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Fine wine investing for 2020:Guide to wine regions for investors

UKV International News

When it comes to choosing fine wine to invest in, Bordeaux red has historically reigned supreme. However, there are many different regions producing investment grade wine every year, and some of the most valuable vintages have come from outside of Bordeaux chateaux in the past. This being the case, UKV International News recommends it pays to cast a wide net when it comes to choosing investment wine. The ever-expanding nature of the market means that investment in emerging wine regions could lead to great 5-10 year returns in the future.  Recently, wines from regions such as California have been valued extremely high by collectors, and wines from Burgundy and Rhône are even beginning to approach the high value of the classic Bordeaux vintages. With that in mind, lets take a look at the top regions producing fine wine, as well as some of their most valuable vintages.

Bordeaux

The Official Classification of Medoc and Graves, instigated by Emperor Napoleon III in 1855, was a ranking established in order to showcase the very best in French wine. These rankings still hold weight today and cover numerous Bordeaux chateaux that are responsible for producing some of the highest quality wine in the world. There are 54 official appellations, or “controlled designations of origin” within Bordeaux, and over 8000 individual chateaux. The majority of the wine produced here is red, sometimes known as Bordeaux claret in the English-speaking world.

Such is the reputation and influence of the Bordeaux region that their wine accounts for roughly 70% of all wine traded though Liv-Ex, the wine investors exchange. Bordeaux wine is therefore still the benchmark by which all other wine is judged for quality. Potential investors would do well to focus on Bordeaux as a way to guarantee that there will always be a market for the wine they purchase, maximising returns in the long term.

Some of the top chateaux to look out for are Lafite Rothschild, Margaux, Latour, Ausone, and Pavie. Bordeaux wines can typically command some of the highest secondary prices seen. A large format bottle of Chateaux Margaux 2009 sold recently for £122,000 and a single standard bottle of the Lafite-Rothschild 1787 Thomas Jefferson Collection can also reach upwards of £100,000 in resale value.

Burgundy

Burgundy wine accounts for the second largest share of the secondary market for fine wine, at around 12%, and this figure appears to be trending upwards. Between 2006-08, for example, it enjoyed only a 2-3% market share, but has become the single biggest challenger to the dominance of Bordeaux since 2012 onwards. The Burgundy region is one with a rich history, adding to its prestige and value. Burgundy wine dates back to the second century and the region produces both dry reds and chardonnay whites that are highly regarded for their quality.

Burgundy as a region has the highest number of official appellations out of all of the French regions, each producing its own signature vintages. This diversity means that there are relatively small quantities of the investment grade “grand cru” wine produced. The demand for these limited supplies means that there is always a good chance for resale returns through the secondary market.

A crate of Montrachet 1990 sold for around £100,000 in 2017, and a crate of Domaine de la Romanée Conti 1988 sold for over £250,000 in 2018.

Champagne

A historical rivalry with the Burgundy region, dating back to the court of King Louis XIV, is one of the most famous characteristics of the Champagne wine region. This rivalry was fierce and almost resulted in a civil war on numerous occasions. However, since the proliferation of sparkling wine the rivalry has mellowed, and Champagne has become famous the world over for its unique vintages. Only sparkling wine produced within this small region can legally be designated Champagne, and this prestige means that the investment grade wine produced there can rival Bordeaux and Burgundy in terms of value.

The Champagne house of Moët and Chandon is home to the Dom Pérignon brand, named after the famous Benedictine Monk who pioneered many techniques involved in the production of sparkling wine. A single bottle of Heidsieck 1907 Champagne has been valued at over £180,000.

Rhône

Côte Rôtie, found in the northernmost region of the Rhône Valley produces the entirety of the investment grade vintages from the region. These wines include the Guigal La Landonna, Guigal La Turque, and Guigal La Mouline. Although the region is significantly smaller than Bordeuax or Burgundy, its wine regularly achieves perfect scores from industry critics, which raises its value to rival that of other regions. It is still growing as an investment avenue, accounting for roughly 2% of the secondary market share, however, the wine’s proven and reliable quality may make it a smart choice for great potential returns in the future.

California

California produces over 90% of all wine made in the United States, and the state has over 1,000 individual wineries. Its history dates back to the 18th Century, where vines were planted by Spanish missionaries. The region grew exponentially due to the gold rush of 1849, which helped to establish the Napa and Sonoma regions with the influx of new settlers. California accounts for roughly 3% of the market share of wine fine as of 2017. Their cult wines, from brands such as Screaming Eagle, Harlan, and Scarecrow, are produced in extremely low numbers – They are often very rare and therefore very valuable to collectors and investors alike. California stands to become one of the premier wine producing regions outside of France and investors would do well to turn their attention to their wine now to stay ahead of the curve.

To conclude, Bordeaux still reigns supreme in the investment wine markets, and produces the most well-known and sought-after wine in the world. It is a safe bet for investors and can generally be relied upon for a good return of investment over 5-10 years. However, it pays to diversify, and the other regions covered here can all be considered worthy of attention. Particular attention should be paid to the Californian and Rhône wine both for their assured quality and their relative scarcity, as these are factors that make vintages especially appealing on the secondary markets.

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Written by Avery

Business/Finance Blogger. I provide insight, business advice and consultancy to small and medium size businesses. Get in touch on Google + or follow 3_Business on Twitter

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