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Small but Exceptional Port Vintage Expected in the Douro

Panorama of the sunny Douro valley

As the Port producing region of the Douro has just begun grape harvesting, producers are expecting dramatically reduced yields this vintage due to the impact of extreme heat and drought conditions that have characterised 2022. 

This year’s rainfall is more than 70% lower than the 30-year average and follows on from three years of below-average rainfall. Producers in the region are becoming increasingly concerned about this series of drier years. They are most worried about their younger vines as they are more susceptible to drought and hydric stress as the roots don’t reach as far down into the ground as those of older, established vines.

Less rainfall means reduced grape yields which in turn means higher production costs for winemakers at a time where there are other inflationary pressures at play. 

Another factor that has exacerbated the lack of rain is the combination of heat and wind. CEO at Taylor Fladgate, Adrian Bridge, commented that ‘the wind normally picks up at 6pm, but at 2pm it has been whistling up the (Douro) valley – having a hairdrier effect on the vines, so the grapes are shrinking’. He added that this has contributed to the grapes having very thick skins this year and a lot more grapes will be required to make the same quantity of Port.

‘I believe that this is going to be one of the lowest yielding harvests ever in the Douro,’ commented former chairman of Symington Family Estates, Paul Symington

However, while producers will have to wait over the coming weeks to see just how much wine it will be possible to make, there’s a sense of optimism among the Douro winemakers that this year’s vintage will turn out to be a small but exceptional one. 

Christian Seely, managing director at Quinta do Noval, commented that: ‘The occasional hot dry year is not a disaster and can produce remarkable, memorable wines: ‘45 and ‘17 had that sort of profile and both of them produced some of the most remarkable vintage Ports ever produced – and in 2017, remarkable red wines too, to my surprise’.

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China Suspends all Imports from Australia & New Zealand

Australia and Chinese flags with tear in middle

China has suspended all imports from Australia and New Zealand, including wines, dairy products and beef, according to the country’s official logistics trade association: China Federation of Logistics and Purchasing (CFLP). The ban is set to significantly escalate tensions between China and its Pacific neighbours.

In a post by the Food Ingredients Supply Chain Association under the country’s official logistics trade association (CFLP), it announced that on the 15th of August an order had been given which requests incoming cargo wait at each port for further notice.

The news has not been officially announced by the Chinese Customs Administration, but the association highlighted that relevant organisations working in customs and logistics have already been informed.

It’s currently unknown whether this will be a temporary ban or long-term one. While the CFLP hasn’t given its reasons for the ban, it did cite Australia’s revoking of the ‘One Belt, One Road’ deal as having damaged mutual trust between the nations.

What’s made the situation even more confusing is that within just 24 hours after the CFLP published its article, it was deleted. Anyone now trying to open the WeChat post is presented with an error message that says ‘the article has been deleted by the author.’

Trade

New Zealand’s exports to China totalled US$22.83 billion in 2021 with the main products being lamb, butter and cheese.

Australia and China’s relations have been worsening since 2017. Recently, tensions were heightened due to the origin of Covid, 5G and Huawei that resulted in China imposing hefty tariffs in 2020 on Australian goods such as wine and barley.

Despite the tensions between the two nations, China is still Australia’s number one trade partner, with the Asian country having imported US$164 billion, over 40% more in value than a year ago according to China’s Ministry of Commerce.

If legitimate, the ban would be a huge blow to bilateral trade as the administration in Canberra has been in talks with the Chinese for over two years in a bid to repair relations.

What’s more, the timing couldn’t be worse as 2022 marks the 50th anniversary of diplomatic relations between China and Australia.

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3 Bordeaux Appellations Permitted to Irrigate Vines

Saint-Emilion church and vineyard

In a year of drought, heatwaves and fires, producers in the three Bordeaux appellations of Pessac-Léognan, Pomerol and Saint-Émilion have been given special dispensation to water their vines. 

The lack of rain this year has been so pronounced that Météo France, the French national weather service, declared that July of 2022 was the driest on record since 1959. Irrigation is usually banned in the region from the 1st of May onwards. However, producers sent a request to the regulatory body, the Institut National de l’Origine et de la Qualité (INAO), which issued a derogation in light of the ‘extreme situation’ facing Bordeaux châteaux. Winegrowers are permitted to water their vines during times of persistent drought with permission and only if the drought ‘disrupts the good physiological development of the vine and ripening of the grapes.’ The vignerons were told by the INAO that their request was granted in this case but to use it when ‘only absolutely necessary’.

In Pomerol, the derogation states that producers must submit their proposals for irrigation two days ahead of any activity, along with the size of the vineyard area and grape varieties to be watered. Grapegrowers must also only use water from wells near the vineyard sites and not from the network.

The threat drought poses to vines, especially young vines, is hydric stress. This means that vines can’t get enough water to flourish and are unable to build up sufficient levels of sugars which delays ripening and harvest. Older vines have deeper roots which can draw water from further underground but vines aged between three to eight years old need the most attention.

The permission to irrigate vines is a much needed lifeline for wine producers this year who have had to deal with April frosts, the June hail storms, fires and a heatwave. With forest fires having started up again around Bordeaux, the region’s châteaux will be praying that the next few weeks bring cooler temperatures and long overdue rain.

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Shafer Vineyards Buys Stags Leap District Vineyard

Shafer-Vineyards

Legendary Napa producer Shafer Vineyards has purchased a nine-hectare vineyard in proximity to its winery in the Stags Leap District from Screaming Eagle founder Arlie Jean Phillips as part of a $35 million deal.

Shafer Vineyards was acquired earlier this year by the Korean luxury firm, Shinsegae Property, and it has now purchased the nine-hectare Wildfoote Vineyard in the Stags Leap District of Napa Valley. 

The deal has been reported by various news outlets to form at least part of an overall acquisition of some 46 hectares for $35 million. 

In a statement, Shafer Vineyards said that the purchase ‘secures a key source for the winery, ensuring that winemaker Elias Fernandez will continue to select from the best-of-the-best fruit each vintage.’

Cabernet Sauvignon, Cabernet Franc and Merlot grapes are all grown in the Wildfoote Vineyard. Shafer Vineyards’ President Doug Shafer commented on the sale that ‘the real winner in this is the consumer, as it gives our winemaking team the ability to choose the best possible fruit in a given vintage.’

General Manager Matthew Sharp highlighted that ‘this is a once-in-a-generation opportunity to acquire a world-class vineyard property of unequaled caliber’. He added that ‘it’s a great privilege to make this site part of the Shafer Vineyard portfolio.’

Shinsegae Property, the property arm of a Korea-based luxury company, purchased Shafer Vineyards in February earlier this year.

A historic Napa winery founded in 1972, Shafer Vineyards is one of a handful of the region’s producers that helped gain worldwide recognition for its wines.

Commenting on the sale, Doug Shafer added: ‘for those who are fans of our wines and our team, you’ll see a continuation of everything you love about the winery.’ ‘There may be some new things down the road that I think you will love and embrace as well.’

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7 Under-Used Alternative Investments

Man at laptop

Like a nervous first date wondering if they’ve been stood up, cryptocurrency has kept alternative investors biting their nails, on the edge of their seats and glancing restlessly at the door. As a decentralised asset, it shouldn’t have been impacted by rocketing inflation, rising interest rates or other market shocks. But the theory isn’t holding up. When disaster struck, crypto investors behaved in the same way as the stock markets – if anything, they panicked more. Over recent weeks, crypto enthusiasts felt their stomachs lurch as Bitcoin plummeted to less than the value of creating it [1] … It’s a punch in the face for hopeful diversifiers who turned to crypto as an alternative asset.

In this article, we’ll uncover seven fascinating and under-used diversifying investments, that truly steer clear of the market. In theory and in practice. ‘Alternative alternatives’ to inspire you as you build (or re-build) your portfolio.

1. Litigation finance

The up-and-coming investment that almost nobody has heard of. Litigation investors help people to cover the cost of their legal suit and take a share of the damages if they succeed. This type of finance has the potential to do good for society, while offering an alternative source of revenue to investors. Most recently, it’s being used in greenwashing and climate cases, so alternative investors can help protect the environment too. The downsides are that it is risky, not possible in every country and can take a while.

2. Art

An old favourite for seasoned alternative investors, but still relatively unknown in the wider world of investing. Buying art has the double advantage that you can appreciate and enjoy your investment while you own it. Many affluent investors purchase valuable art from museums, auctions and galleries. But if you’re looking for lower price tags, you could take a chance and buy from undiscovered artists directly … It’s certainly riskier, but if you have a good eye, you might just hit the jackpot.

3.   Domain names

Believe it or not, an aptly-named domain can rake in a fortune. Cars.com sold for $872 million. Carinsurance.com swept up $49.7 million. And Insurance.com went for a cool $35.6 million [2]. Not every domain name will be valuable, of course, around a third are never even used. But if you manage to buy a good one, you could reap serious rewards. Better still, this type of investment is completely uncorrelated to the stock market, meaning you can protect yourself from market shocks.

4.   Whiskey

The water of life, as it’s known in Gaelic cultures, doesn’t just taste good on the lips… it can feel great on the wallet too. While whiskey may not offer the kind of eyebrow-raising returns that fine wine has, over the past years it has enjoyed a steady real return of 7.9% from 2011 – 2020 [3].

5.   Comic books

It’s hard not to smile when you imagine the likes of Wonder Woman, Spiderman, or the Joker in your portfolio. But, as well as being a passion investment, comic books have enjoyed a boost in recent years. According to one alternative investment site, ‘Comics continue to trend upwards with very little signs of the market slowing anytime soon’ [4]. Like fine wine and whiskey, these are much-appreciated collectables which become rarer over time.

6. Music royalties

Another fascinating yet little-known alternative investment is in music royalties. When investors own a share of the music rights, they should profit when the sounds are played. For example, in movies, adverts, video games and even cover songs. (Although, of course, there is always the risk that people will use the music without paying up). Investors could also pick up profits from hardware sales, such as the reproduction of vinyl disks or CDs. This is generally one for high net worth investors, as price tags can start quite high. But there are exchange platforms available for cost-conscious players too.

7. Fine wine

Our favourite alternative investment is – of course – fine wine. As well as offering stable, yet strong returns of 12.6% CAGR each year, it’s an excellent diversifier too. Unlike many other high-performing assets, the value of fine wine is not correlated to the stock market. Return is largely based on the vintage year, scarcity and storage, so fine wine owners have a lot more control over the value of their investment. This can help reassure investors in times of economic turmoil. What’s more, one advantage investment-grade wine has over other alternative assets is the availability of market data to analyse and a more regular marketplace. If you’re looking to bolster your wealth against market shocks, a 1-3% allocation of fine wine could help you reduce your exposure.

Finding a truly alternative investment takes time and research. Often investors will need to stray away from the beaten track. And, as we’ve seen recently, they may also need to laser through all the crypto-sphere hype too.

Call us old-fashioned, but we believe that the best alternative investments are the ones that have been around the longest. Proving themselves decade after decade, recession after recession and beyond. If you’re interested in learning more about the benefits of investing in fine wine, we’re here to support you on your journey.

 

[1] Source : Finbold

[2] Source : Alts.co

[3] Source : WhiskyInvestDirect

[4] Source : Alts.co

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News

Penfolds Innovates New French-Australian Blend

Bottle of Penfolds FWT

The innovative Australian producer Penfolds is pushing winemaking boundaries even further with its soon-to-be-released wine that is a blend of Bordeaux and Australian grapes.

‘Penfolds II Cabernet Shiraz Merlot 2019’ blends Bordeaux-grown Cabernet Sauvignon and Merlot grapes with Shiraz from South Australia. The project was brought to fruition through Penfold’s partnership with Thiénot, a Champagne house that owns Dourthe in Bordeaux.

Peter Gago, Penfolds’ chief winemaker, was delighted at a press conference in London with the imminent release of the new project, but highlighted the logistical problems in shipping a container of French wine to Australia where it was blended with the Shiraz. Both components were from the 2019 vintage, although the Shiraz was six months older due to its grapes having been harvested from vineyards located in the southern hemisphere.

Penfolds’ aim was to make wines sourced from around the world in its ‘house style’. Gago added that the key to making the wines was to have ‘ripe tannins from the start’. 

The wine is being released this month under the label ‘FWT’ (French Winemaking Trial), along with another expression that’s a Bordeaux blend which also forms part of the ‘Collection’. The objective behind this activity is to expand the Penfolds range while keeping its signature character.

Gago commented on this new release, saying: ‘it is done through the Penfolds lens: we are not saying the wine is better, but done in the Penfolds way.’

This is just the beginning of the pioneering Australian brand breaking new ground. One interesting future project would be a blend of Australian Shiraz with Syrah grapes from the Northern Rhône, as the Rhône is the original heartland of Syrah, better known as Shiraz in the New World. Gago confirmed that we might not have too long to wait as a ‘project with the Rhône Valley’ is in the pipeline. 

There’s certainly a lot going on at Penfolds and we’re excited to learn what the next new innovative launch looks like.

Read more about Penfolds’ recent made in China project here.

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Report

Bordeaux 2021 | Vintage Report

Bordeaux vineyard

Our Bordeaux 2021 En Primeur Report is now available to download. Read our full analysis of the new 2021 vintage which is considered to be an approachable, good quality one that differs in style to the wines from the three previous years.

2021 was the coolest and second wettest vintage in the past decade with frosts, rain and mildew. This meant yields were down significantly in some appellations. Meticulous sorting in both the vineyard and the winery enabled producers to select only the best fruit and this created the finest wines possible. 

Critic reports suggested that quality was better than expected and there is a selection of outstanding wines on offer that will bear comparison with the very best and various châteaux have produced some of their highest ever rated wines.

Prospective buyers have been expectantly waiting for the 2021 vintage’s scores and prices. Release prices were expected to be lower than those of the top rated trilogy of 2018, 2019 and 2020 as this is a different style of vintage from a challenging year. However, there were economic reasons that could justify price rises such as inflation, wine shortages and the US dollar’s appreciation against the Euro.

In general, wines have been released at the same price as 2020 – just 1% lower on average. However, some châteaux released at up to 15% discounts, while others at up to a 15% premium with lower scores than last year.

Discover our analysis and the fine wines we recommend fully in this report. While it was a mixed vintage, there are some excellent wines on offer at attractive prices.

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News

Heatwave Provokes Bordeaux Fires

Fire near lake in Bordeaux region

The UK recorded some of the highest temperatures on record at over 40°C on the 20th of July and fires broke out across England. For the WineCap team that was in Bordeaux at the time, it was an all too familiar scene.

France, like other countries on the continent, has endured sweltering temperatures in recent weeks. The combination of the mercury rising and the tinder-dry ground have provided the perfect conditions for forest fires which have ravaged large parts of South and South-West France since the 12th of July. Around Bordeaux, over 6,500 hectares have already been burnt in the Landiras commune and over 3,000 have been scorched in La Teste de Buch according to the Copernicus website.

While no vineyards have been directly affected yet, the fires have come too close for comfort for some producers. Loic Pasquet, owner of Liber Pater, based in the previously mentioned Landiras commune just North-West of Sauternes, revealed that a fire had come almost within 500m of his vines. Fortunately, it has now been fought back to 7km away.

Some 2,000 firemen and a combination of sea planes and water bombers have been battling the blazes in the region. This, combined with temperatures dropping from 41°C to ten degrees cooler, has provided a much needed respite and the forces are currently optimistic that they will be able to contain the fires unless circumstances change.        

Although Bordeaux has experienced large scale fires before – in 1949 and 1989 – none have been as severe as these. For wine lovers, the risk of fires and smoke taint affecting wineries and grapes is something that they’ll probably have read about most with California wines. In 2020, Napa’s ‘Glass Fire’ caused wineries Cain, Newton and Behrens Family on Spring Mountain to suffer complete losses.

It’s too early to tell in Bordeaux if smoke taint has affected grapes and therefore the 2022 vintage. Producers who think their vineyards may have come into contact with the smoke are being urged to take samples and perform tests. The mood in Bordeaux remains optimistic, but with the August and September months still to go before harvest, we’re sure many producers are keeping everything crossed.

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WineCap in Forbes Advisor

Wine bottle necks

WineCap CEO Alexander Westgarth spoke to Forbes Advisor’s Andrew Michael about wine investment’s benefits and long-term performance. Below is a summary of the ‘How to Invest in Wine’ article which you can read in full here.

2021 was a good year for wine investment, as reported by Knight Frank’s Wealth Report released earlier this year. In fact, fine wine shared the top spot in the ‘alternative investments’ category with collectible watches. Both delivered a 16% return over the course of a year.

More and more money is being invested in the wine market. Alexander Westgarth highlighted fine wine’s solid and consistent returns over the past 15 years, with compound annual growth of 8% and some regions, such as Burgundy, delivering 12.5%.

In the current economic climate, traditional asset classes, including stocks and shares, aren’t performing as well as they historically have. The US stock market has entered a ‘bear market’ and is down 20% since January this year.

More and more investors are considering tangible assets as they are less likely to be affected by market fluctuations.

Mr Westgarth commented that ‘wine is a low-stress investment that doesn’t require constant attention, or frequent trading in and out of.’

Other advantages of investing in wine and advice include:

– There is no capital gains tax to pay on profits. HMRC classifies wine as a ‘wasting asset’ as it determines the wines to have a lifespan of fewer than 50 years.

– Think about working with a reliable investment specialist that can build a portfolio for you, manage storage and insurance, keep you updated with valuations and advice and eventually manage the sale of your investment.

– Consider an initial investment of between £5,000 and £25,000. Even at the lower end, you can start building a portfolio with exposure to different wine regions.

Want to find out more about how to get started investing in wine? Download our free guide here.

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Champagne Sells for Record $2.5 Million at Auction

Bottle of Champagne Avenue Foch on table with glasses

A magnum of Château Avenue Foch 2017 has sold for a record-breaking US$2.5 million at auction, making it the world’s most expensive Champagne and perhaps the world’s most expensive wine. Interestingly, the magnum wasn’t the sole item in the auction lot. The Champagne also came accompanied by an NFT – a non-fungible token – a digital image that trades on the blockchain. The NFT is of a ‘Bored Ape Mutant’ whose face features on the bottle and that was designed in collaboration with the artist Mig. It also includes the digital image’s intellectual property rights.

The British entrepreneur Shammi Shinh was responsible for commissioning and selling the bottle and whose aim was to boost NFTs’ profile through associating it with the luxury fizz. ‘I’m hoping for more awareness — I want people to understand NFTs now’, he commented. Shinh also hinted that this may be the first in a series of limited edition bottlings. 

The successful buyers at auction were brothers Giovanni and Piero Buono. They are Italian investors in cryptocurrencies, as well as in fashion and technology markets. However, while they are involved with cryptocurrencies, the purchase was reportedly made in dollars – as first reported by the Wall Street Journal. Giovanni confirmed to the paper that they have no plans to open the bottle.

Château Avenue Foch is a new Champagne brand that’s made from Premier Cru grapes grown at the family-owned estate of Allouchery in Chamery.

Want to discover the ten most expensive wines in the world? From Burgundy to Bordeaux, we’ve put together a list of the world’s most expensive bottles, and their intriguing stories, in our article here.