Burgundies Move into the Wine Investment Spotlight

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Feb 19, 2013

Although Bordeaux wines are seen as dominating the fine wine market, Burgundies have been gaining some wine investment traction this year. On 18 February Bloomberg reported that some top Burgundies were driving investment-grade wine prices at auction. Higher Burgundy demand is adding to other signs of recovery in the fine wine market following last year’s slide.

**Top Burgundies Driving Investment-Grade Wine Prices**
Bloomberg reported that among the top Burgundies performing well at recent auctions were Romanee-Conti offerings, with a six-magnum case of Domaine de la Romanee-Conti (DRC) Assortment 1990 selling for HK$541,200 (£45,092) at an Acker Merrall & Condit sale in Hong Kong in January, more than 15 percent up on its 2012 best. In addition, a case of 1990 vintage from Burgundy vintner Henri Jayer’s Vosne-Romanee Cros Parantoux vines fetched $113,525 (£86,219) at a Hart Davis Hart Wine Co auction in Chicago.

Bloomberg quoted Peter Lunzer, founder of Lunzer Wine Investments, as commenting that demand for top Burgundies far exceeded supply. “We’re still keen on Burgundy. One of the ones that are resilient is Domaine de la Romanee-Conti.” Mr Lunzer was also quoted as saying that Burgundies were “undoubtedly contenders” for wine investment portfolios, “even if we often struggle to find sufficient volume”.

Meanwhile, a Cellar Watch market report published February 2013 revealed that Burgundy trade hit a record high in January, with the region’s share rising to 14.5 percent. The report also noted the dominance of trade in Domaine de la Romanee-Conti product. As reported by Bloomberg, on January 30 two 12-bottle DRC Assortment cases from 1999 sold for £28,200 each at Sotheby’s (NYSE:BID) in London, whereas a similar case changed hands at £24,600 on the Liv-ex wine exchange in November.

**Market Recovery Signs**
The visible demand for top Burgundy wines adds to other signs of fine wine market recovery, with Decanter magazine recently observing that purchases at auctions in January suggested a sustained increase in fine wine prices. Decanter quoted Paul Bowker, director of Wilkinson Vintners, as noting that the increasingly “punchy” prices at auction were a welcome relief. “Demand was fairly flat last year in relation to stocks, but supply has begun to tighten up,” Mr Bowker noted. “Prices edged up before Chinese New Year, which was quite early this year, and they seem to be carrying on in that direction.”

In January, the Liv-ex fine wine 50 index rose 3.5, its biggest monthly gain in two years, with Bloomberg reporting that the index is up more than seven percent from a 31-month low seen in November 2012. The Liv-ex fine wine 100 index in turn posted a 2.8 percent advance in January, with the data suggesting a more favourable wine investment environment than seen in 2012.
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**Burgundy vs. Bordeaux**
Despite the apparently growing demand for Burgundies, not all investors are inclined to give the region a try. Bloomberg quoted Miles Davis, co-founder and partner at Wine Asset Managers LLP, as saying that it would be poor timing to buy Burgundy now. “It’s had a good run. It’s been outperforming for the past year or so.” Mr Miles was quoted as instead favouring Bordeaux, with a special mention of Lafite. “We’ve got a sensible weighting in it,” he shared.
Bloomberg reported that a case of Lafite 2009, the most expensive vintage in the past five years, sold for £7,800 on Liv-ex, reaching a seven-month high and extending its December gains. As noted on the Cellar Watch website, the Liv-ex Bordeaux 500 index is up 2.24 percent in January. Amongst Bordeaux wines to have recently attracted wine investment attention is Chateau Petrus, with a case of its 1982 vintage fetching $38,240 at the Hart Davis Hart auction in Chicago.

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