Land values

by Wine Owners

Posted on 2015-06-10

Jane Anson’s insight into what courtiers and négoces think about the en primeur system makes for very interesting reading.

Perhaps what many Chateaux are unwilling to go on record with is the question of estate value.

Land values are at least partially driven by the cost per bottle that can be achieved by the Chateaux at the point of release. The higher the release price (whenever that is) the higher the cost of land per hectare. 

If you've just blown €200M on a slice of prime classed growth real estate, you want to support the underlying assumptions upon which that price was predicated. The balance sheet value of that asset and its ability to appreciate over time (and not see shareholder value diminished) becomes pretty crucial.

Is this one of the reasons why Calon released so little and massively cut back on the number of Négoces they allowed allocations, narrowing channels to market?

We totally agree with Jane Anson that a number of the First Growths got their pricing right. For me Lafite at first tranche and Mouton (Grand and Petit) got it most right vs market pricing of back vintages. There is future value in those purchases.

The sooner the 'funding' model of EP is clarified, the sooner the negativity surrounding the EP release period will evaporate. I think consumers dislike conflicting messaging and behaviour as much as channels of distribution do.

Let's say it; the top Chateaux (the only part of the EP market that appears to be worth bothering with) don't need us to fund the next vintage. Nor therefore do they have a need to leave enough on the table to convince us of the opportunity-cost of stockholding for them. That illusion is about to be shattered.

Wine writers and bloggers fine wine purchasing influence ranking

by Wine Owners

Posted on 2015-06-07

Which wine writers exert the most influence over consumer purchasing decisions of fine wine?

It’s a question we’ve often been asked, and one we wanted to understand in context of what kind of recommendations influence consumers’ fine wine buying decisions.

To find out, we teamed up with Spiral Cellars, and organised a structured research programme through Effective Research. The fine wine purchasing influence ranking is based on 244 questionnaire responses. 

We discovered that consumers rely on multiple recommendation sources, and even the least relied-upon source is quite significant in influencing purchases. This also suggests that social media influence is real, and can indirectly contribute towards buying decisions.

There is nonetheless a clear, favorable bias towards online sources, with the subscription sites of leading critics exerting the greatest sway over consumers.

Which critics and bloggers, if any, are you most likely to base a proportion of your buying decisions on?  

When it comes to informing a proportion of buying decisions, Robert Parker is the clear winner with more than half of all respondents likely to buy based on his reviews. Neal Martin, his successor for new Bordeaux releases and leading Burgundy critic, is relied upon by 29% of respondents, with Jancis Robinson in a very strong second place position on 49%.

Vinous (Antonio Galloni on 26% and Stephen Tanzer on 17%) showed complementary strength, with Burghound (Allen Meadows) registering 22% and Tim Atkin on 20%. 

Whilst consumers have their favourites, their buying decisions will be influenced by a number of critics and writers.

Burgundy on the move

by Wine Owners

Posted on 2015-06-04

The WO Blue Chip Burgundy index continues to power ahead, up 5% in just 7 weeks.

Has this rise been driven by recent demand and auction performances in Hong Kong, or are we just seeing the latest kick upwards driven by increasingly difficult-to-find wines in the face of growing global appreciation?

Whilst to 2010 DRCs have fallen over the last year by 7-10%, the scarcest wines from blue chip producers have registered strong double-digit growth in the last year.

Burgundy is substantially outperforming Bordeaux First Growth performance and Northern Italy. First Growths show flat performance over the last 12 months, whilst Northern Italy has edged up by 1.5%.

You can see performance of indices and their constituent wines here.

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