The annual Australia Day celebrations have reminded us about Australian wine again – and perhaps it’s useful to have a reminder this year, as Australian wines don’t seem to be as dominant in the marketplace as they once were. It seems like much more shelf space was dedicated to Australia a decade ago – perhaps our interest in Australia’s budget and mid-range wines reached its peak and then dropped off slightly as other wine-making nations emerged. That’s not to say that Australia’s wines are performing badly in the marketplace – their wine exports were up 14% in value last year, although this is not reflective of how they are performing here in the UK, where growth has been relatively slow at 0.2%.
A problem of perception
At the top end of the market, Australia still struggles slightly with how its finest wines are perceived, particularly in the on-trade where they are often under-represented in favour of their high-end counterparts from Europe. Australia’s fine wines are plentiful, and extend far beyond its most famous names, Penfold’s Grange and Henschke’s Hill of Grace. Unfortunately many of the top wines from smaller producers are yet to trickle through to the European market.
Australia’s climate is much more reliable than that of France and other leading Old World wine producing countries, nor have they struggled with drought like the Californians have done of late. That means there are no bad vintages to speak of, their best wines are consistently good and just as ageworthy as their Old World equivalents. There is also a good deal more freedom when it comes to deciding what grapes to grow and how the blend is made up. Some of the finest Australian wines are Bordeaux-like but with a proportion of Shiraz in the blend, a grape that is not grown in Bordeaux. Shiraz loves the Australian soil and adds weight, complexity and softness to the blend. Rhone-style blends are also common.
The best is yet to come
At the lower end of the market it is worth noting that modern Australian wines have much more subtlety and delicacy than earlier versions, and it is likely that the best are yet to come. At the top end, a recent free trade agreement with Korea has encouraged sales, and certainly it seems like the ‘buzz’ around Australian wines has been renewed. For investors, the message seems to be “watch this space”.
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.
‘The Billionaire’s Vinegar’
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.