Wines to take a punt on
Fine wine offers that magical combination of limited supply and great demand – but caveat emptor, writes JOHN WILSON
ALAN SUGAR MAY have been wise to turn down the opportunity to put his money into a wine investment scheme on the TV show The Apprentice. Contestant Tom Gearing was seeking Sugar’s assistance in raising £25 million (€31 million) for Cult Wines Ltd, a fine-wine investment company.
Wealthy people like to have the correct accessories – the car, the yacht, the clothes and other trappings. This is partly so they can enjoy them, but also so that the rest of us know they are rich, hence the clearly defined logos and labels. Wine certainly falls into this category; in the boom years, luxury champagnes such as Krug, Louis Roederer Cristal and Dom Pérignon were much in evidence on the tables of our fine-dining establishments. The best champagnes are generally released at a high price and, while some may increase in value, usually the (substantial) profit goes straight to the producer.
Other wine, quality red wine in particular, requires ageing. It also offers that magical combination of limited supply and great demand. Step in the investor, who buys young wine and sells it later at a profit.
Bordeaux is the traditional investment market. Unlike in Burgundy, most of the top properties produce reasonably large quantities of wine, enough to create a commodity market for buying and selling. The idea is simple enough. In late spring, the properties release a quantity of their wine en primeur, that is, still lying in the barrel. Buyers and journalists attend tastings of the unfinished wine and give their verdict on the vintage.
The most eagerly sought-after opinion is that of Robert Parker, an American wine guru who can make or break a wine. A Parker score of 95 or more out of 100 virtually guarantees an immediate increase in price; anything less than 95 is a disappointment. Other investors wait a year or two to see which wines are performing best, and then buy.
The Chinese market has provided a boom for luxury goods in recent years, and fine wine is no exception. Here, too, the wealthy want to be seen drinking the right beverage. Many, though, have little knowledge of wine. Everyone in the trade has stories of people drinking red wine chilled, with a soft drink to sweeten it, or simply of wine being drunk when it is far too young.
Château Lafite Rothschild has enjoyed the most spectacular success of all fine wine in China. Even inexpensive Bordeaux bearing the Lafite Rothschild logo sells at incredibly high prices. Last year the price of Château Lafite Rothschild took a tumble. But the price is still remarkably high.