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Price ratio: comparing regional First Growths

  • We compare the price performance of Château Lafite Rothschild to other regions’ respective ‘First Growths’.
  • The rising ratio highlights the increased value to be had in the Bordeaux First Growths.
  • Today, one can get 29 bottles of Lafite for the price of Romanée-Conti and almost five for Pétrus and Screaming Eagle.

How many bottles of Château Lafite Rothschild can one get for the price of other regions’ respective ‘First’ wines?

With changing market dynamics at play that have seen the balance between Bordeaux and other regions change, we examine the price ratio between some of the most popular investment-grade wines.

Below we compare the performance of the Bordeaux First Growth Château Lafite Rothschild to Burgundy’s highest echelon Domaine de la Romanée-Conti, the Super Tuscan Sassicaia, the Right Bank Château Pétrus, the Californian cult wine Screaming Eagle, and the most in-demand Champagne, Dom Pérignon. These are all wines that symbolise and even transcend their geography.  In the same way that Lafite has long been the mainstay of Bordeaux, the other wines are bellwethers for their regions.

The ratio between these wines is somewhat reflective of broader trends within their respective regions. Over the last decade, the ratio has risen consistently, highlighting the increased value to be had in the First Growths, as other regions gather momentum.

How many bottles of Lafite for the price of DRC?

Today, one can get on average 29 bottles of Lafite Rothschild for the price of Romanée-Conti. The ratio has risen considerably since 2013 when one could buy just 14 bottles of Lafite for one DRC. It peaked in December 2022, when it stood at 30:1.

As the chart below shows, the Domaine de la Romanée-Conti index hit a record high in December last year. Meanwhile, the Lafite index has not seen any of the price volatility witnessed by DRC. Year-to-date, prices for both labels have dipped but the fall has been sharper for DRC.

The DRC:Lafite price ratio is somewhat reflective of broader trends within their regions. In the last decade, Burgundy emerged as Bordeaux’s main contender. After Bordeaux peaked at the end of the China-led bull market in 2011, buyers started to seek out other corners of the fine wine world and it was Burgundy that attracted the greatest attention. The allure of rarity and quality meant that demand quickly outstripped already tight supply. Prices for Burgundy peaked, while Bordeaux ran quietly in the background.

For Bordeaux, the period between 2013 and 2015 saw contraction at the tail end of the Chinese correction. The market turned again in October 2015, and since then, Lafite Rothschild has been the second-best-performing First Growth, with some vintages doubling in value. However, it has not managed to catch up with Burgundy’s stellar rise.

Left vs Right Bank

It is also interesting to compare performance within Bordeaux’s Left and Right Bank. Today 4.6 bottles of Lafite gets you a bottle of Château Pétrus, up from 3, ten years ago.

As the chart below shows, Lafite and Pétrus have followed a similar trajectory up to September 2021, when prices for the First Growth flattened while Pétrus continued its rise.

Similar to Burgundy, rarity plays a key role in Pétrus’ appeal and investment performance. Pétrus is produced in much smaller quantities (around 3,000 cases per year) compared to Lafite (around 25,000 cases). Despite commanding a higher price tag, the wine has considerably outperformed Lafite in the last decade.

Dom Pérignon vs Lafite Rothschild

Recent years have seen a surge in Champagne’s market share and price performance. This has been reflected in the performance of its most traded label – Dom Pérignon.

Produced in much larger quantities than Lafite and more widely available, Dom Pérignon has started to catch up with the First Growth. In the last decade, the ratio between them has doubled – from 0.2 to 0.4.

Champagne prices, with Dom Pérignon at the helm, have made considerable gains since the early 2020s. In the last decade, our Dom Pérignon index is up 120%, compared to 20% for Lafite.

Sassicaia vs Lafite Rothschild

Similarly, the Super Tuscans have been getting more expensive. The most liquid and heavily traded group of Italian wines, their performance has been further boosted by critical acclaim and brand strength, with Sassicaia at the helm.

The ratio between Sassicaia and Lafite has risen from 0.2 ten years ago to 0.42 today.

As the chart below shows, Sassicaia has seen stable and consistent growth. 2019-2022 was a period of upheaval for the brand, which benefited from excellent vintages that captured investors’ interest.

Screaming Eagle vs Lafite Rothschild

The price ratio between Screaming Eagle and Lafite Rothschild tells a story of increased volatility, which can largely be ascribed to the Californian cult wine. Screaming Eagle has seen bigger price rises, followed by sharper falls.

Today one can now get 4.8 bottles of Lafite for the price of Screaming Eagle, up from 2.7 a decade ago. The ratio peaked in February 2022, when it stood at 5:1.

California has enjoyed serious investment interest which has been reflected in its market share. Today the region holds around 7% of the fine wine trade by value and is the most important New World player.

While Lafite has come to represent better value when compared to other top wines, this is largely due to shifting regional market dynamics. The First Growth continues to entice buyers with brand strength, high-quality releases and returns on investment.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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The rise of fine wine as a stable and sustainable investment

A version of this article written by WineCap’s CEO Alexander Westgarth was first published by Forbes.

  • A popular alternative investment, fine wine can plug the gaps left by struggling assets, helping to steady and raise performance across a whole portfolio.
  • As a tangible asset, fine wine delivers stability in uncertain times.
  • Part of the rising demand for fine wine can be attributed to environmental factors.

Between April 2020 and September 2022, the average bottle of fine wine rose 43.5% in value. While the fine wine market has dipped and corrected since, the general trajectory has historically pointed upwards.

Since 2004, Liv-ex data shows that the average bottle price tag has risen by 329.9%. While it can be a good investment, better still, fine wine is a great means to plug the gaps left by struggling assets, helping to steady and raise performance across a whole investment portfolio. Earlier this year, WineCap conducted a survey where we found that 92% of U.S. wealth managers believe demand for fine wine will increase over the next year. This is for three main reasons, and below we outline how to best take advantage of this asset’s potential for stability, sustainability and profitability.

Stability in uncertain times

We live in uncertain times. In the last year, businesses have had to cope with rocketing energy bills, inflation and interest rates. In times of hardship, people want something solid. This is why tangible assets like property, gold or fine wine tend to feel more precious during market downfalls. WineCap found that 56% of wealth managers invest in wine to add stability to portfolios across different market conditions.

It is not only wine. Across the entire investment landscape, there is an increased demand for reliability. In the past few months, gold prices have been rallying too. When the gold prices go up, this often indicates that investors are looking to preserve their wealth and shield it from market shocks.

At the same time, investors have been shying away from bullish investments like technology stocks. Apple, for example, has suffered significant dips. Microsoft shareholders have endured wobbly turbulence (though, at the time of this writing, the company is beating financial expectations). Likewise, the tech-heavy Nasdaq Composite has been on a rocky ride over the past months.

As the choppy waters continue, many investors want steady ships to ride out the storm – not fancy speedboats. With its historically low volatility, fine wine delivers just that. Unlike stocks or bonds, fine wine prices do not tend to fluctuate massively as the market operates with its own dynamics. Regions like Champagne are currently seeing high levels of demand, not only because of the quality of the wines but the stability the region has historically offered.

Similarly, wines from Bordeaux, Tuscany and the Rhône may be more solid. However, not all fine wines are made the same. Extremely rare and highly coveted wines from Burgundy, for instance, can make a great investment but remain a riskier asset if stability is what you are after.

Demand for environmentally friendly assets

Our survey also found that investors are prioritising environmentally friendly assets, and 56% say they invest in fine wine because it is a sustainable asset class with a low carbon footprint. This trend is hardly surprising; 2023 has been the hottest summer on record.

Dozens of wildfires are actively blazing through the USA. Meanwhile, elsewhere, the excess water caused by melted ice caps means that flooding and torrential rains are washing away entire communities. In August, flash floods tore through Pennsylvania, killing five people. Naturally, investors are keen to put their money into assets that will mitigate some of the climate risks.

Part of the interest in fine wine can be attributed to environmental factors. Vines promote healthy soil quality and nourish pollinators, which are essential for biodiversity. A hector of vineyard soaks up a respectable 2.84 tonnes of carbon every year. The best winemakers use age-old sustainable practices. Many will even opt for a pony and cart rather than disturb the terrain with a tractor.

Some well-known organic producers include Burgundy’s Domaine Leflaive and the Bordeaux Fifth Growth, Château Pontet-Canet. While not officially certified, Burgundy’s Domaine de la Romanée-Conti also follows organic and biodynamic guidelines. Meanwhile, some producers are reducing bottle weight in pursuit of sustainability such as Burgundy négociant Albert Bichot, which has reduced the weight of their bottles from around 700 grams to 450 grams.

Climate-conscious investors can keep an eye out for wineries investing in a greener future.

Strong returns

According to our survey, almost half of the investors choose fine wine because they want strong returns. Historically, fine wine has offered generous returns over long periods without sacrificing quality or environmental qualities. Access to historical data, critic scores and current prices can help an investor identify whether a wine represents a good opportunity. Things to look out for include brand prestige, price per point, investment appreciation over different time frames and drinking windows. One can also get help from experts who understand the intricacies of the market, utilize the latest technology and closely follow the trends.

Stability, sustainability and profitability

Today’s investors are looking for stability, sustainability and profitability. Different from last year, they are often less prepared to invest in edgy technologies for the future. Instead, many are looking for solid investment results – ideally, ones they can hold. Fine wines fit this demand well. Although it already features in 45% of HNW portfolios, with average allocations of 13%, fine wine looks set to become even more popular. Like a classic vintage Champagne, the market is ready to pop.

Thanks to its diversity and growing attention from experts, producers and enthusiasts, fine wine could be well-placed to meet investors’ changing priorities in the years to come.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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The place of the Bordeaux First Growths in a changing fine wine market

  • Once the dominant force in the fine wine market, the Bordeaux First Growths have lost market share due to its broadening.
  • In the last decade, Château Mouton Rothschild has been the best price performer, up 43.2%.
  • Château Haut-Brion offers the best value, with the highest average critic score and the lowest average price per case.

The Bordeaux First Growths in a broadening market

The Bordeaux First Growths have long been the cornerstone of the fine wine investment market. Back in 2010, they made up close to 90% of all Bordeaux trade by value – at a time, when Bordeaux’s share of the total market stood at 96%.

With the broadening of the market, their share has decreased and they now regularly account for around 30% of all Bordeaux secondary market trade (which itself has fallen below 35% annual average).

This trend was also reflected in the 2022 Power 100 list, which offered a snapshot of the ever-changing landscape of the secondary market. For the first time ever, no Bordeaux wines featured among the top ten most powerful fine wine labels.

Even if trade for these brands remains consistent or increases, the First Growths are facing greater competition. Still, they are among the wines with the greatest liquidity, attracting regular demand and high praise from critics year after year.

First Growths’ price performance

In terms of price performance, the five First Growths have followed a similar trajectory (i.e. rising post-Covid and dipping in the last year in line with the current market reality). The relative outcast has been Château Latour, whose performance was impacted by the decision to leave the En Primeur system in 2012. The wine has been the worst-performing First Growth, up just 17.9% in the last decade.

The best performer has been Château Mouton Rothschild, with an increase of 43.2%. Recent releases have elevated the performance of the brand, like the 2020 vintage, which boasts 100-points from The Wine Advocate’s William Kelley, 99-100 from James Suckling, 98-100 from Jeff Leve and 99 from Antonio Galloni (Vinous). ‘Off’ vintages like 2011, 2013 and 2014, which have greater room to rise, have also fared well over the last five years.

The second-best performer has been Château Margaux, which is also the second most affordable First Growth. Similarly, its biggest price risers have been 2014, 2011 and 2013. Less classical years reveal the strength of these brands, as demand for the First Growths remains consistently high regardless of the vintage.

First Growths’ price and score comparison

The table below shows the average price per case and critic score of the First Growths for vintages since 2000.

Château Haut-Brion tops the list with the highest average score (95.9) and the lowest average price per case (£4,595). With a price per point of £48, the wine seems to offer the best value among the First Growths. Vintages that have received 100-points from The Wine Advocate include 2018 (LPB), 2016 (LPB), 2015 (LPB), 2009 (LPB) and 2005 (RP).

Looking at the average prices, Château Lafite Rothschild stands out as the most expensive of the First Growths. The wine has achieved 100-points from The Wine Advocate for its 2019 (WK), 2018 (LPB), 2010 (LPB) and 2003 (RP) vintages.

In conclusion, the First Growths remain an important part of the changing secondary market, offering brand strength, consistently high quality and stable growth.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Key trends that shaped the fine wine market in Q3

The following article is an extract from our Q3 Fine Wine Investment report, which will be published next week.

  • Ongoing inflation and interest rate hikes led to increased volatility in mainstream markets.
  • The fine wine market in Q3 was a buyer’s market for two main reasons: availability of stock and falling prices creating value.
  • Two of the best value La Place releases were Almaviva 2021 and Masseto 2020.

High interest rates rattle global markets

Mainstream markets experienced a turbulent third quarter, mainly due to a marked rise in borrowing costs coupled with a substantial increase of nearly 30% in oil prices. As a major input in several industries, rising prices for crude oil led to overall increase in production costs, impacting profit margins and, ultimately, reducing stock prices. These developments created a challenging landscape for stocks and bonds, with investors opting for more liquid assets like cash that tends to be a safer short-term bet. This inclination towards liquid assets illustrated the unresolved struggle between the Federal Reserve and inflation, leaving investors navigating a path marked by heightened risk and uncertainty.

Fine wine’s downturn slows

Fine wine prices fell in Q3, but their declines gradually became smaller. For instance, the Liv-ex 100 index recorded dips of 3.1% in July, 1.3% in August and 0.1% in September, showing humble signs of recovery. The broader Liv-ex 1000 index dipped 3.9% in Q3. Italian wine fared well, thanks to strong performance from Tuscany and Piedmont, as well as older Bordeaux vintages which experienced slight rebounds. Global trading activity increased suggesting that interest is there for well-priced stock.

A buyer’s market

The fine wine market in Q3 was a buyer’s market for two main reasons: availability of stock and falling prices creating value. This was particularly noticeable in regions like Champagne. Some of the top and most desirable brands, which have an impressive mid- to long-term performance saw small declines in Q3. Buyers took advantage of this opportunity and demand increased. Such is the case with Dom Pérignon 2013, which has fallen 7.1% in value since its release in January but has been the most traded wine this year. The brand’s overall trajectory is upwards, with Dom Pérignon prices rising 64% on average in the last five years, and 133% over the last decade.

Assessing the La Place de Bordeaux campaign

Over 110 fine wines were released through La Place de Bordeaux this September. The overall pricing strategy bore similarities to Bordeaux En Primeur earlier this year: price increases that failed to take the current market environment into account. Some critics expressed the opinion that there weren’t ‘as many hits as usual’. Two wines that stood out as good value were Almaviva 2021 and Masseto 2020; the latter immediately generated trading activity above its release price.

Over the last decade, Almaviva prices have risen on average 167%, while Masseto is up 107%.

Stay tuned – our Q3 Fine Wine Investment report will be published next week. The report contains further analysis on the best-performing and most in-demand wines, and Q4 investment outlook.

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Differences and similarities between the fine wine and financial markets

  • The fine wine market is not correlated with mainstream markets yet there are some notable similarities and differences between them.
  • Global events and the law of supply and demand affect both the fine wine and financial markets.
  • Some of the main differences are tangibility, liquidity, the impact of time and factors influencing their performance.

The world of fine wine and the broader financial market might seem like distinct universes at first glance. However, there are intriguing similarities and differences between the two, which we examine below. 

Similarities between fine wine and financial markets

Both fine wine and financial markets provide lucrative opportunities for investors. While the latter showcases a plethora of options like stocks, commodities, and currencies, the former provides an alternative avenue for diversification, offering tangible assets, valued not just for their financial potential but also their historical and cultural significance. In stark contrast to the complexity and varied strategic approaches inherent in the financial markets, the wine market is more straightforward, predominantly guided by a ‘buy and hold’ strategy. Moreover, the universe of investable wines is notably narrower, typically centering around a select group of regions and producers.

Driven by demand

The laws of supply and demand are central to price determination in both markets. A rare vintage from a renowned vineyard or a wine produced in small quantities can fetch astronomical prices due to limited supply, mirroring the price surge of a high-demand stock or asset. For instance, Hubert Lamy Saint-Aubin Premier Cru Derriere Chez Edouard Saint Aubin has risen 189% in value over the last year due to low supply. The singular wine comes from a tiny plot of 0.7 hectares in Derrière chez Edouard, which was planted 20 years ago at 30,000 vines per hectare. At such a density, the entire plot only yields enough juice to fill the contents of a single barrel. In the world of stocks, demand has played a key role too. Nvidia – the company of the AI-fueled market rally – has been the best-performer in 2023, up 198%.

Impact of global events

Economic downturns, political events, and global crises can influence both the fine wine and financial markets. However, fine wine is less susceptible to global crisis. In fact, events that induce uncertainty usually drive investors towards more stable, tangible assets, which can include fine wines.

For instance, the fine wine market hit new heights during the Covid-19 pandemic, which saw a shift away from risk assets. Prices rose due to heightened demand for fine wine, which demonstrated remarkable resilience during the pandemic.

Expert valuations

Just as financial analysts predict stock performances, wine experts gauge the potential value of wines, guiding investors’ decisions. Investors can also follow the historical performance of their wines of interest with tools like Wine Track, which shows the performance of different brands over various time periods, as well as average prices and scores.

Differences between the fine wine and financial markets 

Tangibility

Investing in fine wine is an investment in tangible assets. The very bottle that appreciates in value over the years can be held, showcased, and ultimately consumed. Contrarily, financial investments, such as stocks or bonds, epitomise intangible assets, wherein the investment is in a concept or a digital representation.

Liquidity

The fine wine and financial markets have different levels of liquidity, which are rooted in their inherent trading characteristics. Fine wine tends to be less liquid, due to its tangibility, with transactions often slowed by factors such as the necessity for physical transport, authentication of products, and a comparatively limited buyer market. Additionally, investment-grade wines often necessitate longer holding periods to realise their gains, further reducing their liquidity. Meanwhile, the financial market is commonly cherished for its high liquidity, with assets like stocks and bonds that can be rapidly traded on large-scale platforms, accommodating a broad, active base of buyers and sellers.

The impact of time

The relationship between wine and time also sets these markets apart. While fine wine can age (which impacts its quality and value), financial assets do not inherently bear such physical transformations. However, their value may be just as susceptible to the passage of time and shifts in market dynamics.

Storage and maintenance

Fine wines require specific conditions for storage to retain or enhance their value, incurring additional costs. In contrast, stocks or digital assets don’t require such maintenance.

Factors influencing performance

In the wine investment landscape, several factors, including vintage quality, expert reviews, provenance, and global demand, play pivotal roles in determining a wine’s value and investment potential. Often burgeoning markets exert a profound influence, dynamically shaping global demand and investment flows, like China’s love affair with Bordeaux.

On the other hand, the financial market is steered by economic indicators and central bank policies, technological advances and corporate actions, such as mergers and acquisitions. Each factor, be it micro or macro in scale, casts its influence over the market’s performance, underscoring the multifaceted nature of financial investments.

Investor profiles

Fine wine appeals to a myriad of audiences, including collectors, connoisseurs, and institutional investors seeking diversified, alternative investment portfolios. The allure of tangible, appreciative assets, coupled with a penchant for oenology, makes this market a vibrant tapestry of participants.

Conversely, the financial market is frequented by a diverse mix of retail and institutional investors, brokers, and analysts. The widespread availability of resources, platforms, and instruments in the financial domain makes it accessible to an extensive demographic.

While the fine wine market and the financial market operate in distinct realms, the parallels and contrasts between them offer valuable insights. As with any investment, potential investors in either market should conduct thorough research and seek expert advice. 

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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How to include fine wine in your investment portfolio

A version of this article by WineCap’s CEO Alexander Westgarth was first published by Forbes.

  • Fine wine can serve as a stable, alternative asset in a diversified investment portfolio.
  • Investing in fine wine offers both economic resilience and long-term growth potential.
  • Proper storage and understanding of the asset are crucial for maximizing investment returns.

Fine wine, often associated with luxurious dining and celebratory events, has also gained recognition as a viable investment opportunity. This article explores how to strategically include fine wine in your investment portfolio, while highlighting its unique advantages and potential risks.

Positioning in the portfolio

In a well-diversified investment portfolio, asset allocation usually comprises a mix of stocks, bonds, and alternative investments. Stocks usually dominate, occupying roughly 50% of the total funds due to their potential for high returns. Bonds, typically accounting for 30% of allocations, offer a balance against the volatility of stocks. The remaining 20% is reserved for assets like real estate, hedge funds, cash, and alternatives. These offer a niche yet valuable opportunity for diversification. Industry experts typically recommend allocating a modest percentage of a portfolio to alternative investments, including fine wine. This provides enough room for additional returns without exposing the investor to excessive risk.

Fine wine as a recession buffer

One of the most striking attributes of fine wine as an investment is its resilience during economic downturns. Fine wine indices offer compelling evidence of how fine wine can act as a hedge during challenging economic times. For instance, in the first nine months of 2022, the stock market wobbled. The S&P 500 dwindled downward, losing 23.7% in value by the end of September. However, in perfect contrast, the value of fine wine (according to Liv-ex 1000) rose 14.1% in the same time frame. While it might be tempting to sell off when the markets are doing well, fine wine can be extraordinarily helpful when downturns hit.

Long-term outlook

Investors should be aware that fine wine is an investment that rewards patience, and longer-term commitment. For instance, some fine wines, as shown on Wine Track, have seen four-digit returns in the last decade. On average, a bottle of Rene Engel Vosne-Romanee is up nearly 3,390% in value. The stellar growth can be attributed to the scarcity of the wine; the leading Burgundy winemaker Philippe Engel passed away in 2005 and the domaine was later sold to Francois Pinault and renamed to Domaine Eugenie. But this is not a single example. Leading fine wine indices show that the average value of a fine wine has increased by close to 70% in the last decade, and 340% in the last 20 years.

Patience is most definitely a virtue when it comes to investing in fine wine. The most long-term investors tend to get the highest returns. It is also crucial to note that fine wine is not as liquid an asset as stocks or bonds. Selling a wine may take weeks or even months, emphasising the need for a long-term investment strategy.

Proper storage

Preserving the quality of fine wine is crucial for realising its investment potential. Proper storage conditions, including a controlled environment with consistent temperature and humidity, are non-negotiable. The wine should ideally be stored horizontally to maintain cork moisture. Those unfamiliar with the intricacies of wine storage should consider hiring professional services. These specialised storage facilities not only offer optimal conditions but also provide insurance options to protect your valuable investment.

Understanding the asset

Fine wine is more than just a potential source of revenue; it is a tangible link to history and culture. Understanding the various factors contributing to a wine’s value, such as the region, vintage, and rarity, can offer more than just economic benefits. This multifaceted understanding can enrich an investor’s appreciation for the asset, making it a unique and satisfying component of a diverse investment portfolio.

In conclusion, incorporating fine wine into an investment portfolio requires careful planning, due diligence, and a long-term perspective to realise its full potential as a unique and rewarding asset.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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The legacy of the 1855 Bordeaux Wine Classification and global rankings

  • Wine classifications serve as guides to quality standards, geographical origins, and historical context.
  • The 1855 Bordeaux Classification continues to serve as a touchstone that has shaped not only Bordeaux but also global perceptions of what constitutes a ‘fine wine’.
  • Wine-producing regions worldwide have developed their own unique classification frameworks, based on quality, price, and terroir.

The classifications of fine wines provide an intriguing labyrinth of quality markers, geographic indicators, and historic relevance. Among the most iconic of these is the 1855 Bordeaux Classification – a system that has endured for over a century and a half. In contrast, the dynamic Saint-Émilion classification demonstrates the capacity for change within the realm of wine classifications. This article delves into these iconic French systems and other similar classifications in countries such as Germany, Italy, and Portugal.

The enduring legacy of the 1855 Bordeaux Classification

Commissioned by Napoleon III for the Exposition Universelle de Paris, the Bordeaux Wine Official Classification of 1855 set the gold standard for wine classifications. Designed to rank the finest wines of Bordeaux – from Médoc, Sauternes, and Barsac – the classification ranges from ‘First Growth’ to ‘Fifth Growth’, based on both quality and trading price. With only one significant modification since its inception – the promotion of Château Mouton Rothschild to First Growth in 1973 – the classification remains a cornerstone in the world of fine wine.

The classification has been both praised for its impact on the wine industry and criticised for its rigidity, given that it reflects a snapshot of quality from more than a century and a half ago. The global wine exchange, Liv-ex, has created a similar classification that uses price alone to determine a hierarchy of the leading fine wine labels in the market.

The Saint-Émilion Classification

In contrast to the static nature of the 1855 Classification, the Saint-Émilion region in Bordeaux has a more dynamic approach to ranking its wines. Established in 1955, the Saint-Émilion Classification is updated approximately every ten years. This system classifies wineries into tiers: Grand Cru Classé A, Grand Cru Classé B, and Grand Cru Classé.

Unlike the 1855 Classification, which is set in stone for the most part, the Saint-Émilion system allows for upward or downward mobility, giving wineries an incentive for continuous improvement.

Nonetheless, the classification has also faced controversy when three leading estates with ‘Premier Grand Cru Classé A’ status – Châteaux Ausone, Cheval Blanc and Angélus – withdrew from the rankings last year.

Classifications beyond Bordeaux 

Burgundy’s Cru System

Unlike Bordeaux, where the 1855 Classification ranks specific châteaux or estates, Burgundy’s Cru System classifies individual vineyards by assessing their terroir (Grand Cru, Premier Cru, Village, Regional).

Even vineyards that are right next to each other but separated by a road or a wall may be classified differently. The terroir is believed to impart specific qualities to the wine, with soil composition, slope, and sun exposure all playing a role.

While the 1855 Bordeaux Classification has changed very little since its inception, Burgundy’s Cru System is more fluid. Vineyards can be promoted or demoted based on ongoing assessments of quality, although changes are relatively rare and usually occur over long periods.

The Burgundy Cru System has been highly influential and is seen as a precursor to many New World terroir-based classifications. However, it’s not without its critics. Some argue that focusing solely on terroir might overlook the skills and contributions of individual winemakers.

Germany’s VDP Classification

The Verband Deutscher Prädikatsweingüter (VDP) has developed a system somewhat inspired by Burgundy. The top tier of this system, the Grosse Lage (Great Growth), designates vineyards with the highest quality potential, followed by Erste Lage (First Growth).

Italy’s Barolo and Barbaresco Cru vineyards

In Italy’s famed Barolo and Barbaresco regions, vineyards are often termed ‘cru’, reflecting the particular characteristics of the terroir. Unlike Bordeaux’s 1855 classification, there isn’t a formal hierarchy, but the cru system nonetheless signifies a level of quality and prestige.

Portugal’s Douro Classification

One of the oldest classification systems for wine comes from Portugal’s Douro region, known for Port wine. Established as early as 1756, this classification focuses on the quality of the grape-growing land, making it an early precursor to the concept of terroir.

Concluding thoughts

In the ever-evolving world of fine wine, the 1855 Bordeaux Classification continues to serve as a touchstone that has shaped not only the Bordeaux region but also global perceptions of what constitutes a ‘fine wine’. By contrast, the more dynamic systems like the Saint-Émilion rankings and Burgundy’s Cru system offer a flexible approach that accommodates change and encourages ongoing excellence. As the article explored, wine-producing regions worldwide have developed their own unique classification frameworks, each adding a different flavor to this complex narrative. Whether these systems will adapt to the challenges of climate change, evolving consumer tastes, and other modern factors remains to be seen, but what is clear is their enduring impact on how we appreciate, value, and ultimately, enjoy wine.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Is sustainable wine the next big investment trend?

  • Sustainability in wine encompasses various processes such as environmental stewardship, social responsibility, and long-term financial viability.
  • Sustainability appeals to a growing group of investors who want their money to do good while it grows.
  • Top wineries implementing sustainable practices include Bodega Catena Zapata and Château Pontet-Canet.

The wine investment market has diversified considerably in recent years, with sustainability becoming a core focus. As examined last week, environmental considerations are the number one reason why UK investors choose to invest in fine wine. Today’s article explores the criteria for sustainable wine, its appeal, risks and considerations, as well as the future prospects for this important market segment.

Defining sustainable wine

Sustainability in wine is a nuanced concept that goes beyond certifications like ‘organic’ or ‘biodynamic’ that you might find on a bottle’s label. These certifications are positive indicators but they do not provide a complete picture of a wine’s overall sustainability or its quality. In fact, while organic and biodynamic practices are steps in the right direction, they are not panaceas for all environmental challenges facing vineyards and wineries.

Truly sustainable wines are produced with a broader vision that encompasses not just environmental considerations, but also social and economic aspects. This holistic approach involves responsible land use, ethical labour practices, and a focus on long-term financial viability for producers.

Organic, biodynamic, and sustainable – what is the difference?

Organic wines are made from grapes grown without synthetic pesticides or fertilisers. Biodynamic wines take this a step further by integrating the vineyard into a self-sustaining ecosystem.

Sustainable wines, however, encompass a broader range of practices aimed at the long-term viability of the entire wine-producing operation. Various certifications, such as ‘Certified California Sustainable Winegrowing’, exist to label these wines officially. Organisations such as Sustainable Wine work to enhance clarity around sustainability in the industry as a whole from viticulture to packaging solutions and logistics.

The appeal of sustainable wines

Sustainability appeals to a growing cohort of investors who want their money to do good while it grows. Investing in sustainable wines satisfies this ethical imperative, thereby adding another layer of attraction to the investment.

Studies indicate a rising demand for sustainable products, including wine. This increased consumer demand means greater sales potential and, by extension, a probable rise in value for these wines over time.

Sustainable wines often come with compelling stories of environmental stewardship and community support. This narrative adds a unique selling proposition that can boost brand value and investment potential.

Risks and considerations

Like any investment, putting money into sustainable wines is not without risk. Market volatility, consumer preferences and supply and demand can impact returns as with any other investment-grade wine.

Another risk lies in the potential for ‘greenwashing’, where a wine’s eco-friendly credentials can be exaggerated. Investors must perform due diligence to ensure they are backing genuinely sustainable ventures.

How to invest in sustainable wines

The first step is comprehensive research: utilising online resources, expert reviews, and consumer reports to assess a wine’s investment potential and sustainable credentials. Diversifying your portfolio by including a mix of sustainable wines from various regions and price points can mitigate risks and increase the potential for rewards.

Pay close attention to ratings from renowned wine critics and industry experts. A high rating can significantly impact a wine’s market value.

Sustainability pioneers

Several wineries around the world are setting the bar high for sustainable practices. Frog’s Leap in Napa Valley is known for its organic and dry farming techniques. Germany’s Weingut Wittmann has also embraced organic farming and natural winemaking processes. In Argentina, Bodega Catena Zapata stands out for its sustainable farming and research into high-altitude winemaking. Château Pontet-Canet in Bordeaux is another success story, having converted to biodynamics in 2014 after various setbacks in 2007. Their journey underscores the long-term dedication needed for truly sustainable winemaking.

Future outlook

From water-saving technologies to renewable energy, the wine industry is continually adopting more sustainable practices, pointing to a robust market future. Experts predict the demand for sustainable wines will only grow, particularly as younger generations who prioritise sustainability come of age.

Sustainable wines present a captivating new frontier in wine investment, promising both ethical satisfaction and financial gains. As with any investment, there are risks, but the burgeoning market for these wines, coupled with their unique branding advantages, makes them a trend worth watching. For investors willing to do their homework, the opportunity is ripe for the picking.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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The impact of climate change on wine investment

Climate change and wine investment
  • Environmental considerations are the number one reason why UK investors choose to invest in fine wine.
  • Fine wine itself is facing the effects of climate change such as reduction in yields.
  • Scarcity can drive demand and prices higher, but also lead to the broadening of the fine wine market.

Climate change and environmental considerations are the number one reason why UK investors choose to invest in fine wine, according to the results of our Global Wealth Manager Survey 2023. Over half (54%) of our respondents cited fine wine’s low carbon footprint as a key reason for adding it to their portfolio.

While there is a strong case why fine wine can be considered an ESG investment that is a good for the environment, fine wine itself is facing the impact of climate change. Like all agriculture, viticulture is at the mercy of the environment, making climate change a pressing issue for wine investors.

Changing weather patterns affect wine quality and quantity – two of the main factors that can make an investment profitable.

How changing weather patterns affect wine quality and quantity

In general, climate change can lead to alterations in grape ripening cycles, water stress, diseases and pests, and can affect berry size and composition.

Rising temperatures can cause early ripening, potentially disrupting the balance of sugars, acids and tannins – factors crucial for the quality of the wine and its ageing potential. Meanwhile, drought and irregular rainfall can lead to excessive water stress in the vines, affecting fruit development. Warmer temperatures can also bring new pests and diseases to regions previously unaffected, while heatwaves can cause grapes to sunburn, reducing yield and quality.

For instance, in 2023, two of the main fine wine producing countries, France and Italy, faced diverse weather patterns. France’s 2023 wine harvest projects between 44-47 million hectolitres, benefiting from potentially strong yields in Champagne and Burgundy. Italy, however, might see up to 14% reduction in yields due to extreme weather, marking it among its smallest harvests.

What does this mean for fine wine investment

Smaller harvests lead to reduced supply, and assuming that demand remains constant or increases, prices tend to rise. When news of a small harvest breaks, especially from a reputable wine-producing region, it can create a buzz in the trade. Buyers and collectors might perceive wines from that harvest as more valuable or unique, driving up demand and, subsequently, prices.

Moreover, a smaller harvest doesn’t necessarily mean reduced costs. Wineries still have to maintain vineyards, pay labour, and cover all production expenses. With fewer bottles to sell, the cost per bottle increases, which can result in higher prices for the consumer.

Supply and demand

This is a particularly pertinent question for regions, where scarcity is the main driver behind their investment appeal such as Burgundy. A recent example was the 2021 Burgundy En Primeur campaign, which saw drastically low volumes. The Bourgogne Wine Board (BIVB) pointed to a crop of 900 to 950,000 hectolitres, representing about 50% of a normal year and 2/3 of the average in recent years.

As a result, allocations were low and release prices were up 25% on average. This stimulated demand for older vintages at comparatively low prices, such as 2012, 2014 and 2017, as examined in our Q1 2023 report.

Overall, climate change can create scarcity in the market, pushing the entry point into some fine wine regions higher.

The broadening fine wine market

The rarity of some wines is leading buyers to also consider alternatives from other regions, impacting the size of the market. Today there are more fine wine investment opportunities than in any other point in history.

Changing weather patterns have also led to the emergence of new wine producing regions. For instance, England is now producing award-winning sparkling wines, due to warming temperatures. The country is still a niche player in the investment market, but some brands such as Nyetimber and Gusbourne Estate are making waves.

Climate change is reshaping the fine wine market, with some of the traditional regions forced to adapt their strategies. It is more than an abstract global concern; its palpable effects are shaping the fine wine industry, from agriculture to investment.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Risk tolerance in investing: the role of fine wine

  • Risk in investing refers to the potential for higher long-term rewards but also the possibility of losses.
  • High-risk investments can provide significant returns, but they also come with increased potential for losses.
  • Fine wine can be a low-risk investment with high growth potential and a hedge against inflation.

Understanding risk in investing

In the context of investing, risk signifies the potential variability of returns. It reflects the likelihood that the actual return on an investment may deviate from its expected return, which could mean either losing money or making more than anticipated.

Risk is usually calculated using statistical measures such as standard deviation and variance, which represent the degree to which an investment’s returns can vary from its average return. Greater variability implies higher risk and vice versa.

What does risk tolerance really mean?

Contrary to popular belief, risk tolerance is not about being an adrenaline junkie or being willing to lose all your money. It’s about your ability to endure potential losses in your investment portfolio without panicking or making rash decisions.

Risk tolerance depends on various factors, including your financial capacity to absorb losses, your investment goals, your time horizon (the length of time you plan to keep your money invested), and your emotional comfort with uncertainty and potential loss.

In long-term investments, it can actually be riskier for your wealth to invest solely in traditionally “low-risk” assets. This is because these assets may not provide the growth needed to achieve your investment goals, especially after accounting for inflation.

High-risk investments: high return or high loss?

High-risk investments experience significant price volatility, such as equities, commodities, high-yield bonds, and currencies. These usually have the potential to generate substantial returns; however, they can also lead to significant losses, including the entire amount invested in some cases.

While high-risk investments can be a part of a diversified portfolio, it is crucial to only invest money that you can afford to lose in these types of assets. And, most importantly, these investments should align with your risk tolerance.

Fine wine: a low-risk asset with high growth potential

Fine wine presents an intriguing investment prospect, particularly for those with a lower risk tolerance. As a tangible, finite asset, fine wine tends to appreciate with time and offers a level of stability that is often appealing to risk-averse investors.

Moreover, fine wine has shown high growth potential, with certain wines appreciating significantly over time. Some of the best investments in the last five years have been Prieure Roch Vosne-Romanee Le Clos Goillotte (588%), Egly-Ouriet Brut Millesime Grand Cru (340%) and various wines from Domaine Leroy and Domaine Arnoux-Lachaux. Similarly, the fine wine regions that have seen the highest return on average in the last semi-decade have been Champagne (69.9%) and Burgundy (35.5%).

Our Wine Track tool allows you to explore the best performing wines over different time frames, the price point upon which they are available, and their average critic score.

Understanding risk and your personal risk tolerance is essential in making sound investment decisions. Whether it’s high-risk or low-risk assets, or a combination of both, the key is to align your investments with your personal risk tolerance and financial goals. With its unique attributes, fine wine offers an exciting avenue for those seeking lower-risk investments with substantial potential returns.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.