Investing in wine is a long-standing industry that stretches back centuries, yet it only became a significant global trade in the mid-1990s. While the finest of wines have homes all over the world, the most desirable and profitable come from barrels stored deep within the vineyard cellars of Bordeaux and Burgundy. London’s Berry Bros. & Rudd, wine and spirit merchants who have been trading for over 300 years, advise new investors to stick with top Bordeaux and Burgundy wines for a trusty return. This begs the question, which wines should we choose when investing in wine?
During the hot summer of 1900, the left bank of the Bordeaux vineyards birthed one of the greatest vintages of Château Margaux to have ever graced the palate: a pure, silky and velvety textured blend of Cabernet, Merlot, Cabernet Franc and Petit Verdot grape that today is highly sought after when considering investing in wine.
Château Margaux has long been considered one of the best fine wine producers, with an aura of grandeur and aristocracy so enveloped in French history that just mention of its name stirs excitement in the wine connoisseur when investing in wine. According to Simon Staples, sales director at Berry Bros. & Rudd, ‘Château Margaux is one of the five “First Growths” in the 1855 classification. From the Margaux commune it’s the most feminine, elegant and charming of all the First Growths and arguably of all the wines in Bordeaux.’
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The sovereignty of Château Margaux in the fine wine market was shown at an auction held by Christie’s in Hong Kong, 2012, where a single bottle sold at $7,055. Then again, in a 2015 Sotheby’s auction in New York a single bottle of 1909 Château Margaux sold for $9,188.
While the rare 1900 vintage is regarded as the holy grail of Bordeaux, there are other vintages of Château Margaux that have a respectable and profitable reputation in the current investment market—with a not-so-hefty price tag. The best Château Margaux vintages to look out for when investing in wine include the 1928, 1929, 1953, 1959, 1982 and the very recent but highly regarded 2015 vintages.
The finest wines of Bordeaux are accountable for approximately 80 percent of investments of fine wine worldwide, a testament to their trusted reputation. However, the Bordeaux region has, over the years, steered away from the romantically authentic image associated with winemaking and has instead become corporatised, with land owned by millionaires from as far away as China. Cue, the Burgundy region.
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While second to Bordeaux in terms of market success when investing in wine, Burgundy’s wine reputation has steadily risen over the years, making it a rival to King Bordeaux. A certain appellation of the region sits firmly on the lips of wine experts everywhere: Domaine de la Romanée-Conti. Simon is one among these: ‘All the wines in the Domaine Romanée-Conti stable are arguably the most beautiful and profound red Burgundy made,’ he said.
The Romanée-Conti appellation is run using traditional winemaking techniques. The farmers harvest the grapes just before temperatures begin to fall, before storing the wine in 100 percent new oak barrels built from the wood in the Troncais forests.
Unlike Bordeaux wines, where a mixed blend of grape is integral to the unique taste so associated with the region, Burgundy’s Romanée-Conti relies singularly on the Pinot Noir grape for a taste founded in purity, richness and simplicity which is a fine choice when investing in wine.
Romanée-Conti produces only 450 cases per year compared to Chateau Margaux’s 12,000 cases, which immediately makes Romanée-Conti a rare (and expensive) commodity to consider when investing in wine. According to Simon, ‘in the case of Burgundy the production in every Domaine is miniscule in comparison to Bordeaux, but the returns can be far higher with the 50 or so top wines doubling in price at the day of release. Also because these wines are so precious and irreplaceable most of the owners never resell them so they become even more rare and expensive.’
An interest in fine wines in the Asian market—particularly China—means an increased demand for the scarce red wines of Burgundy. As such, auction prices have shot up and look to continue to do so. An auction held in 2014 by Sotheby’s in Hong Kong saw some 114 bottles of 1992-2010 vintage Romanée-Conti sold at $1,609,776—just over $14,000 per bottle.
One can enjoy a fruitful and profitable relationship with these sophisticated French wines with an investment commitment of at least five years. Investment of fine wine delivers, on average, annual compound growth rates of between 10-20 percent. With such attractive figures, the likes of Château Margaux and Romanée-Conti are a good starting point for the beginner when thinking about investing in wine.
Read more about investing in wine on The Master Chefs.