I figure it’s been enough time since I last spoke about wine collecting/auctions, that I should bring it back to what I find an interesting paradigm. So for this installment of The Wine World: WINNING and LOSING we’ll be focusing on factors driving today’s collectibles and tomorrows prized bottles.
Why look at wine in this manner? Well, given the state of World economics, the fact that wine is doing so well truly speaks to its worth as not only one of our favorite libations, but also as a potential asset.* The following are a few of my viewpoints on recent events/topics found in the news.
2011 Napa Valley Wine Auction – Sticking true to what makes Napa a great wine region, the auction raised an additional $7.3 million for Napa Valley charities. Year over year this is a wonderful event that has raised over $100 million for charity since its inception three decades ago. The pleasant thing about this auction, it’s not all about which billionaire will walk away with a museum piece to show off to his buddies. The most saught after lots here are typically a package that showcases Napa in a truly unique way for the winning bidder. Now sure, this is still a playground for the rich and they still get to show off to their friends; however there is a bit more substance and romanticism to this auction. On top of that, it’s for charity!
Wine Cellars and Real Estate – This article is almost painfully obvious; however I decided to include it because more people should consider this, especially if they love wine and plan on building a middle to high end houses, or plan on remodeling their kitchen. With the increased interest in wine here in the States, more and more people have started their own consumption cellars. Eventually, their collection grows and can no longer fit in a wine cooler. What then? In my opinion, convert a closet or add-on a wine cellar. I know, this is not the most practical way of doing things; however the cellar will serve three huge functions: proper storage for your wine, a terrific focal point to show off to friends, and a unique component to your house when it comes time to resell. In a world of granite and stainless, this is something to truly set your property apart. I know the article focuses on the English market; however add cellar, even a small one, to your place in Boston, NYC, Miami, LA or Chicago areas and see what happens.
Robert Parker - Minutes after writing the bit about En Primeurs (see losing) I read this bit about a recent interview with the king of all wine critics, Robert Parker. “Bordeaux is the epicenter of the greatest wines. I hate to see the image damaged by the fact people tend to think it’s too expensive.” He goes on to say, “Bordeaux is focused too much on the wealthy Asian market. Despite the fact thatChina has so many wealthy people, it’s a very dangerous game if they raise prices, because the world economy is very, very fragile.” Now some people blame Parker for the high prices, as his ratings are the only ones that matter to Asia and collectors in general. The higher the Parker score, the more valuable the wine. However the guy is just doing his job, it’s the Bordelais chateau owners that make the pricing decissions and unfortunately for us, they’re making a mistake. What happens if the Chinese economy has a hard landing and Bordeaux has to turn to a consumer base that they’ve effectively isolated?
1806 Chateau Lafite - Back in 1976, David Lyons purchased the bottle at a then world record price of $14,200. Now, you can barely get a case of Lafite for that price in a good vintage, so I’d sayLyons got a hell of a bargain. Gotta love inflation, investors and the emerging Chinese wealth. For the record, the current record for most expensive fermented juice is $232,692 for a bottle of 1869 Chateau Lafite purchased at a Sotheby’s Hong Kong auction in 2010. So investing in certain wines does make sense, because 1500% returns are fun, considering that’s based on a bottle that’s 63 years younger!
2010 Bordeaux En Primeurs - It’s pricing season for the 2010 Bordeaux futures, that magical time when you are buying bottles that you won’t receive for another two years. The time of year that Americans wait for, but can’t afford…cause we’re poor. Thanks to the rabid lusting for anything luxury, prices for the futures of wines from the World’s most famous wine region have gone up 10-30% yet again. Last time I checked, the world financial system was still garbage, governments are using a heavy hand in regulating monetary policy and unemployment is still historically high. Considering the low levels of inflation in Europe I’m going to go out on a limb and say their operating expenses haven’t gone up by those same percentages. So, did I miss something? Congrats to the Bordelais for producing another fantastic vintage, yet pricing out even more wine lovers just to capitalize on Asian gluttony. Piss off, I’m done with Bordeaux! Ya’ll are playing with fire.
2011 California Growing Season – I know it is still early; however Mother Nature is toying with the already frail emotions of California’s vintners. If last year was a challenge, then this year may be a struggle. Late frost, and then heavy rains combined with cooler temperatures in May have left many vineyards about 4-6 weeks behind schedule. According to this AP article chronicling the shortcomings of this vintage thus far, the author states, “Now just days before the official start of summer it looks like early spring across California wine country. Buds are just emerging and the fruit is forming far behind schedule.” Unless there is a drastic turnaround of sustained months of warm and dry weather, this could be a rough vintage for vintners, consumers and collectors alike.
*There are risks associated with investing in wine. I highly recommend you read “Investing in wine: 5 steps to success” that I wrote for Smart Tastes, as well as do additional research before considering to do so.