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Penfolds Innovates New French-Australian Blend

Bottle of Penfolds FWT

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

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

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

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

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

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

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

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

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

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Report

Bordeaux 2021 | Vintage Report

Bordeaux vineyard

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

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

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

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

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

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

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News

Heatwave Provokes Bordeaux Fires

Fire near lake in Bordeaux region

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

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

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

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

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

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

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WineCap in Forbes Advisor

Wine bottle necks

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

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

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

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

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

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

Other advantages of investing in wine and advice include:

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

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

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

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

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News

Champagne Sells for Record $2.5 Million at Auction

Bottle of Champagne Avenue Foch on table with glasses

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

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

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

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

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

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Report

Q2 2022 | Report

Lafite Rothschild barrel room

Our Q2 Report is now available to download. In it, we examine the wine investment trends that shaped the fine wine market over the past three months. The report looks at how inflation and the possibility of recession have impacted fine wine, the success of the 2021 Bordeaux En Primeur campaign, the top-performing regions and the most in-demand wines.

Fine wine proved itself as a stable investment in the second quarter of the year, which was characterised by exacerbated economic pressure. As stagflation worries grew, equities experienced increased volatility and some entered bear markets. Meanwhile, fine wine prices continued their steady ascent and even outperformed safe haven assets like gold. The best-performing wines were blue-chip labels, which attract regular demand, hinting at narrowing focus and increased caution in the current economic situation.

On a regional level, Burgundy and the Rhône experienced the biggest price rises. The top-performing wines can now be seen on Wine Track, our latest tool, which helps you track wines’ price performance over any given period at a wine label level.

In Q2, Champagne and California continued to trade actively, with Louis Roederer Cristal cementing its place as the most in-demand Champagne. The 2021 Bordeaux En Primeur campaign stimulated interest in previous vintage wines, which presented many good value wine investment opportunities. Some of the most successful 2021 releases included the First Growths and their second wines, Châteaux Lafleur, Calon Ségur, Les Carmes Haut-Brion, Léoville-Barton, Ausone and Cheval Blanc.

The third quarter will throw the spotlight on releases from the Rest of the World, with the La Place de Bordeaux campaign taking place in September. Almaviva, Opus One, Vérité, Seña, Catena Zapata, Masseto and Solaia are few of the star names that will offer their latest vintages internationally, with many more new additions. The next three months will also further test the bullishness of the fine wine market.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Download our brand new quarterly report for your summary of the past quarter in fine wine.

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Fine Wine Investing during Market Volatility & Uncertainty

Stocks index

With an increasing number of investors looking to alternative investments, and in particular fine wine, WineCap’s CEO Alex Westgarth explores why this sector has risen to prominence in recent years in Wealth Advisor. Read his opinion piece in full below:

‘Although wine is mainly known for its leisure benefits, many would be surprised to discover that fine wine investments can provide both stability and returns to investment portfolios during times of market volatility and uncertainty.

Fine wine investing can be a safe haven for investors in times of instability. As global markets experience increased levels of volatility due to factors such as the conflict in Ukraine, the threat of rising interest rates and spiking inflation, investors are exploring different ways to shield their wealth and assets.

We cannot predict what ways the current factors will affect the economy and financial markets and many experts expect volatility will stick around even when these short-term drivers have faded away. Therefore, investing in more stable options, such as fine wine, has grown in popularity in recent months.

Fine wine’s ability to hold its value through times of instability can be seen from historic data. At the start of the 2008 recession, the Liv-ex Fine Wine 1000, which tracks 1,000 wines from across the world, dropped 10 per cent from its peak in August 2008 to a low in December of that year. But by early 2009, it began a steady recovery and recouped all its losses by the end of 2009.

In contrast, the FTSE 100 fell 47.82 per cent and took over five years to return to pre-2008 levels. More recently, the first quarter of 2020 saw stock markets spiral down in the wake of COVID-19. While the S&P Global Luxury Index fell 23 per cent, the Liv-ex Fine Wine 1000 slipped just 4 per cent and had already begun its recovery by May 2020.

How is fine wine able to maintain such stability? As with the very nature of wine itself, the longer you hold on to it, the more valuable it becomes; and in investment terms, the more consistent your returns become. This is because, over the long-term, the demand-supply imbalance is exacerbated by increasing consumption and subsequently decreasing availability, and therefore wines become more desirable due to rarity and improvements in quality as they age.

Furthermore, the fine wine market is self-contained and, to a large extent, divorced from equity markets. This is because the value of the wine market is not determined by a single economy, rather, it shadows the movement of wealth around the world.

This unique characteristic means it is less vulnerable to the fluctuations witnessed in conventional equity markets which ultimately allows people to safeguard their investments and distance themselves from the exposure that traditional investors are often forced to endure. Moreover, the wine investment market provides flexibility as it is less open to fashionable interpretation compared to most other luxury collectables.

Particularly, when market volatility increases or economic conditions go south, investors acknowledge that fine wine can offer great capital preservation, real value growth and a way to diversify a portfolio away from the most volatile assets. Good wine will always be in demand, which means long-term returns will continue to be supported by consistent consumption.’

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News

LVMH Buys Top Californian Winery Joseph Phelps

Exterior of Joseph Phelps winery and vineyard

The French luxury goods house LVMH has announced that it is expanding its portfolio of northern Californian wineries with the purchase of high-end producer Joseph Phelps. 

Phelps has produced sought-after bottles from Napa and Sonoma for almost 50 years. The winery’s top cuvée – Insignia – was one of Napa’s first Bordeaux-style Cabernet blends and helped the region’s new style of wine to gain recognition in the 1970s.

The purchase means that Moët Hennessey has now deepened its foothold in California where it already owns three other wineries: Domaine Chandon, Newton Vineyard and Colgin Cellars.  

Included in the sale is the Phelps brand, winery and inventory, as well as approximately 500 acres in vineyards in Napa and Sonoma counties. No purchase price was disclosed.   

Moët Hennessy Chairman and CEO Philippe Schaus said that Joseph Phelps is ‘an iconic name and an iconic winery’. ‘It’s important for us that we are acquiring a family business with a legacy and heritage. It’s super important that we keep that heritage.’

For Schaus, Moët Hennessy’s aim is to be able to offer ‘all the different moments of consumption’: from apéritifs, Champagne and fine dining wines to bars, clubs and cocktails. The company’s Cloudy Bay brand covers white wines and its Whispering Angel line offers rosé, but, Schaus commented, ‘we were missing a strong red wine.’

It’s clear than LVMH ‘s purchase of this Napa stalwart fits comfortably into its portfolio, as Schaus declared: ‘Joseph Phelps has been to the Napa Valley what Nicolas Ruinart, Mrs. Clicquot, Joseph Krug and Claude Moët were to the Champagne region and likewise we will continue to develop this new House in the respect of the founder’s heritage and vision.’

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WineCap Featured in The Telegraph

Bottles of wine laid down to age

WineCap featured in the ‘Money’ supplement of Saturday’s The Telegraph. You can read Lauren Almeida’s full article here and find a summary below on how investors are turning to fine wine to protect their savings:

With share prices falling, investors are looking at how fine wines and luxury goods can protect their savings.

Historically, stocks and shares have delivered solid returns over the course of a decade during a bull market. However, with a global recession looming, markets are on a downward trajectory with global stocks down %12 year to date. With inflation at a 40-year high, savvy investors are looking to protect the value of their money through other means.

Rod Peel worked as an engineer at British Gas and is now retired in Bolivia. His portfolio of investment-grade wines are valued at over £1m. ‘I started in 2004, when I received a call from my current broker WineCap’.

‘You only make profits on the wines when you sell them. Otherwise, they sit there gaining hypothetical money. I pay around £1,000 for storage and insurance each year.’

One of the advantages of investments in wine and whisky is that there is no need to pay capital gains tax on profits as they are classified as a ‘wasting asset’ by HMRC.

‘It’s also very fun,’ Mr Peel commented. ‘It’s interesting to learn about the wines. You discover something new every day. I think it’s more engaging than investing in shares.’

Another investor is Cameron Scott, a 78-year-old accountant from Staffordshire who has been building up a portfolio of wines and is nearing retirement.

‘My wine makes up between 5pc and 10pc of my overall portfolio,’ he commented. ‘I like it because I can’t imagine that its value would ever fall to zero and it helps reduce currency risk. My best investment has been in an American wine that I bought seven or eight years ago, Screaming Eagle. It cost a few thousand a bottle, and its price doubled in just three years.’

‘But overall I view it as a long-term investment. I don’t sell many, because I’d like to pass my wine down to my beneficiaries, rather than cash in now.’

Both Mr Peel and Mr Scott highlighted that they had found it hard finding a trustworthy broker in wine. ‘It is not a fully regulated market, so there are a lot of rogues out there,’ said Mr Peel.

Keen to find out more about the benefits of wine investment? Download our free guide.

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Is Fine Wine Inflation-Proof?

Two men looking at a laptop drinking glass of wine

Rocketing inflation is no longer creeping toward us. It’s striding. Currently at 9% in the UK (jumping from 1.5% in April 2021)[1], inflation rates are set to hit a crisis point. And worried investors are understandably looking for solutions to hedge their exposure.

Investing in wine is one of the most effective inflation hedges because of three main reasons:

• The performance of fine wine is uncorrelated to global markets
• Fine wine is a scarce asset, becoming rarer over time
• The growth of fine wine has been exceptionally stable, even more so than gold

In this article, we’ll explain the inflation-shielding qualities of fine wine as an investment.

The performance of fine wine is uncorrelated to global markets

For many investors, the bulk of their assets will be in marketable securities – publicly-traded stocks, bonds, or currencies. Famously, for generations, the rule of thumb has been to invest 60% in stocks and 40% in bonds. But this style of investing has a huge downside, which many are now coming to terms with. Even with diversification, entire asset sectors and classes are still affected by the same market turbulence.

Inflation is one such market shock. Even at a rate of just 3%, the entire value of cash will erode after just 24 years[2].

At the current rate of 9%, outpacing inflation will be an uphill struggle for investments in bonds and currency. The stock markets – although slightly more resilient – will also feel the force of inflation. As businesses grapple to remain competitive with soaring prices, stagnant wages, and less consumer spending, all sectors are likely to be affected in some way.

Fine wine investments, however, do not derive their value from the broader markets. And shocks like inflation have almost no effect on their worth. This is because the price of the fine wine is determined by a niche, insider group of passionate investors. As the supply and demand come from within, fine wine is almost entirely uncorrelated to the global markets. Interestingly, fine wine continues to grow in value despite market turbulence and soaring inflation levels.

Other value drivers for fine wine include qualities that are personal to the bottle. For example, the brand of wine, the quality, and how it has been stored. None of these drivers have any direct link to the wider markets. While all of them give investors a lot more control over the value of their investment.

Fine wine is a scarce asset, becoming rarer over time

There are many ways to define value, but one of the most enduring is the scarcity of an asset. When there is less supply than demand, the value usually goes up. Fine wine is one of the purest examples of this.

Unlike other treasure assets such as gold or precious stones, fine wine naturally depletes over time as people drink it. Some bottles are so rare they are known as Unicorn Wines. One example is the legendary 1945 Domaine de la Romanée-Conti. The wine is famed for its iconic flavours and complexity. But the fact there are so few left in the world drives up the price exponentially. Only 600 were produced and there are almost none left today. In 2018, two such bottles were sold at auction for over $1 million[3], beating all records along the way. This bodes extremely well for long-term investors.

What are the most expensive wines in the world?

There is a clear trend showing how fine wines have increased in value over time. This is great for hedging against inflation. The Liv-ex index is one of the ways investors can track this steady increase. Since it began life in 2004, the fine wine market has grown in value by a staggering 315% (as of the end of 2021). Adjusting for inflation, the real value has grown by 125%. This is compelling growth, especially for those looking to outpace the 9% rates of inflation.

Which wine looks the most promising for 2022?

 

The growth of fine wine is exceptionally stable, even more so than gold

Wine has been on a steady upward trajectory for some time now. In 2021, the collectible saw record gains and topped the Knight Frank Luxury Investment List. Some performed exceptionally well. Cases of Domaine Bizot, Vosne-Romanée, Aux Jachées, for example, soared by a whooping 414% over the past twelve months[4]. And an incredible 3,004% over five years[5].

By contrast, the worst-performing wine on our books – the Château Croizet-Bages 5eme Cru Classé, Pauillac – fell by just 23% over twelve months. And it’s already increasing in value, again. Over a five-year period, the brand has increased in value by an average of 29%.

Discover the biggest risers and fallers this month

This illustrates the promising risk and return outlook for fine wines. Overwhelmingly, wine as an investment has shown growth.

In recent years, the strong performance of fine wine has even caused economists to question if the asset is more steady than gold. For centuries, gold has been considered an inflation hedge. Demand for this asset – and therefore value – has tended to spike during times of market turbulence. However, the flip side of this is that the precious metal can also tumble when the environment calms. Fine wine, to date, has not suffered this volatile fate. Investors in wine tend occasionally buy more during times of turbulence, as we saw in 2020. But there are no signs of mass sell-offs later. Arguably, this makes fine wine even more stable than rock-solid gold – an impressive feat!

How can you hedge against inflation with fine wine?

Shielding against inflation is just one of the many delicious benefits of investing in fine wine. To name a few, fine wine investors benefit from tax perks, compelling growth potential and improved diversification. What’s more, they also support a much-loved industry, filled with passion. And, with fine wine investments, they can even help to protect the environment.

For the best results, experts recommend allocating a small proportion of your investments into treasure assets like wine.

Getting started is simple and hassle-free. For more information, contact us or explore our tips for investing in fine wine.

[1] Source : Y Charts

[2] Source : CNBC

[3] Source : Bloomberg

[4] Source : WineCap

[5] Source : WineCap

[6] Source : Credit Suisse