Beyond Bordeaux & Burgundy, what else should you invest right now?

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19th September, 2020 by Alice Liang

db Asia spoke with Kevin Cheng, senior managing director of Kaigai Fine Wine Asia, for his insights on fine wine investment and regions to watch on your radar.

2020 is a year marked by turbulent events. However, this seems not to be affecting the global wine auction market as most sales have shifted online and achieved outstanding results. As reported by various auction houses, the acceleration of online biddings is not only a positive sign but has helped successfully capture a younger, broader and more dynamic audience this year. For consumers, the digitalisation of auction houses is opening up a much more accessible and viable channel for fine wine purchase.

A lot of fine wine connoisseurs would prefer to go after staple regions such as Bordeaux and Burgundy. “Bordeaux has been the strongest wine region in the overall market share of wines up until around 10 years ago, taking around 95% of total market activity on Liv-Ex at the time. This was largely the result of significant buying of Bordeaux wines until the middle of 2011 which saw Bordeaux prices increase by over 200% between 2006 and 2011 to peak around June of 2011,” explained Kevin Cheng, senior managing director of Kaigai Fine Wine Asia.

He continued, “buyers had often looked towards the en primeur campaigns in Bordeaux to determine the direction of prices and unfortunately the prices for the primeur campaigns around then were just too high for a lot of them to stomach. This was coupled with a period where consumers were interested in diversifying their wine portfolios, both for consumption and also for cellaring. Even as Burgundy prices continue to rise every year, there seems to be more of an interest to collect Burgundies now given the generally much lower production numbers for the fine wines in Burgundy compared to Bordeaux and the perceived rarity of a lot of Burgundy wines now.”

Although the enthusiasm of Bordeaux is still storng, Cheng recommended buyers to go beyond the region and keep an eye on other rising stars in the auction market, “some wines coming out of South America, particularly from Argentina, Chile and Uruguay have seen a lot of attention recently, getting outstanding scores from prominent reviewers. Some wineries from Australia, New Zealand and the US (especially from Oregon and the Finger Lakes regions) have been gaining cult-like status and prices for these wines have been on the rise for the past several years.

“Within Europe, there has been renewed interest in places like Priorat in Spain, Sicily and Friuli-Venezia Giulia in Italy, as well as Jura, the Loire Valley and the Southwest of France. Many of these regions have a lot of potential, but as collector items, it is going to take a bit of time – so if there are particular regions buyers are interested in, it won’t hurt to buy some and lay them down in the cellar for a while.”

Speaking of starting a wine collection for first timers, Cheng suggested thinking about whether collectors are looking to collect the wines purely for investment or personal enjoyment. If seeking wine as an asset class, buyers should focus more on wines that have an established or growing brand, new wines that are high in demand already and which have consistency in quality for each vintage and potential for improvement with ageing.

On the other hand, most individuals like to buy wines that they want to drink. Being able to purchase a case of six or 12 bottles gives buyers the opportunity to try the same wine over the course of many years. At the same time, prices for these wines has a chance of increasing in value – possible to an ideal situation that half a case could be sold back into the marketplace some years down the road at a large enough profit that results in the owner of that case being able to drink the first half of the case for essentially no cost.

When it comes to purchasing wine from auction houses, it is imperative to buy wines with the best provenance possible and to ensure the legitimacy of the wines. Cheng added it is important to understand how the wines have been stored by the consignor and to get as much information as possible on the conditions of storage prior to ending up in a consignor’s cellar. There are a lot of bottles of wine that are being put up at some auctions that have no discernible track record or have some questionable issues pertaining to the condition of the bottles themselves. “There have been quite a few cases in the past in which the auction house doesn’t necessarily complete the proper due diligence required to minimise potential problems with the bottles,” he warned.

Most of the time connoisseurs spent much attention on major spring or fall sales from large auction houses; however, they may have overlooked other quality auctions held all over the world. In these events, bidders can as well treasure hunt for rarities, unicorns and unique bottles.

Next month from 5 Oct (9am JST) to 12 Oct (6pm JST) sees the 29th Kaigai Fine Wine Online Auction – leading the sale are two bottles of Domaine Romanee Conti of 1923 and 1969 vintage. The event also includes a mini-vertical of G. Roumier Bonnes Mares (1986, 1989, 2010 and 2012), an extensive range of mature François Raveneau Chablis, mini-verticals of René Engel Grands Crus (Grand Echezeaux, Clos Vougeot and Echezeaux) and mature bottles such as 1977 Armand Rousseau Chambertin Clos-de-Beze, 1966 Leroy Musigny, 1982 Mouton-Rothschild, 1978 Guigal and 1978 Chave, 1976 Roumier Morey-St.-Denis Clos de la Bussiere. Interested bidders can register and manage the bids on Kaigai’s auction platform.

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