A Historic Low, Automation and Wine Investments

Hazardous conditions take their toll and yet many brave women and men continue to pursue a career that is demanding even in the best of times. There are so many things to love about wine and the passion that goes into it is one of my favourites. Wine investments is a bit of a different story and we get into this and other stories in the latest JollyCellarMaster Weekly:

 

The True Value of Wine

A Lot Less Champaign

I really don’t take much pleasure in writing about the misfortune of other people, but the precarious weather conditions are unfortunately a recurring topic, so I believe we need to cover it in a weekly news round up. This week it is about reports on France bracing for a slump in wine output amid the weather woes of the recent months. The country’s farm ministry announced that the wine production could drop by as much as 30% this year to its lowest level in decades. In early spring vineyards were hit by spring frosts, which was followed by heavy rain in July that has significantly harmed the vines. Producers in Champagne have reported that their harvest potential has been cut by about half due to severe spring frosts while the torrential summer rain that caused problems with mildew fungus. According to the French farm ministry as part of a first outlook for national wine output, the projected 2021 production sits somewhere between 32.6 million and 35.6 million hectolitres, which is 24-30% less than last year. It will be interesting to see what this means for wine prices in France in general and Champagne in particular.

 

Second Best

Talking about the value of French wine, an interesting article by Richard Woodard for the Drinks Business discusses the rapid rise in value of second wines from leading Bordeaux estates over the last decade or two. For instance, a case of the 2020 vintage of the Carruades de Lafite has been released at more than £2,100 or close to €2,500. That is still considerably less than you would have to cough up for the first wine of Chateau Lafite Rothschild, which would set you back at least €600 en primeur. Yet, questions should be allowed whether this presents fair value for a second growth.

Liv-ex’s Second Wine 50 index tracks some of the second wines of prestigious Chateaux and shows a rise in value by 56% over the past five years or a whopping 805% since 2003. The value of these second wines for a consumer is explained as being a more affordable ‘entry point’ as prices for the grands vins continue to rise. The question is, however, whether these bottles are actually an object for consumption or whether a collector token or a mere investment instrument that gets traded like other asset classes. The thought alone could make you shiver if you’re really interested in drinking and enjoying wine, but it is a sad reality that many people are frozen out of the opportunity to taste some of these wines at such prices.

The second question you could ask yourself is whether it actually makes sense to put that much money into the second growth of a prominent producer if you could buy a first wine from another, less popular for the same amount or less? That is, of course, for you to decide.

 

Your Favourite Italian

While we are on the topic of wine as an investment class, Wine Search has published an overview of the most expensive Italian wines. Though the top 10 list (and beyond) is dominated Barolo, Brunello and Super Tuscans with Giuseppe Quintarelli Amarone della Valpolicella Classico Selezione making second place at $1265 right behind Giacomo Conterno Monfortino at an average of $1287 a bottle in first place. Roagna Crichet Paje Barbaresco also breaks into the top three at $918 per bottle and Miani’s Calvari’ Refosco Colli Orientali del Friuli makes the list at $709 at seventh place.

There is little change between the top 10 this year and last year. However, there seems to be quite a change in the prices as last year the fall away from the top two wines was quite sharp, dropping from $1213 to $842. Now, there are three wines in the $900-plus bracket and the mean increase of the global average price across the 10 wines is 11.7 percent; last year that figure was 10.8 percent.

Sounds like a numbers game and it doesn’t answer the question whether any of those wines is worth the money. Again, something you need to decide for yourself depending on your preferences and wallet.

 

To Be Or Not To Be

And lastly, more from the Drinks Business and the question Chile’s winemakers are facing: to automate or not?

On one hand, there is a consistent shortage of workers and the availability of advanced technology that speaks in favour of automation. On the other hand, wine thrives on the idea of being an artisanal product made of the blood, sweat and tears of men (leaving the more socialist element of depriving humans of a means to make a living and replace them with machines, which in the case of a shortage of workers is, of course, not really a valid argument).

The question does not appear to be whether to automate or not though. To me it sounds rather than how much technology should be allowed since no one really produces wine as the old Greeks thousands of years ago and there is a good reason for that. On the whole, the average quality of wine has improved significantly over the past fifty years, though there is, of course, the point about whether we are actually drinking better wine (I keep getting back to what Keith Grainger told me in our recent podcast conversation – you can listen to it here at about minute 19).

Well, once again a question every man and woman has to decide for him or herself, I suppose.

 

And that’s all for this week, folks! However, if you have an interesting story to tell or simply want to chat about wine as a guest on the Podcast, connect on Twitter or drop me a line. And if you want to stay in the loop about things happening at the JollyCellarMaster and the world of wine, make sure you sign up to our newsletter.

 

Disclaimer: As always, I’d like to be completely transparent about affiliations, conflicts of interest, my expressed views and liability: Like anywhere else on this website, the views and opinions expressed are solely those of the original authors and other contributors. The material information contained on this website is for general information purposes only. I endeavor to keep this information correct and up-to-date, I do not accept any liability for any falls in accurate or incomplete information or damages arising from technical issues as well as damages arising from clicking on or relying on third-party links. I am not responsible for outside links and information is contained in this article nor does it contain any referrals or affiliations with any of the producers or companies mentioned. As I said, the opinions my own, no liability, just thought it would be important to make this clear. Thanks!

 

 

 

 

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