The Story of... Fashionable Bordeaux wines make corking investments


2015-06-26 12:28:09


The Story of... Fashionable Bordeaux wines make corking investments

Western buyers love them, Asian collectors want them. Wine is the ultimate investment

Everyone knows that wines get better with age, not just in terms of taste of course, but with regards to their value too.

Produce from Bordeaux especially will always hold a place at the top table because of its reputation and astounding quality. However, it is not just the oldvintages from the region which are setting records for how much they are worth, as even the younger bottles are rising in price and value.

There is no doubt that, during the last few years, fashionable wines from the French region have established themselves as the best money can buy.

If ever you were thinking about starting or enhancing a collection, or even viewing them as a viable alternative investment, there is no better place to start than at the top.

Last month it was reported by The Telegraph that this year's batch of Chateau Pontet Canet, which produces wine classed as Fifth Growth by the now criticised 1855 Bordeaux Official Classification, was sold out in hours.

This was despite its price having risen by 39% over last year's release, and by a staggering 113% since 2005. The high values of wine across the board at the moment may seem incredible, but clearly there is just an insatiable hunger for it among aficionados.

As Paul Fraser Collectibles has reported extensively in recent months, the vintages made by the star names like Chateau Petrus, Lafite and Mouton at the moment, these mere bottles of fermented grape juice, have sold for thousands at auction.

It is not just the dusty old vintages now selling highly - younger bottles are too

Unsurprisingly, it is Lafite which has set the benchmark high, as this is classed as a First Growth, and is regarded as the world's finest. It is produced by the Rothschild estate in the Mdoc region of Bordeaux.

The vineyards cover 107 hectares, and produce around 35,000 cases of Lafite per year. That is not a lot really when you consider how many collectors there are, and how much of it they are willing to buy at one time.

Its growth potential is evident for all to see. In 2009, the 2008 vintage doubled in price within just two weeks of release. Earlier this year in February 2011, Acker, Merall and Condit's wine auction was topped by a case of 1982 Lafite, which sold for an astounding $61,000. That kind of return is enough to pop anyone's cork.

Produce from another vineyard, Petrus, is not far behind its neighbour. It is a relatively small estate, covering 11.4 hectares and releasing an average of 3,500 cases per year. Do not let this fool you though, because it is still a big player in the market.

Last September, two magnums of 1961 Ptrus sold for just shy of $50,000, while in January 2011, we reported on the sale of Sir Andrew Lloyd Webber's wine collection at Sotheby's, which saw 12 bottles of the 1982 vintage realise $77,564, smashing its estimate. This wine certainly does not have an inferiority complex.

But why, you ask, has this growth occurred? Clearly for such results to be so widespread now, there must be one main push behind the growing value of wine. That one main force is the Asian market, in particular China.

Put simply, those nations which are experiencing the most rapid economic expansion, like India, China and Hong Kong, are now looking to flex their financial muscles. What better way to do this than buy the best products and items the world has to offer?

Chateau Petrus is undoubtedly one of the world's finest wine producers

As we reported in November 2010, this "new love affair" has had a huge impact. China's new wealthy middle-classes have changed the market, one example being when they pushed the Chateau Lafite Rothschild 2008 to a 20% overnight price jump. Cannily, Lafite responded by marking its bottles with a new "eight" symbol.

"Eight" is considered to be very lucky in China. Not that the Lafite needs much luck with its new-found market power. Our November report stated that a case of the 2008 is now worth 10,160 ($16,000).

Other vintages were also benefitting from China's new infatuation. Around the time of that report, three bottles of the Lafite 1869 sold for more than $232,000 each at Sotheby's successful wine sale in Hong Kong.

This success was not one-off. In fact, both Sotheby's and Christie's enjoyed record years for fine wine sales in Asia. Sotheby's recorded a $88.2m "landmark year, [its] best in 40 years" for wine auctions, while Christie's posted total results of $71.5m - each thanks in no small part to Asia's buyers.

As Victoria Moore succinctly stated in The Telegraph, an "influx of new money from the rich Asian market over the past couple of decades has turned the top-rated wines into an investment commodity."

The coupling of theWestern buyer's established love for fine wine, which has enjoyed a renaissance in recent years as sales at the likes of Sotheby's, Hart Davis Hart and Heritage testify, with the expansion of Asian interest and enthusiasts looking to buy the best luxury items on a whim, means it is a virtual certainty that the money is going to keep pouring into this market.

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