In today’s Money Morning…breaking bottles, but not so bad as Thomas Jefferson’s…the last vintage of a master winemaker…you can make money from this alternative investment, even double your money…
I had most of a bottle of wine last night.
What does that have to do with investing? A lot more than you might think.
It was a 2008 Yering Station Shiraz Viognier. Got it from the local wine warehouse. I’m pretty lucky really. There aren’t a huge number of good quality wine suppliers in my area. But the one that is nearby is brilliant.
You can get Aussie wine in most bottle shops. Some big supermarkets like Waitrose have a selection. But the typical names are Yallumba, McGuigan, and YellowTail. They’re OK, but they’re certainly not top shelf.
I was walking around Majestic Wine Warehouse and saw a Yering sitting there proudly. I had to get it. I also had to get the tempranillo from La La Land winery, too. And for good measure a Penfolds Bin 28.
Both Yering and La La Land are Victorian wine names. Penfolds is a classic South Australian. None are 1er cru classe level. But they’re not a ‘2-buck-chuck’ either.
Nice wines from home like Yering and La La Land help keep me sane. And they keep me from getting ‘wine homesick’.
Unfortunately the Yering Station didn’t survive the night. I didn’t drink it all. I wish I did. Sadly the bottle of Yering was knocked off the table by my giant cat Lewis and his supercat-strength tail.
The bottle, about three quarters empty, did the old bounce, bounce, smash routine. The judges gave It 9.5s, but I gave it a big fat zero.
I wasn’t happy about my loss. But it didn’t seem so bad after my brother emailed me in the morning. He didn’t know about my wine incident. He was just sharing some wine information with me. We do that a bit. We both have a thing for quality wines. It also helps that I’m an hour flight away from Bordeaux.
He wrote the following, with the email subject line: ‘Wow.’
‘$225,000 – Chateau Margaux 1787: the most expensive wine never to be sold.
‘In 1989, a bottle, also from Thomas Jefferson’s collection, was valued at an astronomical $500,000 by its owner, a New York wine merchant called William Sokolin.
‘The high price may have been a publicity stunt, but it was never tested. When Sokolin took the wine with him to a Margaux dinner at the Four Season Hotel, a waiter knocked the bottle over, breaking it. Insurers paid out $225,000.’
That made me feel a lot better. My £11.99 purchase was now a distant memory. At least it wasn’t a Chateau Margaux.
We had been talking about Chateau Margaux for a few months. We had been thinking about getting a few bottles.
The 2015 vintage from Bordeaux’s left bank is potentially exceptional. A range of options were, are, on the table. But it was the Margaux that might be a once in a lifetime collectors (and speculators) dream.
The most exceptional and last vintage
In March this year, Chateau Margaux’s Paul Pontallier passed away. Pontallier was just 59 years old. He was managing director of first growth Chateau Margaux since 1990.
Decanter magazine explains in his obituary that,
‘Hired by owner Corinne Mentzelopoulos – following a recommendation from his mentor Emile Peynaud – just three years after she stepped into her father’s shoes, the two shared a complicity and friendship rarely seen between owner and director.
‘Decanter consultant editor, Steven Spurrier described their partnership as ‘something that has never been surpassed even by that of Jean-Bernard or Jean-Philippe Delmas with Haut-Brion.’
The 2015 Margaux might be exceptional. But it’s definitely the last from Pontallier. That alone should add value to the wine.
The tricky part is getting your hands on it. You can’t just rock into Dan Murphy’s. These 2015’s aren’t even in bottles yet. You have to purchase them as ‘En Primeur’. In other words, a wine future.
Physical delivery of the wine won’t be until sometime ‘between 2017 and 2018’. And even then a 6-bottle case of Chateau Margaux will be £2,706 (AU$4,754).
Now that might sound a lot. But maybe not if there’s potential to make some money off this vintage.
The 2009 Bordeaux vintage is outstanding. In 2009 a bottle of Chateau Margaux was £695 (AU$1,221). By July 2015 the average price was £669 (AU$1,175). But today the average price is £819 (AU$1,439).
If you’d bought at the start you’d be up 17%. If you had the nous to buy in July 2015 you’d be up 22%. A 22% return in just over 13 months. That’s pretty good.
However, Chateau Margaux isn’t the only wine worth big money.
Double your money on wine
Christie’s held a wine auction in New York in 2001. For sale was single bottle of Chateau Haut-Brion 1961. The final sale price was US$1,380 (AU$1,827).
Now that’s a lot for a bottle of wine. However today the average price is US$2,872 (AU$3,744) per bottle.
Double your money in 15 years. Sure it’s not 1,000% gains. But that’s not the point of investing in wine. The reason you’d invest in wine is to spread your risk — hedge against the stock market, with something completely outside it.
Do you think wine cares who the PM is? Do you think the left bank of Bordeaux gives a stuff about Aussie interest rates? Do you think a 1er cru classe cares what numbers the ‘reporting season’ throws up?
If the stock market crashes you should look at alternative investments. But there’s nothing ‘alternative’ about wine. It’s one of the few multi-purpose investments. You can buy for speculation. Or you can buy to consume.
That’s a win-win in my book.
The left bank Bordeaux 2015 ‘En Primeur’ has plenty of options. You should of course do some research. But some names to keep an eye on are,
- Chateau Margaux,
- Chateau Lafite-Rothschild,
- Chateau Mouton Rothschild, and
- Chateau Haut-Brion.
These 2015 vintage specials might be a once in a lifetime opportunity.
They’re pricey to buy. And they might not reach the lofty heights of Jefferson’s 1787 Margaux. But they still might bring a tidy little profit over time. And of course they would be delightful to drink.
Perhaps best of all, they could be the perfect investment if markets crash.
Editor, Money Morning