by Wine Owners
Posted on 2018-03-23
The KFFWII is up 9.6% over the year to March 2018, with a 2% gain in the last quarter.
Consolidation of the market at current valuation levels is on the back of the 24 months to December 2017, seeing gains of 38%.
The top of the market is significantly influenced by Asian demand, where a weak dollar is causing bid prices to fall. Changes within secondary market wine distribution into China may create a degree of uncertainty not seen since 2014.
The outlook for the rest of 2018 is one of subdued growth, with the Sterling-denominated index at risk of downward pressure as the currency appreciates against the US Dollar and Euro.
First Growths are up just 3.8% over the last 12 months, half of which can be accounted for by the last 3 months. This broadly reflects the rest of the Bordeaux fine wine market (classified growths and equivalents). However, this subdued performance ought not to detract from 3-year performance (43% price growth) in First Growths, and 55% appreciation in the classified growths and equivalents over the same period.
Risers substantially outnumber fallers in Bordeaux, reflecting the market's continued overall growth. Less new wine is being released from chateaux than ever before, and quality is increasingly consistent. These factors point to continued growth during 2018, although it will remain in single figures, as orderly trading patterns continue.
Burgundy values continue to appreciate, with increases of 21% to March 2018, and 4.6% over the last quarter. To date there are no signs of a let-up in the upward trajectory of top producers' Burgundy prices. We’re about to see Burgundy price appreciation break through the 100% mark over the last 5 years, and reach 257% over 10 years.
Northern Italy (represented in the KFFWII exclusively by Piedmont and Tuscany), is up 9.5% over the last 12 months, of which 2.7% is within the last quarter. The leaderboard is dominated by Monfortino, the standout Italian performer of the last 4 years which is consolidating its position as one of the most investible wines in the world.
Expectations for Northern Italy - Barolo in particular - are that prices will continue to increase into double digits over the remainder of 2018.
Vintage champagne has performed well over the year, up a full 10%, and has kicked up 3% in the last quarter.
The best performers are rarer cuvees from such stalwarts as Selosse, Bollinger, Krug and Pol Roger. Over 10 years Champagne has performed even better than Burgundy, up 283%: demonstrating the liquidity that volume can drive, brand values and early consumption patterns.
California’s moderated growth continues, with annual performance to March 2018 of 6.3%, and is up 2% within the last quarter. After years of bewilderingly strong growth (385% over 10 years), fallers are as numerous as risers within the California index, implying further downsides or a relatively flat outlook.
Top Spanish wines dominated by iconic and traditional large estates in Rioja and Ribero del Douro still represent good value, have good ageing potential, and are produced in large volumes.
These positive trading fundamentals support a market up 8.25% in the last year, and a healthy 3% in the last quarter.
A related effect is that Spanish blue-chips (particularly Vega Sicilia's top wines) are increasingly being traded on exchanges, and markets are being made for these wines through the usual offer and bid mechanisms used by market-makers.
The Spanish index is up 155% in the last 10 years. 45% of that growth has taken place in the last 3 years. The timing of that resurgence coincides with the inflection point in Bordeaux markets in the winter of 2015, when they rebounded from cyclical lows.
by Wine Owners
Posted on 2018-03-05
We would like to echo the sentiments of Lisa Perotti-Brown – the new face of Bordeaux at The Wine Advocate – who revels in reviewing great wines from vintages less hyped than the universally celebrated ones.
A review of past vintages is so much more pleasurable than one of a current vintage. It can be pursued at leisure, far from the madding crowd of en primeur set-piece campaigns. The wines have been in bottle for some years, and have grown into their skins, allowing them to express themselves and harmonise. There is none of the guesswork required when evaluating young wines. And it is not done as part of a tasting Megathon favouring the most obvious, richest wines…
Here follows a spotlight of vintages which hide truly great wines, many of which still represent good value.
Let's start with 2013, the worst climatic year Burgundy has experienced in a long time, characterized by a dreadful summer of cold, sodden weather. But that’s the thing with Burgundy; its growers refused to give up. They never do. They spent the summer in their Aigle wellies desperately battling the filthy elements and sticky, sucking mud. Coaxing what they could out of their precious vines - their livelihood - trying to make the best of a seemingly bad lot. The coaxing process involved leaf thinning, and sacrificing bunches to give the rest a chance at maturing properly. And that is the thing with Pinot Noir; it responds exceptionally favourably to low yields.
Now, if you like dense, sweet fruit with generous alcohols, 2013 may not be the vintage for you. But if you enjoy intensity of flavour without the weight of a hot year, red Burgundies from 2013 will positively surprise you. All the more so if you first tasted barrel samples back in January 2015; the wines are now positively transformed from that first recalcitrant showing.
It’s well known that a warm, accommodating, crisis-free growing season will result in wines that are generous and velvety-textured in their youth. But these aren’t always the wines that develop into fine, complex maturity. Take 1999 for example, lauded as one of the greatest Burgundy vintages of all time. Indeed, some of the wines are astoundingly good. But just as many others are really quite average. Why is that? Over-generous yields. It’s a fine line with Pinot, between harvesting as much ripe fruit as nature provides and allowing the fecund vine to produce as much as it’s wont.
Back to low-yielding 2013, and the best wines are beautifully crystalline, intense and transparent. Think a cornucopia of red fruits, blackberries and gooseberries: the essential ingredients of a refreshing summer pudding – a balancing mélange of sweet and sharp. Add characteristic Burgundy high notes of salinity (and a mineral-tinged, geological nod-in-the-glass to the inland sea of which the Cote d’Or was once a part) and hopefully you’ve formed a fair mental image of 2013 red Burgundy.
It’s no coincidence that blue chip stalwarts such as Eric Rousseau and Christophe Roumier love their 2013s. Aubert de Villaine sees his Domaine de la Romanée 2013s as long distance runners (in contrast to his more ‘forward’ 2014s). And they are delightful.
2013 is also one of the last sensibly priced vintages before Burgundy prices became vertiginous.
Wines from cooler Burgundy vintages often start out rather awkward, and out of kilter. Their acidity may add definition and length, but can also close the wine down, or conspire with tannins to suppress the essential grape characteristics in a wine.
2006 was one such vintage. Its wines were initially hard to taste, and broadly speaking, unlovely. Many of us viewed 2006 Burgundies as unwelcome magpies in our collector’s nest of more comely vintages.
But now, after a decade in bottle, the wines are starting to show very well. They exhibit well-defined fruit, great length and energy. Next to the 2005s, they may lack heft and powerful tannin structure, but they are nonetheless serious, intense wines. And they are beginning to drink well now. You’ll have to wait at least another decade for your 2005s to come around, but 2006 is a fine emerging vintage that will give pleasure now and for the foreseeable future.
For Bordeaux, 2011 was always going to be a tough sell. On release, the wines seemed scrawny and mean in comparison with the monumental 2009s and 2010s.
Yet a recent dinner event hosted by Wine Owners showed how dangerous it is to tar a whole vintage with the same presumptive brush, or to judge a more classic vintage too early. The highlights of that tasting were Vieux Chateau Certan 2011 and La Mission Haut-Brion 2011. They were both easily the equal of their counterparts from better-regarded vintages, and represent great value compared with any more recent vintage.
In Bordeaux, 2006 was a vintage that attracted more than its fair share of negative press, the effects of which are still in evidence today, judging by the affordability of 2006 Bordeaux on the Wine Owners Exchange. The success of a Bordeaux vintage depends on sentiment, and in 2006 combination of negative factors came into play.
First, it came on the heels of stellar 2005. Second, Bob Parker’s favourable rating of the vintage attracted criticism from many pundits, attracting further negative attention. Third, the release prices were too expensive– due at least partly to the high Parker scores. Why else would La Mission Haut-Brion be ready to trade at £1,550 per 12x75cl, yet be overlooked?
[ Top tip: buy La Mission Haut-Brion at this level – half of its opening (mis)price. It is considered a ‘wine of the vintage’, rivalled for this accolade only by the (much more expensive) Mouton. ]
We are fans of the Bordeaux 2006 wines we’ve tasted. They don’t have the powdery tannins and powerful black fruit of the 2005s, but they do have superb energy, and a sappy character that compels you to take the next sip. We see many wines from 2006 as more interesting than their counterparts from 2004 or 2008. Notable examples include Mouton, Pontet-Canet, Leoville Barton, Leoville Las Cases, La Conseillante (just a sampled tip of the iceberg). Whenever tasted comparatively, these showed extremely well alongside relative other vintages.
In our experience, where 2006 performs particularly well is its consistency. Simply put, we’ve never had a poor one. Other low-rated back-vintages produced a number of successes (such as 2007, 2011), but none are as consistent as 2006.
2002 is another Bordeaux vintage which suffered from poor reputation. The year’s poor weather consigned the vintage to the status of ‘restaurant wine’ before any of the wines were even bottled. But it’s easy to forget that the wines were very well priced; first growths were released at around £800 per case (just one-sixth of their 2015 release prices). If you had invested in 2002 Bordeaux 15 years ago, you would be feeling rather smug right now. 2002 is the vintage for the contrarian that lurks inside every wine enthusiast!
While they were never going to be the most profound expressions of Bordeaux (in the light of the meteorological conditions), the 2002s have consistently tasted savoury, fruity, and sweetly spiced with cloves, cinnamon sticks and liquorice root. At all levels of classification, we’ve yet to stumble across a disappointing example.
In 2002 Piedmont, like Bordeaux, suffered from rotten summer weather. Wine commentators have described 2002 in Piedmont in such terms as ‘wiped out’, ‘disastrous’, ‘severely compromised’, ‘a washout’.
But despite all of this, one wine survived the vintage’s humid gloom (and the hailstorms which repeatedly strafed Barolo) with enough salvaged bunches to benefit from perfect autumnal conditions. This is a wine made with such severe selection that yields were just 12 hl/ ha, and which epitomises viticultural triumph against the odds. The wine in question is, of course, the now-mythical Barolo Riserva Monfortino 2002.
Take a moment to consider the sacrifice involved in making wine with yields as low as 12 hl/ ha. Burgundy considers 25 hl/ ha to be painfully low, and in Bordeaux anything under 40 hl/ha is a very short harvest.
Giovanni Conterno – Roberto Conterno’s late father – called 2002 the greatest Monfortino of his lifetime.
The last word must surely go to Antonio Galloni, whose tasting note and review of this wine encapsulates why it’s so rewarding to seek out the greatest wines within those vintages in the shadows:
“…the 2002 Barolo Riserva Monfortino, a wine that may very well turn into a modern-day legend… 2002 was a cold, rainy year that in many parts of Barolo culminated with violent hailstorms in early September. The weather then turned picture-perfect for the rest of the growing season, but by that time most vineyards were severely damaged. The late-ripening Cascina Francia was an exception. Conterno green-harvested aggressively, which gave the fruit a chance to ripen. …The Conternos were so upset by the poor early press reaction to the vintage they announced they would let no one taste their 2002 Barolo. Conterno has fashioned an old-style, massive Monfortino that pays homage to the great wines of decades past. …It is a deeply-colored, imposing Monfortino loaded with dense dark fruit that today is held in check by a massive wall of tannins…classic, old-style Barolo the likes of which we aren’t likely to see again any time soon. Antonio Galloni, October 2008.
by Wine Owners
Posted on 2018-03-01
Next Wednesday the annual Knight Frank Wealth Report 2018 will be published. As always, the report's primary focus will be on prime real estate, wealth, investments and luxury lifestyle. The latter pair are of particular interest to Wine Owners users, and the team here at HQ.
We have specific interest in the report's wine investment section, of course. This section rests strongly on data from the Knight Frank Fine Wine Investment Index (KFFWII), a custom-built index created by Wine Owners for Knight Frank in 2015. This index of 200 investment-grade wines has provided Knight Frank with detailed market data for the past three Wealth Reports. Last year, the index really came into its own; the Wealth Report 2017 showed wine clearly out-performing all other passion assets.
Of course, we at Wine Owners HQ have a pretty fair idea of what the upcoming 2018 Wealth Report will say about the wine investment market performance. But if anything, that knowledge piques our interest even further. We are very much looking forward to seeing the report live next Wednesday.
The report can be acquired here, and we will report back here in a couple of weeks' time with the key messages, and an update on the KFFWII.