Changing of the Guard

 

I do take the wine very seriously but you have to be humble in this job. There are a lot of egos but I am not like that. I like to bring in my Essex roots

Neil Martin

 

For years people have contemplated what would come of the wine market once Robert Parker Jr retires. Mr Parker has been the major driving force in the fine wine market for decades and his scores have been known to make or break a wine. Parker is responsible for establishing the 100 point scoring system for fine vintage, a system that has been adopted by all but the most stubborn of critics.

First he withdrew from tasting En Primeur Bordeaux and handed that privilege to a younger and fresher member of his Wine Advocate team named Neal Martin. This came as a shock to many as the Bordeaux En Primeur tastings are seen as one of, if not the most important task in fine wine critique. Neal took the baton and ran with it. His younger fresher style with obscure references to pop culture and contemporary themes made sure he stamped his mark on the role, rather than just trying to be Mr Parker II.

Then, in April this year, Parker announced that he would also be stepping down from tasting bottled Bordeaux. This also transfers the important 10 year reviews to Neal Martin which have become a benchmark for measuring a wines actual development against its predicted development and again is a hugely important part of fine wine critique.

Neal grew up in Essex and worked as a part time DJ. By his own admission he claims to have drank only cider and Liebfraumilch, or sometimes Mateus Rose on special occasions. He began working for a company in his mid-twenties that exported wines to Japan and this is where his passion started. By 2003 he had started his own online wine blog which soon amassed over 100,000 readers due to his abstract approach to writing. Soon after he was picked up by Parker and taken under his wing.


Daniel with Neal Martin @ Matter of Taste London 2015

Parker has not retired completely, he has reduced his tasting responsibilities to California and the odd wine from elsewhere that he feels like tasting, good work if you can find it! But what will come of his previous scores? A Parker 100 point score has been seen of THE ultimate seal of approval and would ensure a wine’s future market performance and liquidity. The general consensus among trade and in the market appears to be that his perfect scores will always be seen as the greatest examples of the wines that received them. In fact, Liv-Ex have already created a new index named The Parker 100 to track the price performance of every wine with a perfect 100 point score from Parker.

In the last few years, post-bull market and adjustment, the trackers for the Fine Wine 50 Index and the Parker 100 Index have beaten a fairly similar path. With Parker’s announcing his retirement and the supply of Parker 100-point wines therefore finite, we feel they will begin to outperform their counterparts considerably.

It is yet to be seen whether or not a Martin 100 point score will carry the same gravitas as his predecessor but early signs are positive. Neal Martin is a very knowledgeable and hard working individual with a huge amount of integrity that might just have what’s needed to inject a new lease of life into the market and attract younger fine wine enthusiasts. In the words of Robert Parker himself “This was actually the ultimate plan way back when Neal was first hired. Neal is a natural and, coincidentally, the best prepared for the job. I think it is important for us to ensure the continued unrivaled coverage of Bordeaux that made The Wine Advocate famous and improve on it. En primeur tastings have been an important and dramatic part of my professional life. I loved the anticipation and challenge of trying to analyze and evaluate a vintage and will undoubtedly miss it. But after 37 years of covering virtually every Bordeaux vintage since 1978, change is inevitable. I have total confidence in Neal’s independence, work ethic, and abilities.”

by Spencer Leat

Long Term Growth – A Closer Look at Lafite ’82

 

The fine wine market really comes into it’s own when the supply starts to tighten and a wine becomes a collectable ‘trophy’.

 

Clients often ask us to explain the differences between medium and long term price performance and which would best suit their portfolio. There are a lot of variables at play but also some basic forces that you should be aware of before making any plans for the future of your portfolio.

The wine market revolves around the basic principles of supply & demand but quality, longevity and price also have a hand in determining your potential for growth. In layman’s terms you need to acquire the highest quality ‘investment grade’ wine you can afford, at the right price and allow plenty of time for the supply and demand of that wine to swing in your favour.

As these wines age not only do they improve in quality but naturally, as people begin to consume the more mature stock, the quantity of that wine available on the market decreases which should drive values upward. For over a decade Cult & Boutique Wine Management have supplied wines with five years storage and insurance included in the purchase price, as historically this has proved long enough to generate an adequate level of capital growth. However, the market has changed dramatically during the last decade and one of the most important lessons time has taught us is that you should also consider the benefits of a longer hold term of ten or fifteen years.

Take the example below, the 1982 Chateau Lafite Rothschild was first offered to the market in 1983 at a whopping £275 a case. Over the following five years the value of this wine gained an impressive 118% at which point we’re sure many investors disposed of their holding and were happy with their gains, and who wouldn’t be.

In the following chart we have extended the hold term by an additional five years to show a ten year hold. You can see that trading starts to become more frequent, as the wine is beginning to approach or enter critic’s suggested drinking windows and people start to acquire for consumption. After 10 years the Lafite ’82 managed 209% growth, again very respectable.

The fine wine market really comes into it’s own when the supply starts to tighten and a wine becomes a collectable ‘trophy’. If we fast forward an additional ten years and display a twenty year hold term the results are very impressive, achieving over 1,300% growth. Again you can see the frequency of trading increase as buyers rush to take a position with what is fast becoming a very lucrative asset.

By the time Lafite ’82 reached it’s peak price in 2010 it had managed to reward those early buyers with a growth of 16,990%. Fair enough, it took twenty seven years to get there but with an average of 630% per annum for those that held on, we feel it would have been worth the wait.

Most Clients will be aware that the market showed unprecedented losses after 2010 and it would be misleading for us to ignore the price correction in this study. In the chart below the current Liv-Ex market value for a case of 1982 Chateau Lafite Rothschild is £27,000, 40% down from it’s 2010 peak market value of £47,000 but still a massive 9,718% above its original release price of £275. This would represent an average annual growth of 294% over the 33 years that the wine has been on the market.

This is probably one of the best examples of a wine rewarding over the long term hold but it is not an isolated occurrence, there are countless examples of fine wines showing long term growth that is unparalleled in traditional financial markets or products.

If you haven’t considered wine for long term growth yet it would be worth contacting your Portfolio Manager to discuss your objectives, budget and time scales to see if we help you tap into this growth for yourself. Many Clients adopt long term strategies when arranging legacy options for children, grandchildren or other loved ones. We have access to a selection of wines that we would recommend for extended hold periods and can work with you to create a package that suits your needs.

by Spencer Leat

Supply & Demand

 

I know several excellent tasters who think this is the single greatest wine they have ever tasted, and it is difficult to disagree

Robert Parker Jr
The Wine Advocate

 

In a supply and demand environment a great deal of weight is often given to the ‘demand’ end of the bargain. But what if the wine in question is so rare that even a demand for one case is hard to satisfy?

Each wine that Cult & Boutique Wine Management recommend could be seen as rare when compared to mass produced supermarket wines but some are considerably more rare than others. Identifying these rarities and, more importantly acquiring them in workable quantities, is something that we take pride in doing for our clients.

In our opinion every client portfolio should aim to have at least one wine that fits this description, as these hard to find gems can often outperform everything around them. Here we run through a selection of our favourites that we have supplied to our client base over the years.

Chateau La Violette

This tiny Pomerol estate produces an average quantity of 250 cases per vintage and, if well received, has shown staggering rates of growth. The 2010 vintage was awarded a perfect 100 point score from Robert Parker and its value rose exponentially – and all of this in the middle of a bear market!

“This is a riveting wine and certainly one of the great classics to ever be produced by this tiny estate” – Robert Parker Jr, The Wine Advocate

The 2010 Violette managed to grow by 380% between January 2013 and now. You have to agree, it’s hard to ignore performance like that.

Domaine Jean-Louis Chave Ermitage Cuvee Cathelin

Many of you will be familiar with Rhone Valley producer Jean-Louis Chave but you may not be aware of their top cuvee. The Cuvee Cathelin is only produced in outstanding vintages and to a quantity of just 200 cases.

Held in extremely high regard by the worlds most respected wine critics, it is virtually impossible to source by the case. If you are ever lucky enough to be offered this wine, grab it with both hands and don’t let go! Between 2014 and 2016 the 2003 Cuvee Cathelin has shown 130% growth, during the same period the Liv-Ex100 fell by 8%.

“I know several excellent tasters who think this is the single greatest wine they have ever tasted, and it is difficult to disagree” – Robert Parker Jr, The Wine

Trilogie de Le Pin

Pomerol’s Le Pin has no second wine but if you’re lucky enough, try and get hold of Trilogie, a non vintage blend of three declassified Le Pin vintages with a dash of Cabernet Franc, unlike Le Pin which is 100% Merlot.

The name Trilogie is a reference to the blend of 3 vintages. Production quantities are not published for this wine but it is common knowledge that hardly any is produced at all, seeing as the total production from the Le Pin property is only around 400 cases a year.

Trilogie de Le Pin has shown 218% growth over the last three years based on average 75cl bottle price. The lower production 1.5L magnums are even more sought after, due to the wine to air ratio in the large format bottles they mature more gracefully.

Although these highly collectible wines have the ability to jump in value quickly, they really come into their own when held over the long term. The more time that passes the more collectible these wines become and over an extended hold term of 15 – 20 years the results can be very profitable. For example, the 1992 vintage of Napa Valley’s Screaming Eagle was originally released at £195 per three bottle case. If you were fortunate enough to purchase the same case of wine today you would need to part with over £15,400. Appreciated, 20 years is a long hold period but with more and more Clients looking to understand and explore the benefits of extended hold terms we would argue that over 7,800% growth is a just reward for your patience.

If you would like to discuss acquiring a wine of this rarity and the benefits of an extended hold period we will be happy to assist.

by Spencer Leat

The Long Term View

 

There is a finite number of bottles in existence, and for the best returns a medium- to long-term view needs to be taken. As the wines mature and improve they also become rarer and more desirable – which drives prices ever higher.

The Daily Telegraph
January 2015

 

Investment grade fine wines are produced in small quantities and can rise in value over time. As more bottles are consumed the value of remaining examples increases, mainly due to supply and demand. There is a finite number of bottles produced in every vintage, and for the best returns a medium to long-term view should be taken. As fine wine matures and improves it also becomes rarer and more sought after – which in turn drives prices higher.

When building a diversified wine portfolio it’s important to consider how long you would like to store your wines before selling them back into the market. This period of time, often referred to as the ‘hold term’, is the ideal time span to wait before aiming for a return and can vary from one wine to another depending on age, value and demand in the market place, among other variables.

A healthy portfolio should contain a mixture wines expected to deliver over the medium, long and extended hold terms. In the fine wine market a medium term is around three years, long term is up to five and extended terms continue beyond the five year mark, sometimes a decade or more.

All wines supplied by Cult & Boutique Wine Management come with five years storage, insurance and portfolio management included in the purchase price, so the choice between medium and long term holds should be fairly straight forward. If you decide that you would prefer to store your wines past the initial five years its not a problem but there are costs involved. Extended storage is charged at London City Bond’s standard annual rate.

Some wines have the ability to deliver a return across all three options and as a result are often purchased in multiple quantities. This allows greater flexibility as the market progresses for example, if you buy one case of Chateau Lafite Rothschild and the market surges upwards you are faced with a dilemma – should you sell or hold out for a better price? If you were to purchase two or three of cases of the same wine you would have the freedom to sell one case at the current price and hold the other one or two back to see if the market continues on its upward trajectory.

If you are aiming to purchase specifically for an extended hold term we would tend to recommend solid ‘Blue Chip’ wines, such as First Growth Bordeaux and top flight Pomerol and Burgundy. These are wines that have a track record of being traded for decades and have managed to build a reputation in the fine wine marketplace as tried and tested brands.

If you study the growth profiles of this type of wine over extended hold periods the results can be staggering. The fine wine market has had a fairly bumpy ride in recent years but even taking the downturns of 2008 and 2011 into account these wines have still managed to show impressive capital growth.


We always ensure that we have a wide spread of wines available to our Clients from different vintages, territories and varietals. Some of these wines are better suited to long term capital growth than others, so if you would like to explore the benefits that an extended hold term can offer please contact your Portfolio Manager who will be happy to talk you through your options.

by Spencer Leat

Bespoke Offerings – The John Evans Series

 

Making boxes is a microcosm of the art of woodworking allowing the maker to subject his skills to close scrutiny. One of the first reactions when people see my work is to touch it – closely followed by opening the lid! By carefully selecting wood you can create objects that have a beauty and magic that few things in this technological age can match.

John Evans
Craftsman

 

At Cult & Boutique Wine Management we pride ourselves in recommending some of the most exclusive, highly sought after wines in the world. Alongside fine wine stalwarts such as Bordeaux First Growth, Burgundy and Pomerol, we have also worked with numerous 100 point scored wines produced in quantities sometimes as low as only 150 cases.

As you would probably be aware, Robert Parker’s Wine Advocate team and most leading wine critics include what is called a ‘Drinking Window’ in their tasting notes. This is usually a range indicating when you could potentially approach the wine for consumption and also when the critic feels the wine will have reached the end of it’s optimum lifespan. Drinking windows are usually updated when a wine is re-tasted and it is not uncommon to see them extended – sometimes quite dramatically – when a critic realises the wine has a much broader lifespan than suggested when sampled in its youth. But what happens when the drinking window ends?

If a wine has a good enough reputation and is from a high quality vintage it has the potential to continue showing capital growth and be bought and sold on the secondary market as a collectable. If a wine is fortunate enough to cross over from consumable to collectable then it has the potential to command interest from buyers for decades upon decades. With this in mind we planned a limited run of products aimed specifically at bridging the gap between the consumable and collectable markets.

A small number of Clients recently had the opportunity to take part in a new bespoke venture produced exclusively for Cult & Boutique. Working in collaboration with Gower based craftsman John Evans, we commissioned a series of solid oak, handcrafted cases produced to hold a selection of the world’s finest wines. John produces handmade ring, watch, and jewellery boxes. Working in carefully selected hardwoods he crafts a limited number of individual pieces from rare and unusual timber.

There were five different cases in the first bespoke series, each produced in miniscule quantities and featuring wines carefully selected to add value and desirability to each case in years to come. There are cases with multiple vintages of the same wine, or multiple wines from the same vintage but every wine in each case has been awarded a perfect 100 point score from Robert Parker or his Wine Advocate team of critics.

The wines are matured in oak barrels prior to bottling, so we thought it fitting to return them to oak to continue the maturation process. And in the same way that you can trace the provenance of a fine wine to a specific vineyard, we have the specific location of the tree felled to produce the cases.

Each hand crafted case is a work of art in it’s own right and is individually numbered and issued with it’s own Certificate of Authenticity by John Evans himself. Constructed using through dovetail joints topped with oak boards cut from a single oak tree and featuring hand carved oak hinges, the interior is lined in dark brown suede and the exterior finished with two coats of hard wax penetrating oil, followed by a natural carnuba wax. No expense has been spared in order to highlight the very special nature of this project. The oak tree used had already reached the end of its natural life, so the more green minded amongst you would take comfort in knowing that a healthy tree was not culled to make this project a reality!


Actual oak boards used for the John Evans Series cases

Each Client that purchased a case from the John Evans Series will be sent photographs of the cases being manufactured. The wines will be inserted at London City Bond’s Hillington bonded warehouse by Cult & Boutique staff. This will ensure that the in-bond status of the wines will remain intact but also that adequate care is taken to preserve the condition of the bottles and labels. A key will be stored with each case at LCB, another at the Cult & Boutique offices in Richmond-upon-Thames and a third is issued to the Client.


Solid brass lock used for the John Evans Series

As an example, one of the cases we offered featured a series of vintages from Chateau Lafite Rothschild. At the time of writing the Chateau has only three 100 point scored vintages – 2003, 1996 & 1986 – and all three are brought together to make one of the most collectable cases of wine in the world. Having the opportunity to offer two bottles from each of these legendary vintages in one purchase, housed in a bespoke case manufactured to match the lifespan of the wine gives us the potential to access both the consumable and collectable markets directly.


A John Evans jewellery box

We do plan to commission further bespoke products, your Portfolio Manager will contact you with details but please bear in mind that due to the bespoke nature of the products they are produced in limited quantities and are sold on a first come, first served basis. If you have purchased a bespoke product from us you will be our first point of contact when new products are launched and you will be offered first refusal.

by Spencer Leat

Matter of Taste London

 

The careful selection presented by Robert Parker’s team included many wines that our Clients either own as part of their portfolio, or would be familiar with through speaking to their Portfolio Manager.

 

Late last year The Wine Advocate announced they were visiting London in 2015 as part of a global series of exclusive events for eRobertParker.com members and wine enthusiasts. Cult & Boutique Wine Management sent a select few from our team to rub shoulders with some of the most influential people in the fine wine world and take the opportunity to sample some outstanding wines along the way.

Entitled a Matter of Taste and held at The Saatchi Gallery in late February, the informal, walk-round tasting featured over 200 iconic wines from around the world represented by talented winemakers and estate owners. Each wine was handpicked for its outstanding quality and complexity and had been awarded 90 points or above by The Wine Advocate.

The line-up of wines at the tasting was exceptional both in quality and number. It included iconic names from Bordeaux, Burgundy, the Rhone, Champagne, Italy, Spain, Austria, Portugal, Greece, Israel, the United States, South Africa, Australia and New Zealand. Well known favourites like Château Léoville-Barton, Domaine Drouhin, Pol Roger, Penfolds Grange, Sassicaia, Château de Beaucastel and Taylor’s Port trip off the tongue as well as in-depth masterclasses featuring Dominus Estate, Michel Chapoutier, Château Ausone and Louis Roederer Cristal, amongst others. What’s more, most of The Wine Advocate Review team were on-hand throughout the day to provide comments, answer questions and engage in wine discussions.

The careful selection presented by Robert Parker’s team included many wines that our Clients either own as part of their portfolio, or would be familiar with through speaking to their Portfolio Manager. Australian boutique winery Two Hands Wines had their Bella’s Garden Shiraz featured as part of the main line up. Bella’s Garden has also been featured in the Wine Spectator Top 100 for nine consecutive vintages so it was great to see The Wine Advocate reminding the world of the quality and skill of Australian wine makers.

We also sent two of our Senior Portfolio Managers – Daniel Paterson and Nicholas Jacques – to the Chateau Ausone Masterclass which offered the opportunity to sample various vintages of the Saint-Emilion Premier Grand Cru Classé Chateau. Hosted by none other than The Wine Advocate’s Neal Martin this was an opportunity to both compare and enjoy five shining examples of this right bank powerhouse.


Neal Martin leads the Chateau Ausone Masterclass

Chateau Haut-Bailly’s Veronique Sanders was on top form following the recent upgrade of the 2009 vintage to 100/100 by Robert Parker and suggested Cult & Boutique Clients acquire the 2008 & 2010 vintages for capital growth purposes.


Cult & Boutique’s Daniel Paterson with Veronique Sanders of Chateau Haut-Bailly

These events are free to all subscribers of The Wine Advocate and we would encourage any Clients that want to expand their knowledge and experience with fine wine to contact us and arrange an annual subscription.

“We are delighted to reward our subscribers, their guests and new ‘members’ to the London launch of a series of events we are planning across the globe,” said Editor-in-Chief, Lisa Perrotti-Brown MW. “Subscribing to eRobertParker.com gives consumers access to hundreds of thousands of independent wine tasting reviews by Robert Parker and our team of wine experts. Matter of Taste brings the very best of these reviews to life, providing readers with the opportunity to taste and meet the people behind these extraordinary wines and to mingle with our critics who recommended the wines. Ultimately we want to transform the traditional and somewhat static wine review subscription model into a much more compelling and dynamic membership opportunity.”

by Spencer Leat