Burgundy Wine Investment Report
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Burgundy Wine Investment Report ENG-4-112015 TABLE OF CONTENTS PRE-INTRO 03 By Chairman Of Cult Wines Philip Gearing INTRODUCTION TO BURGUNDY 05 Overview Of Burgundy 05 Understanding Of Burgundy Wines 06 Key Vintages 09 BURGUNDY VS. BORDEAUX 11 Production And Liquidity 11 Scoring 12 Peformance 12 BURGUNDY AT AUCTION 15 World’s Top 50 Most Expensive Wines 17 KEY PRODUCERS 18 Domaine De La Romanée-Conti 19 Domaine Leroy 21 Henri Jayer 23 Domaine Armand Rousseau 25 Domaine Du Comte Liger-Belair 27 Domaine Ponsot 29 Domaine Dujac 30 Domaine Jacques Frederic Mugnier 32 Domaine Georges Roumier 35 Domaine Des Lambrays 37 Domaine Georges Noellat 39 Domaine Jean Louis Trapet 41 Domaine Coche Dury 42 Domaine Leflaive 43 RULES OF ENGAGEMENT 44 Risk 44 Returns 45 Investment Term 47 Exit Route 47 How Do Clients Participate? 47 PRE-INTRO BY CHAIRMAN OF CULT WINES PHILIP GEARING In 1523 Erasmus reported discovering the Burgundy which Having said that, the buyer still faces the same ‘minefield’ became his lifelong favourite drink, noting ‘it’s bouquet that has always plagued those keen to immerse was neither chilly nor fiery, but moist and innocuous. themselves in the Burgundy adventure; it is without By all this, so gentle to the stomach that even greater question the most complex region in the wine world quantities did no harm’. when you try to get to grips with the structure of the communes, climats*, wines and producers. Burgundy has often been associated with a special group among the fine wine community, those deep It is unlike no other and therefore presents the buyer with pocketed hedonists searching for their next Pinot Noir or two simple options, either spend a few years educating Chardonnay fix courtesy of the region’s finest magicians, yourself, analysing the expert opinions offered by the it’s no wonder that buying Burgundy was known as a rich principal critics, or work with a team who can provide man’s sport! very specific guidance matched to your requirements, whether as an investor, collector or simply as a consumer. One of the reasons for this was the assertion that searching for fine Burgundy would generally yield one Burgundy has always been the focal point of the fine wine great bottle from every 10 purchased, leaving the buyer world for me. Driven by an insatiable desire to master the somewhat frustrated given the lack of consistency from region I spent probably far too many hours researching the myriad of wines and producers that form part of this the Cote d’Or in an attempt to understand firstly the unique region. structure, then the producers and then finally the practical lessons of tasting. The current quality of wines now being produced has improved immeasurably across the length and breadth of These tasting sessions were primarily held in the cellars the Cote d’Or. Over the past decade-and-a-half we have of many of the region’s wonderful producers – for Thomas seen far greater consistency despite some of the tough it was a chance to develop tasting skills that started at growing seasons the producers have faced, and for those just nine years of age, clearly fine wine was in his blood vintages where conditions have been kind the results from a tender age! have been quite spectacular! Tom Gearing (L) Managing Director of Cult Wines and Phil Gearing (R) Chairman of Cult Wines, visiting Burgundy in 1997. Pre-Intro | +44 (0)20 8332 9386 | wineinvestment.com 3 PRE-INTRO Continued BY CHAIRMAN OF CULT WINES PHILIP GEARING It is very interesting to see how some of those estates As a summary introduction to Burgundy it attempts to have established a major reputation in the market over guide you through the basics and bring to the fore some the past two decades. One of our favourites is Domaine of the complexities of this region, some of its great Dujac in Morey St Denis, visited many time in the nineties producers and finally some of the fabulous wines which and it is amusing to note that our cellar tasting would are simply quite unique – every fine wine investor should involve a very young Jeremy who is now co-owner with consider Burgundy as essential to their portfolio. his father at this highly sought-after estate. It is very interesting to note in 2000 I listed for sale some Dujac wines at case prices which would now fail to acquire a single bottle, an example being the 1996 Clos St Denis at £495 per 12 compared with £5695 per case at today’s best market price – a very clear example of the demand placed worldwide on the best that Burgundy has to offer. For those investors looking for 5-10 year holds this is a market that can deliver some very attractive returns, but – and it is a very big but –knowing which wines and producers to focus on does require intimate knowledge of the region, the global status of these estates and their wines, and of course access to stock at the right price. I trust this report will prove interesting reading. Philip Gearing, Chairman. * The Climats of Burgundy are listed as World Heritage sites and compose precisely delimited vineyard parcels on the slopes of the Côte de Nuits and the Côte de Beaune south of the city of Dijon. They differ from one another due to specific natural conditions (geology and exposure) as well as vine types, and have been shaped by human cultivation. Over time they came to be recognised by the wine they produce. This cultural landscape consists of two parts: the vineyards, and associated production units including villages and the town of Beaune, which together represent the commercial dimension of the production system. Pre-Intro | +44 (0)20 8332 9386 | wineinvestment.com 4 INTRODUCTION TO BURGUNDY Our own journey with Burgundy begun with our chairman Even moderately-informed ‘Burgundophiles’ often have Philip Gearing, who launched a specialist Burgundy trouble with the region’s complexities. Therefore, the merchant in the 90s. Today, the company still retains purpose of this report will be to provide a comprehensive Philip’s overriding passion for these wines; his extensive overview of Burgundy, focussing on the fundamentals of knowledge and expertise have been a key component in the market, its producers, key vintages and our proposed facilitating our client’s successful involvement in this area rules of engagement for the investor. of the wine market. OVERVIEW OF BURGUNDY By its very nature Burgundy fascinates. The region’s Therefore, it comes as no surprise that Burgundy is idiosyncrasies and complexities have often left it isolated referred to as the ‘holy grail of the wine world’. although the wines have continuously captivated an audience of the world’s top collectors, offering great Burgundy Classifications: A short History enjoyment and financial reward. The year 1855 is a date synonymous for Bordeaux’s Burgundy is simplicity and diversity intertwined. There classification and relatively unknown is that in the same are two major grape varieties used in Burgundy: Pinot year, Burgundy’s first hierarchy was published by Lavalle, Noir and Chardonnay. Producers here create the most detailing his Plan Topographique of Burgundy’s Cote d’Or beautiful, pure expressions of both without the need for – a map grading every vineyard from Santenay to Dijon. blending that is such an integral feature of Bordeaux. In this way, terroir becomes of the utmost importance. Whilst This led the way for mapping Cote d’Or into more than Bordeaux has long been the target of major corporates 400 appellations when appellation controllé system and increasingly, estate-buying Asian millionaires, was familiarised in 1936. Today in Burgundy, every Burgundy retains more of the traditional family ownership vineyard has its place in a hierarchy much like Bordeaux, structure, the bucolic romance of winemaking and this is descending from Grand Cru to Premier Cru to Village a key part of its appeal. down to Bourgogne. Allen Meadows, an American wine critic and publisher First classifications are almost always based on price and of the quarterly newsletter Burghound and its related in the 19th century, a wine simply known as Romanée website, Burghound.com, describes Burgundy as was top, followed by Chambertin and then Musingy, ‘capable of creating wines of unmatched transparency Richebourg and Clos Vougeot. This order did not change, of place that deliver wonderful elegance and refinement. but finer parameters were poetised, and by the second And when the producer gets it just right, it produces a half of the 20th century Premiers and Grand Crus were complex and emotional drinking experience that no other distinguished from village wines, and the producer’s grape variety can match’. name had as much effect on price as the appellation. Burgundy is a broad region in eastern France that boasts As mentioned, the Burgundian appellations were finalised over 2,000 years of wine-making history. The region, now in 1936 but closely follow the earlier markings. Unlike spanning up to 28,000 hectares, owes a lot to the work of Bordeaux, Burgundy prototype is based on the study Cistercian Monks in the 11th and 12th centuries, principally of the terroir rather than a more simplistic Grand Cru in the Côte d’Or, who were responsible for identifying pyramid, divided into four classes. some of the finest vineyard plots still in existence today. “Today in Burgundy, every vineyard has its place in a hierarchy much like Bordeaux, descending from Grand Cru to Premier Cru to Village down to Bourgogne.” Introduction To Burgundy | +44 (0)20 8332 9386 | wineinvestment.com 5 UNDERSTANDING OF BURGUNDY WINES a) Grand Cru The best of the best.