are quite prestigious, such as those given out annually by the IWC (International Wine Challenge). It’s very desirable for the winemaker to display the IWC sticker on their wine and will greatly enhance their sales, so the wine that wins one of the IWC’s awards such as the ‘Argentinian Red Trophy’ will have faced some pretty tough competition. Decanter’s awards are similarly well-regarded. Wines which are up for consideration are tasted by a panel of wine industry insiders with ‘expert’ palates and allocated accordingly. So, surely it makes sense to choose a wine that has received the seal of approval by expert tasters rather than one that hasn’t?
What would Jancis do?
Well, what are the alternatives? We could make the decision to ask a wine merchant’s advice, or buy online and put our faith in a short description of the wine, or we can look for suggestions from a particular critic like Jancis Robinson or Jamie Goode. There’s absolutely nothing wrong with wanting some guidance when it comes to buying wine, it is a very personal thing. Although what one person liked, no matter how revered they are in the wine industry, won’t necessarily be to every consumer’s taste.
There is some snobbery about wine awards though, many who are dismissive of them are quick to point out that wines that genuinely are ‘the best of the best’ are not entered into competitions because the producers can sell their wines without the endorsement of a sticker on the label. There’s some truth in that certainly, but for the others it is a great way to promote their product to a greater audience and to improve their credibility.
Awards worth winning
If it is just guidance you are after, that little sticker awarded by the IWC or Decanter tells you two things – the wine has been entered into the competition, so the winemaker thinks it is good enough to win. And secondly, the panel of tasters, many of them highly credible Masters of Wine, journalists and household names in the industry, agreed that it deserved their seal of approval. So don’t be afraid to plump for the award winner – it is likely to be a much better buy than the cut-price supermarket wine that appears to be a bargain, but ultimately tends to disappoint.
As Bordeaux licks its wounds following a couple of weak campaigns, investors are often tempted to look to wines from other regions. While Bordeaux will inevitably recover, it does give us a chance to reflect on other wines that might be of interest to the investor, in particular Champagne. In the last decade, Champagne has become a popular choice for investors and deserves to be taken seriously as an investment grade wine.
How does Champagne investment differ from Bordeaux?
Champagne doesn’t usually offer the longevity of Bordeaux – it isn’t destined to be stored for half a century by any means, but the top wines will cellar for a decade after release and the wines of some vintages much longer. There is no ‘En Primeur’ campaign for Champagne – although the media attention that a release of a top vintage wine warrants has a lot in common with En Primeur, as wine merchants grapple to secure their allocation.
One reason why investors are drawn to Champagne is it is perceived to be good value compared to wines of a similar level. You could expect to pay in the region of £80 – £120 per bottle (on release) for wines like Taittinger’s Comte de Champagne and Moet’s Cuvée Dom Pérignon. The marketplace for fine Champagne is both buoyant and global. And as many corks are popped not long after release, the remaining wines that are laid down tend to increase in value quite rapidly.
There are signs from the last 12 months that the market for investment grade Champagne has really taken off – this is often attributed to two very strong vintages being released in a short period of time (2002 and 2004 are both excellent). While wines like Dom Perignon will always be popular, there are also signs that investors are broadening their search to include wines not previously considered. Liv-ex reported on this trend in August 2013. Similarly Decanter reported on the growing success of Champagne as an investment grade wine last year, and it seems to show no signs of slowing down.
Ultimately it will only benefit you to have some diversity in your portfolio, so why not take a look at what Champagne has to offer? The top wines are only made in vintage years so there are no ‘red herrings’ among them – the quality speaks for itself, and has never been better. As long as corks are being popped and Champagne is increasingly recognised as a great wine for food pairing as well as merely a celebratory fizz, this trend seems set to continue.
BWC Management & Consulting Interviewed by China Daily Newspaper About the Chinese Wine Investment Market
Hong Kong, May 22nd, 2014 – BWC Management & Consulting was recently asked by China Daily to comment on the Sir Alex Ferguson wine auction, held by Christie’s in Hong Kong.
The ex-Manchester United manager has been a keen wine collector over the years, and recently decided to part with much of his collection, putting 257 lots up for sale in the Hong Kong auction.
When asked to comment on the auction, BWC Management & Consulting’s senior market analyst, Daniel Paterson, offered some insight into China’s recent penchant for purchasing valuable European wines.
Paterson told China Daily that the number of collectors worldwide has increased, while the availability of investment grade wines has dwindled. This has led to an increase in the value of blue chip wines, and the Chinese market has been quick to identify this phenomenon.
“We have seen ‘staggering levels’ of increased interest from the BRIC economies as well as in Europe and the United States,” Paterson said. “The Chinese, Russian, Indian and wealthy South American countries are also consolidating their positions as both consumers and investors.”
Taking this data into account means there is good sense in Sir Alex Ferguson choosing to hold the auction of much of his wine collection in Hong Kong, where interest and demand are high.
Recent Years Show High Return on Wine Investments
Samuel Cheung, senior broker at BWC Management & Consulting, was also quoted in the China Daily article, commenting on the types of gains wine investors have been reaping in recent years. Cheung cited an example of a case of wine sold in 2001 for 1,000 pounds, which would sell today for 2,760 pounds – a 180 percent return on investment.
Highlights in the Ferguson collection include a case of Petrus 2000, expected to fetch HK$550,000, and six bottles of Romanee-Conti Grand Cru 1999, which could go for as much as HK$850,000.
If you are new to wine investment, you might feel slightly uneasy about the recent high profile cases of alleged wine fraud, such as the recent press articles surrounding a fellow named Rudy Kurniawan. Increasingly the industry is becoming distrustful of collections that seem to appear from nowhere without explanation, and experts don’t like to think that they have been deceived about the contents of the bottle – it makes a mockery of the fine wine industry.
Kurniawan’s case is certainly not the first to make investors nervous – Benjamin Wallace’s book ‘The Billionaire’s Vinegar’ depicts the story of Hardy Rodenstock, a German collector that is thought to have not just duped the wealthy collectors that purchased bottles from him but also expert wine tasters. With all the uneasiness that comes with cases of fraud, how concerned should the everyday investor be that they might fall victim?
Investing in wine involves a considerable financial commitment and the sensible investor will want to get it right from the start, so with any luck, the concept of ‘bottle provenance’ won’t be new to them. Provenance is the traceable history of the bottle and its contents. It ought to show that the bottle can be traced all the way from the winery in which it was made to its current location, and all the while it ought to have been cellared securely, and in optimal conditions of humidity, light, temperature and away from harmful vibrations, in order for it to be in good condition to drink when the time comes. This isn’t as complicated as it sounds, any decent wine cellarage facility will be able to provide evidence of the proper care of the wines cellared there including their secure transportation to and from other facilities as the wine changes hands.
Stumbling across a collection of wine
What we’ve lost though is the romantic notion of stumbling across a collection of amazing wines – anyone that has tasted wines from Kurniawan’s or Rodenstock’s collection will be forever taunted by the possibility that the ‘fine wines’ they were drinking were in fact nothing of the sort. It is reported that there is a substantial black market for empty bottles of First Growth Bordeaux wines, which has led to them being ritually smashed after tastings and even in restaurants in China to ensure they are not recycled for wine fraud.
Should the investor be worried? Well, if you work with an ethical wine investment business, you’ll be in good hands, as they know the risks to them as well as to you of dealing in bottles whose history can’t be traced. With all eyes on Kurniawan’s case and the film version of ‘The Billionaire’s Vinegar’ in development, frankly it isn’t a risk worth taking. But you should still be prudent, and keep provenance at the centre of your thoughts – don’t be taken in by collections of wine that seem to appear from nowhere, as all may not be what it seems.
Various factors come together to determine the value of a wine – there’s the quality of the vintage, its classification, and perhaps most significantly, how it has been rated by wine critic Robert Parker. Wines that Parker scores with 90 points or above become highly desirable often regardless of their Bordeaux classification, including wines that might otherwise slip under the radar. So, what are the factors that determine which wines are the ‘ones to watch’ whose value will improve the most?
The wines of Bordeaux were classified in 1855 and little has changed since then. Recently though, there has been some movement. Two St Emilion estates received promotion to Grand Cru Classé A status, Pavie and Angélus, resulting in a flurry of activity as buyers sought to get their hands on them.
Of course, re-classification doesn’t happen overnight, and a good deal of legislation accompanies it, giving the smart investor with a close eye on the market a chance to source wines that are being considered for promotion.
Parker re-evaluates the wine in bottle
The score that Parker initially assigns to a wine on tasting the barrel sample is a crucial one, but it’s often his in-bottle score in the years to come that determines the wine’s value on the second-hand market. A recent example was Parker’s perfect scoring of Chateau Pontet-Canet 2010– a fifth growth punching above its weight whose value has rocketed.
A special endorsement
When Hong Kong first emerged as a market for Bordeaux, First Growths dominated. In his ‘Magical 20’ tasting, Parker selected 20 wines from the 2009 Bordeaux vintage that he felt were of First Growth quality, taking attention away from the top wines and ensuring that there would be a race to buy the wines he endorsed. Wines like Cos d’Estournel and Pichon Lalande were identified for praise, and their value consequently soared.
A new market?
Who could have predicted how immense the market for fine wine in China would be? Far from slowing down, this is a market whose taste is changing, turning its attention to wines from beyond Bordeaux and exploring different wine regions. It is possible that India will soon drop its wine import duty too, and it is worth keeping an eye on markets like Russia and Singapore as well. Wines to watch out for include Chateaux with historic links to emerging markets.
When it comes to wines to watch, we can’t get it right every time of course, nor can we predict what will appeal to one man’s palate, so for every 2010 Pontet-Canet there will also be a Pichon-Baron whose value suffered slightly from not receiving a perfect score from Parker this time. Nonetheless it remains highly investible and may benefit from re-evaluation in future. Ultimately fine wine is a solid investment, and if you happen to have some of these wines in your collection, your investment will prove to be even more lucrative than you thought.