Can investors afford not to include Burgundy in their fine wine portfolios?

It’s a rare month that goes by without a headline in either the drinks trade press or mainstream media on the outstanding prices being achieved on the sale of rare Burgundy wines. Christies held its final fine wine sale of the year in Geneva on the 11thNovember 2018 raising CHF2.8million (£2.2M), including an assorted case of DRC 1996 (12 x 75cl) which sold for CHF54,000 (c. £41,500) and a case of 1969 DRC Romanée Conti which raised CHF34,800 (c. £26,720).  

The six-figure sums that hit the headlines in mainstream media, for the sale of DRC in particular, will lead many fine wine investors to thinking that these wines are simply unaffordable. The auction of two bottles (75cl) of DRC Romanée Conti 1945 by Sotheby’s in New York in October 2018, which sold for $496,000 (£377,000) and $558,000 (£424,000) respectively, is a record-breaking example of what can be achieved. At the time of the sale Liv-ex reported that, for the equivalent price, you could have acquired 105 bottles of Latour 1961 or 133 bottles of Petrus 2010. We could debate holding a larger position and potentially spreading risk, but the fact is extraordinarily rare top Burgundies are hugely ‘bankable’ right now.

The principal driver is that, on average, only 6,000 bottles of DRC Romanée Conti are made per annum. The 1945 vintage saw production cut to ten percent of the norm, to 600 bottles, due to WWII. These wines will have originally been released onto the market for nothing like these record-breaking values and demonstrate that it pays to select well and hold over the long term. As a rule we do recommend that you hold your fine wine investment for at least five years, and considerably longer with the right wines, to achieve optimum growth.

But the key questions for investors are – ‘is investment-grade Burgundy affordable?’ and ‘Is there still room for growth?’ Firstly, buying the most sought after rare DRCs early in their life cycle means they may be acquired for sub-£10,000 or tens of thousands, not a six-figure sum. However the secondary market in Burgundy wines is broadening and there are a number of exceptional wines that offer considerably more value for investors seeking to add Burgundy to their portfolio.

For example, Armand Rousseau, Gevrey Chambertin Clos St Jacques is a ‘brand on the move’ with an overall increase of 50.1% on prices of their wines in 2017. A number of vintages saw increased trading and double-digit price rises in October 2018. The 2013 vintage, scored 96 points by Antonio Galloni and described as “one of the wines of the vintage”, rose 21.1% from £4,353 to £5,273 in the month – a long way from the average FTSE 100 performance of -5.1% down in October 2018. More importantly, it is considerably more affordable than the ten times more expensive DRC Tache 2010.

Other Gevrey Chambertin Clos St Jacques vintages attracted trade in October 2018:

Armand Rousseau wine Vintage 30.09.2018 31.10.2018 Growth
Gevrey Chambertin Clos St Jacques 2013 £4,353 £5,273 21.1%
Gevrey Chambertin Clos St Jacques 2011 £4,536 £5,122 12.8%
Gevrey Chambertin Clos St Jacques 2014 £5,389 £6,060 12.5%
Gevrey Chambertin Clos St Jacques 2009 £9,300 £10,455 12.4%
Gevrey Chambertin Clos St Jacques 2010 £8,793 £9,818 11.7%

 (Source: Liv-ex.com, mid-price per 12 x 75cl)

Given the average prices of top Burgundies, buying individual bottles with excellent provenance can also provide the means to include these iconic wines in your portfolio. Individual bottles do not enjoy the premium of being sold in their Original Wooden Case (OWC), but this is a common practice with rare Burgundies. They are repacked and stored in bond so the provenance, quality-controlled storage management, insurance and tax treatment of the wine remain protected.

Secondly, is there still room for growth in Burgundy wines? Nobody wants to buy at the top of the market and there has been speculation over recent years about the future performance of Burgundy, but we continue to observe strong month on month, year on year growth in the top wines of the region with no end in sight.

The Liv-ex DRC Index is up 19.7% year-to-date. DRC Tache 2010 was the top market mover on the exchange seeing a MOM 25.3% price rise from £41,504 (12 x 75cl) at 30th September to £52,000 on the 31stOctober 2018. Not many investments are delivering this level of growth in the current climate of economic and political uncertainty. Continued demand for the wines of Burgundy have seen investor focus broaden to include more ‘affordable’ wines beyond the DRC ‘stable’, and you can get further information on these from the Vin-X team.

VIN-X EXCLUSIVE SPECIAL OFFER: Henri Jayer Cros Parantoux 1999 and 1996

Vin-X has secured a limited number of bottles of Henri Jayer Cros Parantoux 1999 and 1996 vintages. The legendary wine maker died in 2006 and his wines are commanding extraordinary prices at auction. Cases of these two vintages were sold in Geneva for 300,000 – 500,000 Swiss Francs in recent months and our special offer provides the opportunity to add these extraordinary wines to your collection at a great discount.

Vin-X has a limited number of bottles of each vintage available at £12,750 excluding fees.CALL US NOW: 0203 384 2262

Contact us for more information about Burgundy and the investment-grade wines of the region  – our current special offer is one not to be missed – call 0203 384 2262.