Is the market for these wines changing?
When prices go beyond a certain point, wines are no longer bought by people who really understand them or appreciate them, they increasingly are bought by the people who have the biggest bank accounts. Clearly there’s some overlap between those two factions – you can be fabulously wealthy and also have great taste.
So that’s where Champagne is going. As a consumer, it makes me very sad to see what these ultra-small production wines are selling for and where pricing is headed. But as I said, nobody in the world wants to be paid less than what they think they’re worth. So I can hardly fault somebody for trying to maximize their economic well-being.
Antonio Galloni from Vinous interview in an interview with Liv EX
Over the weekend I was reading numerous articles on investing in Champagne and stumbled across this interview from 2018. I realise my notion that wine was ultimately there to be drunk and enjoyed in company and with food was anachronistic. I used to subscribe to Vinous but found that Mr. Galloni was too much in love with the luxury side of wine, and when he says When prices go beyond a certain point, wines are no longer bought by people who really understand them or appreciate them, they increasingly are bought by the people who have the biggest bank accounts. One has to wonder what his role is in this development. He repeats himself again and again, that it is the tasting note that matters and not the points. He published his Bordeaux tasting notes for one vintage without points, which would have been very courageous, if he did not add the points a few days later.
Browsing through a number of wine investment sites, it quickly becomes apparent how dependent they are on points. The value of a wine is ultimately determined by the points it accrues. Wines with high points tend to come from warmer vintages and are produced to a certian formula. There are exceptions, but 2009 and 2010 in Bordeaux are a case in point. These wine investment firms advise client how to build a portfolio which will deliver returns. Taste and personal preferences play no role in the portfolios. Sommelierchoiceawards lists Cultwines in the UK in Top wine blogs for wine lovers. Anybody who watched The Apprentice in the UK will know that one of the owners Tom Gearing came second, Alan Sugar concluded his business idea was too risky. Never the less he started his firm and it seems with his fathers help developed the business. The philosophy in a nutshell seems to be, buy cases of rare wines, hold onto them for a few years and as the amount on offer on the market diminishes, then sell with profit. The blog on their website gives interesting insights into which wines to buy from which regions.
What I found particularly intersting was when Cultwines talked about investing in Champagne and the ROI as becoming increasingly interesting for investors. The obvious names were bandied about, Salon, Krug, Cristal, Dom Perignon but also some grower champagnes, notably Selosse and Ulysse Collin but also Bereche.
Well I know how difficult it is to get allocations from these producers, so where do investors intend on buying these wines. Ultimately they are paying from the start quite high prices, so at what price must these champagne be sold at for the investor to get a return on investment. Also the ageability of these. Recently at a visit to Bereche, the drinking window was given at about 10 years dependent on the cellar. Also Dosage plays a big role, the big houses tend to give a larger dosage, this obviously plays a large part in the ageing ability of Champagne. Producers like Bereche and Ulysse Collin, who use low dosage to express the terroir, how will these champagnes fare with time, at some time will there be a past sell by date. Selosse, Tyson Stelzer was really critical about the oxidisation in some of his barrel samples. How will these champagnes taste in ten years, twenty years, are these really suitable for investments.
I remember Parker writing in a foreword to a Bordeaux review in the wine advocate, nobody really knows who are buying these wines and where these wines actually are. How many cases of Bordeaux, Burgundy and other Cult wines are there stored in bonded warehouses and when will the bubble burst.
Antonio Galloni also says in the same interview
These things aren’t mutually exclusive, but the bigger the price gets, the more that relationship starts to get stretched until you reach a point, as in Burgundy, where so many wines are bought and resold based on their scarcity, as opposed to being drunk and enjoyed by people who truly understand something about the land, the family that made the wines, the history of the cru, etc. Conscientious growers in Burgundy live in a state of total distress over the pricing of their wines in the market. Several have told me “I would never pay these prices for my own wines.”
I can only hope Champagne as a whole does not go this way.
Perhaps I was too premature in writing this, seeing how the stock markets crashed yesterday, I cannot imagine Champagne being ainteresting investment in the current situation.