James recently did a special report for the Finanicial Times and interviewed several top wine merchants and traders from the UK, US and Hong Kong to shed light on the latest wine investment trend and opportunities. Here is the full interview with Gary Boom, the managing director of UK-based Bordeaux Index.
He believes that collectors’ demand for top Italian wines, including Barolos and Brunellos from the outstanding 2010 vintage as well as Super Tuscans, is outstripping other wine regions at the moment. He also revealed that Italian wine sales are up close to nine percent this year at his company, and Italy “continues to be a source of exceptional wines at all price points,” says the executive.
Read our interview with him below to find out more.
JamesSuckling.com: What are your views on wine investment at the moment?
Gary Boom: We are still major advocates of the basic principles of wine investment; to put it simply, the right wines bought at the right time will still deliver returns for the investor. This is about combining a traditional viewpoint – straightforward supply/demand economics and good instincts – with a modern, tech-supported analytical approach.
On the first point, this means looking either at regions and properties with a clear trading history (First Growth Bordeaux from good to excellent vintages, for example) or looking at small production, highly-scored, age-worthy wines such as top Burgundy, Barolo or certain Californian producers. This way, you are limiting your risk potential.
On the second, it means constantly assessing the market. We must be the most ruthless analysts of price and pricing trends in the wine market; at Bordeaux Index we built our own online valuation system, available to all our clients who store wine in our reserves, which constantly analyses the market. This enables us to see certain movements and trends, both up and down, which can provide opportunities for trading.
It has undoubtedly been an unusually turbulent few years for the wine market but it’s important to remember that if you are working with the right company, they will always find a trade opportunity out there: some people are looking for the very thing that other people want to offload – the key to success is having a broad enough network of contacts and really understanding their individual needs, in order to facilitate the deal.
JamesSuckling.com: How is Bordeaux selling?
Gary Boom: Bordeaux sales are stable this year versus last, with prices slightly up – our index of the top 200 wines sold through our LiveTrade platform is up 3.35 percent year on year. We had a marginally better En Primeur campaign this year than last, but prices were still too high to get people interested.
We have seen demand for well-priced ex-Chateau releases, however, notably Latour and Cheval Blanc have made ex-cellar releases at prices very close to market with only a small premium for guaranteed provenance – and have sold very well indeed.
The majority of Bordeaux we are selling is either top vintage, ready-to-drink pre-2000s or stellar vintages from more recent years which will have enormous future demand, in particular the 2005s, 2009s and 2010s.
JamesSuckling.com: Is there any upside to Burgundy? Why?
Gary Boom: Burgundy’s star continues to rise and while the top end of DRC has seen a little softening in recent months; names such as Rousseau, Roumier, Mugnier and Leflaive continue to see significant demand. As such, prices are marching ever-upwards.
This demand is about increased education, production scale and quality. Collectors who cut their teeth on great claret often move next to Burgundy, with its complexity and variations of style. Furthermore, there will never be – can never be – more wine physically made from the existing Grands and Premiers Crus; the volume available is miniscule in comparison to virtually all top Bordeaux. In fact, most recent vintages have seen quantity even further reduced in order to maintain or grow quality.
Therefore, owning and drinking top Burgundy is a sign of flourishing interest and education, and increasingly, a sign of status.
Does this provide an upside? The entry bar for the top names has got higher and higher, meaning greater risk for the investor; that being said, the reasoning above suggests that this market can go further. The secret would appear to be finding the next big names and estates whose wines will gain international recognition – and we certainly have our eyes on a few of these.
JamesSuckling.com: Any other regions to highlight for wine investment, price inflation or just plain collecting?
Gary Boom: Italy has its star performers already (more on this later) but two regions which provide interest and diversity are Champagne and the Rhone.
For those willing to hold for the mid- to longer-term (five to 10 years), Champagne makes a strong case: global distribution across private customers, restaurants, clubs, hotels and casinos means each new release is fairly rapidly consumed – within three to five years the wine has matured and improved, and available quantities are much diminished. This is when connoisseurs step forward and subsequently demand, and prices, begin to rise.
The Rhone has some truly extraordinary wines made in relatively small quantities which have the capacity to age a very long time; examples include Chateau Rayas, Henri Bonneau and Guigal’s single vineyard Cote Roties, known colloquially as the ‘La Las’. Owners of these have seen very impressive returns – the only problem is letting go of them. They are among some of the most spectacular wines in my cellar and I suspect I personally will never sell any of mine!
JamesSuckling.com: Italy seems to be outperforming most regions at the moment; are you bullish? Why?
Gary Boom: Italy is up 8.4 percent year on year at Bordeaux Index and continues to be a source of exceptional wines at all price points. Education is growing enormously on Italian wines, especially in Asia, and with the range of styles available this inevitably leads to increased sales. We are certainly bullish on quality, which has never been higher, and there are certain areas and producers which we believe are of significant interest to both the investor and drinker.
JamesSuckling.com: What areas from Italy sell the best?
Gary Boom: Barolo is effectively the Burgundy of Italy, with multiple vineyards or ‘Crus’ usually divided up between many growers, some of whom own just a few rows of vines. This often results in single producers creating just 300 or so cases from each vineyard for the entire world market – with huge critical acclaim to boot. Demand for the top wines and producers is huge, especially in great vintages like 2010. Barbarescos from the top producers have also gained decent traction in the past couple of years.
2010 was also a stellar year for Brunello di Montalcino, with most estates producing their best wines ever. Again, we had enormous demand here and sold over 20,000 bottles across various producers.
Super Tuscans continue to delight collectors and drinkers the world over, whether they are from the coastal Bolgheri region or the heartland of Chianti Classico closer to Florence and Siena.
JamesSuckling.com: What producers are the most highly coveted?
Gary Boom: In Tuscany, the 2012 release of the great established Super Tuscans Sassicaia, Solaia, Tignanello and Masseto have all proven hugely popular; alongside these are the less well-known but equally brilliant wines of Le Pupille and Tenuta Sette Ponti. Brunellos from Cerbaiona, Poggio Antico, Casanova di Neri and of course, Biondi-Santi have been most in-demand across all of our offices around the world.
In Barolo, long-established and traditional names like Giacomo Conterno and Bruno Giacosa continue to generate huge interest, alongside (relatively) new producers like Roberto Voerzio and Sandrone.
JamesSuckling.com: What areas and producers do you look for for the future in Italy for investment and purchase?
Gary Boom: Barolo has the same magical combination of tiny production, ageability and vast critical acclaim as Burgundy, and yet the prices are way behind. Our experience is that Italy follows Burgundy (having begun with Bordeaux) in each new market that opens up – so we expect demand, and prices, to rise. Roberto Voerzio really is the big name for us here – he and his son Davide have established an incredible style and have holdings in most of the great Cru vineyards.
Collectability is big in Super Tuscan wines so look to gather the big names each and every year, thus building yourself a ‘vertical’ collection. Big bottles (magnums, jeroboams and imperials) are harder to get hold of but command a premium further down the line.
Aside from the big names for collecting and investing, Italy has incredible diversity and represents brilliant value for the money for the drinker.
Photo from top to bottom: Gary Boom, managing director of Bordeaux Index; Château Margaux Margaux 1995 and Château Cheval Blanc Saint Emilion 1994; Biondi-Santi Brunello di Montalcino
