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Joseph Drouhin expands vineyard holdings to meet rising Burgundy demand

Joseph Drouhin
  • Joseph Drouhin has acquired two properties, Château de Chasselas in Saint-Véran and Rapet in Saint-Romain.
  • The expansion comes as both producers and buyers seek to find stock and value in an increasingly competitive market for Burgundy.
  • Drouhin has been a brand on the move, with some of its wines rising near 40% in value in the last year.

Joseph Drouhin expands its vineyard holdings 

Rising demand for Burgundy has fueled winery purchases and new investments. One of the most prominent producers, Maison Joseph Drouhin, has expanded its vineyard holdings with the recent acquisition of Château de Chasselas in Saint-Véran and Rapet in Saint-Romain.

Frédéric Drouhin, president of the Maison, explained that this decision was driven by increased competition and challenges in acquiring vineyards and purchasing grapes. The purchase focuses on high-quality yet more affordable areas in Burgundy – outside the main Côte d’Or villages, as both producers and buyers seek to find value in a region that has experienced significant price increases in recent years.

Just in the last five years, Burgundy fine wine prices have risen 75.7% – more than seven times the prices of the Bordeaux First Growths.

Burgundy vs Bordeaux prices

The insatiable demand and investment interest in the region have also impacted the cost of land, creating something of a vicious circle. 

The price of the latest Drouhin purchase was not disclosed.

The estates

Château de Chasselas encompasses 17.3 acres and is already a major supplier of Drouhin’s Saint-Véran wine. The property also includes small parcels in Chasselas and Beaujolais. The Rapet estate spans 19.8 acres and includes both Pinot Noir and Chardonnay vineyards in Saint-Romain, as well as small parcels in Auxey-Duresses, Pommard, and Meursault.

The debut vintage of Drouhin’s Saint-Romain wine is the 2022, while the first bottling of Saint-Véran Château de Chasselas will be the 2023 vintage, which will be released in 2024. All the newly acquired vineyards are being transitioned to organic farming practices.

With these acquisitions, Maison Joseph Drouhin owns close to 250 acres of vineyards, spanning from Chablis to Mâcon and encompassing 60 appellations. Their portfolio includes 14 Grands Crus and 20 Premier Crus. 

Drouhin’s place in Burgundy’s secondary market

Joseph Drouhin has been a Burgundy brand on the move. The brand jumped 142 places in the 2022 Power 100 rankings, thanks to its price performance. 

Four wines from the estate also ranked in the first tier of the 2021 Liv-ex Classification, which ranks the wines of the world solely by price: Montrachet Grand Cru Marquis de Laguiche, Musigny Grand Cru, Chambertin-Clos de Bèze Grand Cru, and Chambolle-Musigny Premier Cru Les Amoureuses.

The best performing Drouhin wines

In the last year alone, the best performing Joseph Drouhin wines have risen between 13% and 39%, outperforming the Burgundy 150 index. 

The biggest riser has been their Beaune Premier Cru Le Clos des Mouches Rouge, which has an average price of £1,403 per case.

You can now explore the historic performance of these wines on Wine Track. Our tool provides a clear overview of a fine wine’s track record, including critic scores, average price and investment 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.

 

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The role of technology in fine wine investment: From blockchain to AI

tech and wine
  • Technology has revolutionised various aspects of the wine trade, from ensuring provenance to streamlining valuations.
  • From blockchain to AI and data analytics, these advancements can improve transparency and efficiency.
  • Wine investment tools like Wine Track help investors spot opportunities and discover relative value.

In the rapidly evolving landscape of fine wine investment, technology has emerged as a transformative force, revolutionising various aspects of the industry. From verifying provenance to streamlining valuation processes, advancements such as blockchain and artificial intelligence (AI) have played a crucial role.

This article explores the impact of technology on fine wine investment, delving into blockchain-based provenance verification, AI-driven wine valuation, and digital marketplaces that are shaping the industry’s future.

Blockchain-based provenance verification

One of the significant challenges in the fine wine market is verifying the authenticity and provenance of bottles. Counterfeit wines can undermine investor confidence and erode market trust.

However, blockchain technology has emerged as a powerful tool to address this issue. By creating a decentralised and immutable ledger, blockchain allows for the transparent recording of a wine’s journey from vineyard to consumer.

Each transaction and transfer of ownership can be documented, ensuring a reliable and verifiable record of a wine’s provenance. This technology provides investors with greater confidence in the authenticity and quality of their investments.

However, applying blockchain to tangible assets like wine has some complexities. Unlike virtual transactions, the wine trade involves physical goods with unique characteristics and specific storage requirements. Bottles can be removed from cases, stored improperly, and tax status may vary, posing challenges for a fully distributed ledger system. Despite the existing challenges, blockchain holds significant potential in creating a more secure and trustworthy wine trade ecosystem.

AI-driven wine valuation

Accurate and reliable wine valuation is essential for investors seeking to make informed decisions. AI-powered tools and algorithms are transforming the wine valuation process, leveraging vast amounts of data to generate precise and timely assessments.

By analyzing factors such as vintage, producer, critic ratings, market trends, and historical sales data, AI algorithms can provide sophisticated valuation models. These models offer investors insights into the potential appreciation or depreciation of specific wines, enabling more informed investment strategies.

Digital marketplaces

Digital marketplaces have disrupted traditional fine wine trading by providing a platform that connects buyers and sellers in a transparent and efficient manner. These platforms leverage technology to facilitate secure transactions, streamline logistics, and expand the reach of the market.

Online marketplaces allow investors to access a global network of fine wines, enabling diversification and providing a more extensive selection to choose from. Additionally, these platforms often offer tools for researching wines, comparing prices, and tracking market trends, empowering investors with valuable information to make informed investment decisions.

Fine wine investment tools

One free tool that helps investors is Wine Track. Wine Track is a comprehensive fine wine index that enables investors to identify investment grade wines, spot trends and wine investment opportunities.

The tool uses daily wine price data from multiple sources, tracking over 75,000 investment grade wines. It indexes the prices of multiple vintages of a given wine, and aggregates critics’ scores, to provide a clear overview of a wine’s investment track record.

The tool also highlights the best and worst performing wines over different time periods, and includes a ‘price per point’, which is a clear indicator of relative value to help investing in wine.

Wine Track

Data analytics for market insights

Data analytics has become crucial in fine wine investment, offering investors valuable insights into market trends and patterns. By analyzing vast amounts of data from multiple sources, including auction results, critic ratings, and global demand patterns, investors can gain a deeper understanding of market dynamics.

Data-driven insights enable investors to identify emerging investment opportunities, track the performance of specific wines or regions, and make informed decisions based on historical market trends.

Technology has significantly influenced the landscape of fine wine investment, providing investors with enhanced transparency, efficiency, and analytical capabilities. Digital traceability ensures wines reach the right hands, while AI-driven wine valuation leverages data analytics to generate accurate and timely assessments, guiding investment decisions. As the wine trade continues to adapt the latest technology, investors will be able to navigate the market with greater efficiency and confidence.

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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Moët Hennessy’s new organic certifications reflect a growing trend in the wine industry

Terrazas de Los Andes
  • Moët Hennessy has achieved new organic certifications for three estates, highlighting their commitment to sustainability and soil health initiatives.
  • The wine industry has seen a rise in organic wineries as more producers adopt sustainable practices to promote soil health, biodiversity, and natural pest control.
  • This is not only beneficial for the environment but presents an opportunity for ESG investors.

Moët Hennessy achieves new organic certifications

Moët Hennessy has achieved new organic certifications for three of its estates as part of its sustainability initiative called ‘Living Soils Living Together’, the drinks business reported.

One of the accreditations was granted to Château Galoupet in Provence, recognising its commitment to soil regeneration and soil health initiatives.

Additionally, two wine estates in Argentina, Chandon Argentina and Terrazas de Los Andes, were awarded the Regenerative Organic Certified (ROC) status by the non-profit organization Regenerative Organic Alliance.

In line with the program, Moët Hennessy had previously committed to ceasing the use of herbicides in its Champagne vineyards.

The rise of organic wineries

Moët Hennessy is not alone in its pursuit of a greener future. There has been a noticeable increase in the number of wineries adopting organic practices in recent years. The organic wine movement has gained significant momentum as consumers and wine investors have become more conscious about sustainable and environmentally friendly products.

Wineries are transitioning to organic farming methods to reduce their use of synthetic chemicals, pesticides, and herbicides in grape cultivation. Such practices focus on promoting soil health, biodiversity, and natural pest control, resulting in healthier vineyards and potentially higher quality grapes.

Renowned organic producers

Some of the most renowned organic producers include Burgundy’s Domaine Leflaive, and the Bordeaux Fifth Growth estate, Château Pontet-Canet.

While not officially certified, Burgundy’s Domaine de la Romanée-Conti also adheres to organic and biodynamic principles in its vineyard management and produces some of the most sought-after wines in the world.

A sustainable investment asset

The increasing adoption of organic and sustainable practices by wineries is not only beneficial for the environment but also presents an opportunity for wine investors. The influence of Environmental, Social and Governance (ESG) factors over investment portfolios has grown dramatically in recent years.

Indeed, fine wine can be considered an ESG investment for the following reasons:

  1. Vineyards are a carbon sink. A rugby-pitched-sized area of vineyard soaks up a respectable 2.84 tonnes of carbon every year.
  2. Soil quality can be enhanced through fine wine. Soil degradation is hot on the radar for concerned environmentalists.
  3. Organic wine production supports pollinators. Organic or pesticide-free vineyards – often one of the hallmarks of fine wine – helps bees and other pollinators get back on track.
  4. Fine wine is fighting back against single-use plastic. Unlike disposable plastic, fine wine glass bottles are something to be treasured.
  5. Vineyards help fill rocky terrain and hills with plants. The higher altitude acts as a natural pesticide, making it much easier to create organic wines.

The combination of sustainable practices and investment potential makes the growing trend of organic wineries a positive development in the wine industry.

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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Diversifying retirement portfolios: Why pension fund managers are turning to fine wine

pension funds
  • Pension funds have increased investment in alternative assets like fine wine by 25% over the past two decades.
  • Fine wine provides stability and intrinsic value for pension planners, as it is unaffected by geopolitical events or high inflation levels.
  • Fine wine has delivered impressive returns of 40.3% over the past five years, making it an ideal asset for retirement planning and diversification.

Change is in the air. As both the bond and equity markets get shaken by turbulence, pension fund managers are increasingly turning to alternative assets, to hedge against economic shocks. According to one report, pension funds around the world have increased their exposure by 25% over the past two decades. The New York Teachers Retirement System, for example, is plunging a whooping 35% of money into alternative investments.

Private equity, property, hedge funds and commodities are among the most enduring alternative assets. However, little by little, institutional investors are dipping into collectibles like fine wine too. One of Canada’s mightiest pension funds, The Public Sector Pension Investment Board, recently acquired 35 iconic vineyards. Goldman Sachs has also been investing heavily in wineries, with a focus on medium and longer-term returns.

In this article, we’ll unveil what’s making wine so appealing to managers today, and how investors could use this unique asset to bolster their own retirement funds.

Fine wine’s intrinsic value is reassuring for pension planners

Unlike most other investments, wine’s world-famous flavors are not impacted by geo-political events or high inflation levels. Instead, they are affected by storage and temperature.

This gives investors – including fund managers – a welcome sense of reassurance. While they may have no control over the stock market, they can ensure that the wine is well cared for.

Over the decades, retirement planners can rest assured that their wealth is not subject to the twists and turns of the stock market. Instead, it comes from the intrinsic value and exquisite quality within the bottle. This can help to mitigate risk and offer valuable diversification.

Investors can find a bottle to match their retirement timeframe

One of the greatest appeals of fine wine is how it improves over time. Naturally, it’s an asset that complements decades-long investment strategies, like retirement plans.

As our CEO, Alex Westgarth, recently commented for Forbes, ‘Fine wine pairs well with younger investors with long-term horizons. A good Bordeaux, for example, can age up to 50 years. This can add a certain stability to your portfolios’.

An excellent wine will always be in high demand as it reaches maturity. And there will almost always be a passionate buyer willing to pay premium prices.

A great advantage for pension planners is that they can probably find a bottle on the market to match their retirement timeframe. While some wines might be best opened in fifty years, others may need just five. Finding the right wine for your unique timeframe can help you to hedge against market losses and meet your investment goals.

With time, premium bottles become rarer

As poet, playwright and novelist, Johann Wolfgang von Goethe famously quipped, ‘Life is too short to drink bad wine’. Ultimately, the asset is made to be enjoyed. People open investment grade wine to celebrate occasions or present as gifts. And, with time, certain vintages will become harder and harder to find.

When demand outstrips supply, prices increase. That’s another reason why long-term investments in wine can be a sensible alternative asset for pension planning.

As the climate crisis continues to impact vineyards, the scarcity factor is likely to further increase prices. The delicate and unique flavors in already-bottled wine could be the last of their kind within just a few years. This will further reduce supply.

Meanwhile, demand is growing by the day. The past decades have seen an impressive rise in Millennial and Gen-Z buyers. Sotheby’s have even noticed the average purveyor’s age shrink from over 60 to under 40.

What’s more, the vast surge of digital advancements are also bringing in new generations and groups of wine buyers.

If demand continues to grow, the tightening supply should lead to a continued increase in value.

Fine wine has an impressive record of beating inflation

There are several reasons why most pension funds begin by investing in equities. It’s partly because managers can afford to take on more risk with longer timeframes. But it’s also to avoid the devastating effects of inflation. Unlike cash, bonds or other debt instruments, equity is generally more inflation-resistant.

Fortunately, fine wine shares this same inflation-resisting quality. This could make it a strong contender for a pension investment plan.

Fine wine has a history of beating inflation. Since 2021, for example, while the UK has endured inflation rates of over 10%, the Liv-ex 1000 index has risen 33%.

During the middle and final investment years – when the pension pot is most at risk of inflation erosion – a healthy allocation to wine could help mitigate the risk.

Fine wine has a history of strong returns

Over the past five years, the fine wine has delivered returns of 40.3%, according to the Liv-ex 1000 index. What’s more, despite the incredibly erratic market, overall performance has been smooth and steady.

This makes fine wine a strong contender retirement planning. Fine wine has both growth and value characteristics, making it well suited for most pension plans.

How can fine wine be incorporated into a pension?

Usually the best way to add wine into private pensions – like workplace and Self-Invested Private Pensions (SIPPs) – is to speak to a financial advisor. This is because they can help you structure the fund in the most tax-efficient way.

When it comes to taxes, fine wine already has a head start. Fine wine is exempt from Capital Gains Tax. Because of this, your advisor may prefer to leave it out of a SIPP altogether and use the tax perks on other assets instead. But probably they would seek to allocate a proportion of fine wine into your overall retirement plan as a hedging asset or long-term growth generator. As an inflation-resistant and illiquid asset, wine generally lends itself to retirement planning well.

If you’d like to find out more about which wines could best suit your pension goals, we’d love to talk to you.

 

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En Primeur round-up: The best Bordeaux 2022 releases so far

Chateau Lafleur
  • Two weeks into the Bordeaux En Primeur campaign about a third of the most popular estates have released their 2022 vintage.
  • The releases so far have commanded 5% to 25% price premium on last year.
  • Some of the most successful releases included Beychevelle and Cheval Blanc.

The Bordeaux 2022 En Primeur campaign is now in full swing. The past two weeks have seen about twenty of the most important Bordeaux estates release their latest vintage, including Château Beychevelle, Château Cheval Blanc, Château Suduiraut and Château Lafleur.

The majority of the wines have been released at 5% to 25% premium on last year, with price rises often highlighting the relative value and better investment opportunities that back vintages offer.

The best new releases have represented an attractive point of entry into the brand, a combination of adequate pricing and good quality as measured by critic scores. Below we highlight four of them.

Château Beychevelle – ‘fabulous’

 

Beychevelle

Château Beychevelle 2022 was released En Primeur at €67.50 per bottle ex-négociant, representing a 17.2% increase on the 2021. The wine was offered at £836 per 12×75, up 18.4% on the 2021’s opening price (£706 per 12×75).

However, in the context of back vintages, the 2022 became one of the most attractive offerings in the market today. The wine boasts 95-97 points from Neal Martin (Vinous), who said it was ‘one of the most seductive Beychevelles I have tasted from barrel’ and ‘one not to be overlooked’. Antonio Galloni scored it 94-96 points and called it ‘fabulous’.

Beychevelle has been a brand on the move, seeing consistent price growth both in the shorter and longer-term. In the past year, prices are up 6% on average; they have increased 24% over the last three, and 68% in the past decade.

Château Cheval Blanc – ‘wine of the vintage?’

 

Cheval Blanc

Château Cheval Blanc 2022 has been another of this year’s campaign successes. The wine is Neal Martin’s highest-scoring vintage ever and the latest well-priced release from the château, which seems to have created a sustainable En Primeur strategy.

When we spoke to Cheval Blanc’s technical director, Pierre-Olivier Clouet, he stated:

“The release price depends on many things. The quality of the vintage, the economic context in the world, and the price of new vintages available on the market. At the end, the definition of the price En Primeur is not something so difficult to do. This is something mathematical. En Primeur should be forever the lowest price you can find in your bottle. If you purchase later, it’s going to be more difficult to find and it’s going to be more expensive.”

Cheval Blanc 2022 was released at €470 per bottle ex-négociant, up 20.5% on the 2021, and offered internationally for £5,760 per 12×75, up 21.5% increase on last year.

Numerous critics awarded the wine a potential 100-points, including Neal Martin (98-100), Antonio Galloni (98-100), Lisa Perrotti-Brown MW (98-100), Colin Hay (98-100), James Suckling (99-100), and Jean-Marc Quarin (100).

Other older vintages that represented good value for money included the 2021, 2020 and 2016. Prices on average have risen 20% in the last half decade.

Carruades de Lafite – ‘a real showstopper’

 

Carruades de Lafite

Carruades de Lafite, the second wine of Château Lafite Rothschild, is another anticipated release that enjoys high demand year after year. The 2022 was released at €180 per bottle ex-négociant, up 12.5% on the 2021. The wine was offered for £2,256 per 12×75, up 13.9% on the 2021 release, which has since risen in value.

Despite the price increases, the 2022 is the least expensive Carruades on the market today. This has not gone unnoticed and the wine has already traded at a premium of 21.2% on the secondary market.

Martin awarded it 90-92 points, and Kelley gave it 91-93. It also received 92-94 points from Galloni, who called it ‘a real showstopper’.

From an investment perspective, Carruades de Lafite prices have risen 22% over the last five years, and 63% in the last decade.

Château Lafleur – ‘intellectual and delicious’

 

Lafleur

In recent years, Château Lafleur has been offering considerable value in the high-rolling world of Pomerol. The latest release was no exception.

Lafleur 2022 was released at €610 per bottle ex-négociant, up 8.9% on the 2021. It was offered at £7,440 per 12×75, a 14.3% increase on the 2021 release, which has since experienced a significant price growth.

The 2022 received 97-99 points from Neal Martin, who said it was ‘an intellectual and delicious Lafleur – a lethal combination’. Galloni gave it 95-98 and noted that it was ‘shaping up to be majestic’.

The wine also received 98-100 points from Colin Hay and Jane Anson, and 100-points from Falstaff and Jean-Marc Quarin.

Lafleur prices have risen 38% in the last five years, and 83% in the last ten, making it an attractive investment wine.

You can now explore the historic performance of these wines on Wine Track. Our tool provides a clear overview of a fine wine’s track record, including critic scores, average price and investment 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.

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How fine wine hedges against economic shocks: In four graphs

fine wine index
  • Fine wine’s value tends to increase when stock markets fall, making it a great hedge option for investors.
  • Fine wine is proving to be a better portfolio hedge than gold which is showing greater correlation with the stock market in recent years.
  • As a precious and depleting asset, wine tends to rise above local shocks and is generally less impacted by cost-of-living pressures.
  • Fine wine has outpaced inflation since 2021, making it a resilient asset to hold in turbulent times.

There is a lot going on in the economy, and most of it is not good. Major financial institutions buckle under high interest rates. Central banks are forced to rethink policies. Inflation continues to flirt with double digit levels. And the stock market lurches from one position to another as world events unfold. According to JPMorgan’s Q2 outlook, ‘2023 looks overwhelmingly likely to be a year of disappointing growth and ongoing adjustment’. Yet, fine wine is generally standing tall, experiencing little to zero negative performance.

In many situations, the value of fine wine has even climbed. As CityAM recently reported, ‘while it might not usurp stocks as the backbone of investors’ portfolios anytime soon, wine is providing some stability and solace amid the turmoil’.

In this article, we’ll uncover how fine wine is reacting to today’s tense economy and why.

The value of fine wine tends to increase as markets go down

Fascinatingly, the value of wine tends to increase as the stock markets fall. One of the most notable examples was during the financial crisis of 2008. Over autumn, the world economies went into shock. Within six months, the great S&P 500 had plunged by 52%.

S&P finance

Source: Yahoo Finance

Yet, while the world’s stock prices zig-zagged downwards, one asset class held up remarkably well. Fine wine (shown in the graph below in red) did not suffer any major downturns. On the contrary, it seemed to have a negative correlation to the stock market. Fine wine prices soared.

Liv-ex 1000 vs S&P 500

Time and time again, fine wine has outperformed when the stock market is sinking. This is because of four essential characteristics.

Most recently, fine wine delivered investors double digit returns over the COVID-19 pandemic and global lockdowns. Between April 2020 and September 2022, the asset shot up a staggering 43.5%.

This makes fine wine an extraordinary hedging option for investors. When stocks are tumbling, a reasonable allocation to wine can help to smooth out the overall performance and absorb losses.

Today, fine wine is a better portfolio hedge than gold   

The current economic environment is unsteady. Understandably, global asset managers are now looking to buffer against some of the market shocks by increasing their allocations to alternatives and hedging instruments.

One of the most popular choices is gold. According to UBS’ latest report, ‘we are also most preferred on gold and recommend holding it as a portfolio hedge in the current uncertain times’.

However, over the past couple of years, fine wine has started to beat gold at its own game. Since Covid-19, the prices of gold have become more correlated to the prices of the stock market. Looking at the graph below, the performance of gold (in orange) is becoming increasingly aligned to the stock market (for example, the S&P 500 shown in yellow). By contrast, the value of fine wine (red) is the least aligned.

Liv-ex 1000 vs S&P 500 vs Gold

When it comes to hedging against a turbulent economy, wine is coming out on top. Some economists are now beginning to question if fine wine is the new gold.

Since 2021, the performance of fine wine has outpaced inflation

The US inflation rate is gradually coming back to an almost-reassuring level. At the time of writing (May 2023), it sits at 4.98%, down from 8.54% in 2022. But it’s more than double the target rate.

In the UK, it’s not looking so good. Inflation now sits at a nerve-wracking 10.06%, meaning that purchasing power is rapidly draining from the pound. At times like this, it’s generally better to hold long-term wealth in assets rather than cash. Physical assets like property, precious metals and fine wine are especially resilient to inflation risk.

Below is a graph showing the UK’s inflation rate over the past five years. Since 2021, it has soared to double digits.

If we compare this to the average performance of fine wine in the same time frame (using the Liv-ex 1000 index), wine hasn’t just kept up with inflation. It has beaten it more than three-fold. Between 2021 and 2023 UK inflation rose by just under 10%. By contrast, the average performance of fine wine has increased by 33%.

There are several reasons why wine is so good at outpacing inflation. Firstly, it’s a global asset so it tends to rise above local shocks. When the pound loses value, Asian or American investors tend to step in. The wine markets are generally private too. This means that the groups of buyers tend to be very wealthy and sophisticated investors, who are less impacted by the cost of living pressures. They’re generally less swayed by rumors or economic turbulence too.

Perhaps most significantly, wine is a precious and depleting asset. It grows in value and scarcity over time, which will almost always outpace inflation levels.

Overall, wine is a useful asset in a turbulent economy

There are so many reasons for turbulence in the economy. Wars, pandemics, political tensions, inflation or the climate crisis to name a few. Yet, the last few years have shown us that fine wine tends to increase in value during these historical moments.

Global demand for investment grade wine outstrips supply more and more every day. As our CEO Alex Westgarth recently explained for Forbes Business Council, wine investors are younger, edgier, and more international than ever. Whichever way you look at it, wine and economic turbulence tend to pair well.

As the markets continue to stride forward into uncertainty, it’s a good moment to reconsider alternative assets and hedging strategies.

Discover seven more delicious benefits to investing in fine wine

WineCap’s 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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Neal Martin awards three Bordeaux 2022 wines potential 100 points

En Primeur Neal Martin Bordeaux 2022
  • Bordeaux 2022 is predestined for long-term ageing rather than drinking young.
  • Martin found little difference between the First Growths and ‘the others’ in terms of quality.
  • He singled out Saint-Julien as an appellation to seek out.
  • Leoville Las Cases, Cheval Blanc and L’Eglise Clinet received 98-100 points.

Yesterday, Vinous published Neal Martin’s much anticipated Bordeaux 2022 report, titled “You’re unbelievable”.

Vintage observations

Martin found some ‘snow-capped peaks’, ‘show-offs whose talent cannot be denied’ as well as some ‘caveats’ in Bordeaux 2022. Like other critics, he commented on the ‘unbelievable’ freshness given the heat of the growing season.

He remarked that in 2022 ‘there is partial flattening of the hierarchical pyramid’. While ‘release prices will inevitably amplify differences in ranking, in terms of quality, there’s little difference between First Growths and “the others”,’ he observed.

On the question of Right vs Left Bank, the critic said the ‘vintage is more evenly balanced’ but singled out Saint-Julien as an appellation to watch out for, noting that ‘this is as good as it gets’.

He mentioned the wines’ higher alcohol levels compared to the 2021s, that are ‘often above 14%’ but feel ‘less blowsy than in 2018’. He also said that ‘unlike 2019 and 2020, most wines, particularly within its higher ranks, are predestined for long-term aging’.

However, he advised ‘those with a penchant for drinking Bordeaux young [to] seek out another vintage’.

In terms of buying opportunities, he argued that ‘the question is whether initial prices make any purchase worthwhile vis-à-vis other vintages currently on the market’.

Top-scoring wines

Neal Martin's top-scoring Bordeaux 2022 wines

While Martin stated that En Primeur is more than just scores, it is important to note that three wines achieved his highest in-barrel range of 98-100 points.

Cheval Blanc 2022, which was among the first releases this campaign, is ‘a wine for those serious about their Bordeaux,’ according to the critic. Vinous’ Antonio Galloni also rated it 98-100 points, noting that ‘it is shaping up to be one of the wines of vintage’. It also makes an attractive investment, with Cheval Blanc prices rising an average of 22% over the last three years.

Cheval Blanc prices and scores

For Martin, Leoville Las Cases 2022 ‘surpasses the 2018-2020 trio and […] is a ‘tour de force’’.

He described L’Eglise Clinet as ‘a wine that may leave you spellbound’.

Martin also suggested some wines from the cellar which included Brane-Cantenac, La Conseillante, Léoville Barton, Phélan-Ségur, Pichon-Baron and Vieux-Château-Certan.

You can now explore the historic performance of these wines on Wine Track. Our tool provides a clear overview of a fine wine’s track record, including critic scores, average price and investment 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.

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Banking failures and the fine wine market: Performance during economic uncertainty

Banking crisis
  • The US banking crisis has been the biggest since the 2008 financial crisis and has created uncertainty in mainstream markets.
  • Revisiting key moments in the history of fine wine investment offers valuable insight into the future of the market.
  • A key difference between fine wine and equities during the last financial crisis was the speed of recovery.
  • The fine wine market is braced for challenges due to its diversity as the performance of different wines and vintages can balance a portfolio.

The recent banking failures have been the biggest since the 2008 financial crisis. Since the beginning of March, regulators have shut down three mid-size US banks – Silicon Valley Bank, Signature Bank and First Republic. In Europe, Swiss giant Credit Suisse was rescued in an emergency deal with rival UBS, which purchased it at a fraction of its closing market value. UBS itself suffered losses during the acquisition – it slid 13% before making a recovery.

While the news echoes the last financial crisis, governments have been providing reassurance that this is not history repeating itself. The current turmoil is partly down to the sharp increase in interest rates, which was aimed to curb inflation.

Still, the banking collapse has had an immediate effect on investor confidence and mainstream markets. European bank shares remain volatile, while US stock markets opened flat this week. Alternative assets and safe havens such as gold and treasuries have enjoyed a boost, as investors have been considering low-risk assets to put their money.

Reflecting on how the fine wine market has performed during previous challenging macroeconomic events could offer valuable insights into what to expect in the current uncertain environment.

The fine wine market during the 2008 financial crisis

Like other markets, fine wine experiences cycles.

fine wine performance

During the previous financial crisis, the fine wine market suffered a downturn, but it fared better than some other traditional investments such as equities and real estate. Between June 2008 and June 2009, the Liv-ex 100 index, which was heavily weighted towards wines from Bordeaux, fell 18.8%.  Meanwhile, the broader Liv-ex 1000 index, which includes greater number of wines from other regions, dipped 7.4%.

The Knight Frank Luxury Investment Index, which tracks the performance of luxury assets including fine wine, recorded similar figures, with the value of investment-grade wine declining 15% in 2008. By comparison, the S&P 500, a benchmark index of US equities, fell over 37% the same year.

A key difference between fine wine and equities during the financial crisis was the speed of recovery. While the stock market took several years to recover to its pre-crisis levels, the fine wine market turned bullish relatively quickly. By the end of 2009, investment-grade wine had returned to its pre-crisis levels, and by 2010, it had surpassed its previous peak.

Moreover, the performance of fine wine during the financial crisis varied between different regions and vintages. While the Bordeaux market was hit particularly hard, Burgundy and the Rhône performed relatively well.

The fine wine market – braced for challenges

The fine wine market of today looks very different from the shape it had fifteen years ago. There are more investable wines than at any other point in history. If Bordeaux accounted for 90% of the market in 2008, today its share sits at 35%, due to the emergence and the proven investment potential of wines outside this dominant French region.

The diversity of this portfolio diversifier has helped it get through swiftly through other more recent challenges, such as Donald Trump’s 25% tariffs on most European wines, and the Covid-19 pandemic.

For instance, Italy and Champagne, which were exempt from the US tariffs, enjoyed steady price appreciation in 2019, while Burgundy suffered. Throughout and after the pandemic, Burgundy and Champagne turned into the top-performing regions.

California also enjoyed rising prices in 2021, and its index hit an all-time high in September last year.

Bordeaux has been moving quietly and steadily, and its relatively mild performance over the last five years has turned it into a region that can offer value for money, especially in ‘off’ vintages.

regional fine wine investment

Factors influencing the performance of fine wine

The fine wine market is different from other markets and operates with its own dynamics, such as rarity and exclusivity. Its unique characteristics make it less vulnerable to market shocks and economic downturns than financial markets.

Indeed, its historic performance has shown very low correlation to mainstream markets. As a tangible good that cannot be traded as quickly as stocks, fine wine is generally insulated from rapid price changes.

In general, prices move based on supply and demand, critics’ scores, vintage quality, age and brand appeal. Find out more about fine wine investment here, or explore the performance of individual brands on Wine Track.

 

WineCap’s 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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Marchesi Antinori acquires iconic Napa Valley’s Stag’s Leap

Stag's Leap
  • Marchesi Antinori has taken full ownership of Napa Valley’s iconic winery Stag’s Leap.
  • Stag’s Leap laid the foundation for the emergence of cult wines after winning the Judgement of Paris in 1976.
  • Antinori’s innovations in the ‘Super Tuscan’ revolution of the 1970s and recent acquisition of Stag’s Leap position both for continued success in the fine wine investment market.

Marchesi Antinori, one of the oldest and largest wine companies in the world, has gained full ownership of the iconic Napa Valley estate Stag’s Leap. Wine Spectator has reported that the current sale includes ‘the winery, the brand and inventory, and close to 300 acres of Napa vines, including the Fay and S.L.V. vineyards’.

Antinori has held a minority stake in Stag’s Leap since 2007, when Ste. Michelle Wine Estates purchased it from founder Warren Winiarksi.

Some of the most prominent wineries owned by Antinori include the Super Tuscan Tignanello and Guado al Tasso, as well as Antica Napa Valley.

Stag’s Leap performance

Stag’s Leap was among the pioneering Californian wineries that laid the foundation for the emergence of cult brands.

It was its S.L.V. Cabernet Sauvignon 1973 – the winery’s second vintage, and first produced at the estate and in commercial quantities – that won the Judgement of Paris in 1976. Stag’s Leap put Californian wine on the map by winning over its French competitors, which included the First Growths Château Mouton Rothschild 1970 and Château Haut-Brion 1970.

In the fine wine market, demand for Stag’s Leap has grown considerably over the last decade, with prices for its Cask 23 increasing 59% and for S.L.V. – up 61% on average.

The brand has been helped by the relative value for money it offers compared to other Californian ‘cult wines’. The average price per point for S.L.V., for instance, is just £19, compared to £472 for Screaming Eagle Cabernet Sauvignon.

The 2014 vintage has enjoyed particularly strong price performance. Stag’s Leap S.L.V. is up 80.5% since release. Cask 23 has risen 77.4% over the past two years, placing it among some of California’s biggest risers.

Antinori’s overarching impact

If Stag’s Leap has greatly contributed to the emergence of California’s cult wines, Antinori’s innovations played a large part in the ‘Super Tuscan’ revolution of the 1970s. Both have managed to re-define ‘fine wine’ outside the confines of Bordeaux, in USA and Italy respectively.

With history that can be traced back to 1385, Antinori has been one of the most successful wine companies. Its Tignanello ranked as the 49th most powerful wine brand in the world, due to high trade volume and value. Liv-ex noted that it was helped by the remarkable value for money it offers being ‘the cheapest Italian wine in the top 100, with an average case price of £1,076’.

While it is yet to be seen how the full acquisition of Stag’s Leap will play out, it seems like both Antinori and Stag’s Leap are poised for continued success and reaching new heights in the fine wine market.

 

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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Jancis Robinson MW releases Bordeaux 2022 scores

Bordeaux En Primeur 2022
  • Jancis Robinson MW and James Lawther MW reviewed the 2022 Bordeaux vintage.
  • Both critics found the reds to be extremely impressive, with surprising freshness.
  • Mouton Rothschild, Lafite Rothschild, Cheval Blanc and Pétrus received the highest scores.

Jancis Robinson MW and James Lawther MW reviewed the 2022 Bordeaux vintage and released a series of articles, covering the whites, red-bank and left-bank reds.

Both critics found the wines to be ‘extremely impressive’, with ‘amazing freshness’ given the hot and dry growing season.

In terms of the En Primeur tastings, Jancis remarked on the ‘record number of visitors’, with ‘Americans and Asians back in force’. According to her, the numbers at the UGC tastings were ‘even higher than in spring 2019, when the 2018 vintage was presented almost a year before pandemic lockdowns’.

This gives greater confidence in the success of the En Primeur campaign, which commenced last week.

Left-bank reds

According to the report, the 2022 harvest was the earliest on record, with most of the Cabernet Sauvignon and Merlot on the left bank picked before the end of September. Despite the early harvest, the grapes’ maturity reached optimal levels. The sugar levels were similar to those found in recent years, while the phenolic ripeness was comparable to or even higher than previous vintages.

Alcohol levels on the left bank were on the high side, with 14% to 14.5% being a regular occurrence. However, the wines were often balanced with freshness.

Lawther wrote that he ‘found the characteristics of most of the appellations respected’, with Margaux being more varied.

Right-bank reds

According to Robinson, Merlot did exceptionally well in 2022, with high sugar levels, deep color and ‘no shortage of tannins for a long life lurking below the alluring surface’.

Lawther also proclaimed the grape variety to be ‘the star of the vintage’. He added that ‘Cabernet Franc was also successful on the right bank in 2022 adding colour, floral fragrance, freshness and length’. The critic claimed that ‘combined with Merlot it has produced some stunning wines, even away from the limestone plateau – witness Cheval Blanc, one of the wines of the vintage’.

White wines

The hot and dry growing season led to lower acidity levels in the whites, which translated to lack of freshness in some. Robinson further revealed that Sauvignon Blanc and Sémillon were picked earlier than ever before since Bordeaux University records began. Domaine de Chevalier Blanc stood out among the dry whites, while Château Suduiraut received the highest score of 18+ points among the Sauternes.

Top-scoring wines

The First Growth Château Mouton Rothschild topped the list of the highest-scoring wines from the 2022 vintage. Lawther described the palate as ‘truly amazing’ and questioned if this isn’t ‘a modern 1986’.

Château Lafite Rothschild, Château Cheval Blanc and Pétrus followed with 18.5-points.

So far, Lafite and Cheval Blanc have been two of the favourite wines of major critics, also boasting potential 100-points from Jeff Leve, Jean-Marc Quarin, and James Suckling.

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.