Speculation or Diversification? The Truth about Funds that invest in Fine Wine

(This editorial is the executive summary of an exclusive VitaBella report)(More wine news on www.vitabella.fr). According to the newly released monthly poll BofA Merrill Lynch, investors mark their preference for liquidities and are overall slightly positive on the stock Market. They do not all agree about the direction the economic situation will take for the next few months but are all very skeptical about a strong and fast recovery scenario. Some even mention a a double dip recession. But at the same time, these fund managers also need to find new opportunities to invest their money in some ways including bonds, gold, etc. And wine is sometimes a "liquid asset" in which funds are interested to invest. And then come discussions among wine merchants and wine lovers who feel threatened by this new money coming into the luxury wine business and more particularly into Bordeaux 1st growths and the recent 2009' En primeurs' campaign. The same topics come back: Does it create a bubble that will explode sooner or later? What will happen when these wines will come back into the market on wine auctions? Do you know in which wines do these funds invest?

It is not breaking news to say that Finance and fine wines are strongly related. But as the word of Finance is often related for many to speculation and short-term objectives, wine merchants and wine lovers may be scared by the new flow of cash coming into the luxury wine business. As it may appear vague for some of us and in order to illustrate the comments made here, the reader will find, at the end of this article, a part of a portfolio that invested in wines as an example. It is just a portion of the entire wine holdings in this portfolio but informations such as names, vintages and valuations (recorded by the fund at the end of December 2009) could be found.

Some points to reassure wine merchants and wine lovers:

- Funds disclose their information to the public. So, nothing is hidden, and wine lovers can find out which fund invested in what wine. It is just a question of taking time to make researches.
- Investment funds are looking for new "safe" investments during a troubled economy. Wine seems to be the right vehicle as the track record for top wines has been quite impressive over the last 20 years. Moreover, they are actually interested in "concrete" assets such as gold, top quality properties and fine wine is considered "Red gold" by some.
- Investment funds are not overinvesting in wines but only take a very small part of their portfolio to invest in luxury wines. Asset allocation is strictly measured in order to lower the overall risk taken by the fund. So either a fund is 100% wine oriented or only a very small percentage is allocated to fine wines.
- Wine is such a beautiful thing that if investors do not make money out of this investment over the next 10 years, they will have the great pleasure to enjoy these bottles with their beloved friends.(Some funds propose to pay back the money invested by individuals with bottles instead of cash).

Of course, some negative points could be discussed:

- Investment funds can be huge and just investing a very small portion of their assets is already a lot of money.
- If investment funds all share the same traditional investment approach called "flight to quality", their investments would be only focused on the top 1% of the wines produced in the world (1% is an approximation as it may certainly be much lower than that).
- Much bigger than investment funds, Pension funds could have a big impact on prices of some very well identified names if they decide to invest heavily.
(More wine news on www.vitabella.fr).

List below: As an example, here is a portion of a portfolio that invested in wines (valuations at end of december 2009) and which recently made its holdings public.

Wine/ Producer/ Year/ Format /Nb.bott. /Tot. val.EUR

France
Bordeaux

Ausone/ Ausone/ 1961/ (MG)/ 6/ 17,137.50
Ausone/ Ausone/ 1964/ (BT)/ 12/ 5,256
Ausone/ Ausone/ 2000/ (BT)/ 2/ 3,544.50
Ausone/ Ausone/ 2003/ (BT)/ 3/ 4,610
Ausone/ Ausone/ 2005/ (BT)/ 171/ 361,551
Ausone/ Ausone/ 2006/ (En-Pr)/ 21/ 21,115.50
Ausone/ Ausone/ 2006/ (MG)/ 6/ 16,600
Ausone/ Ausone/ 2007/ (BT)/ 6/ 3,546
Ausone/ Ausone/ 2007/ (MG)/ 3/ 4,110
Ausone/ Ausone/ 2007/ (En-Pr)/ 36/ 21,276
Ausone/ Ausone/ 2008/ (En-Pr)/ 30/ 25,050
Caisse Prestige Bordeaux 1°/ Caisse Prestige/ 1998/ (CW)/ 1/ 8,500
Calon Ségur/ Calon-Ségur/ 1945/ (BT)/ 2/ 1,192
Calon Ségur/ Calon-Ségur/ 1949/ (BT)/ 20/ 13,560
Carruades de Lafite/ Lafite-Rothschild/ 2005/ (BT)/ 24/ 4,284
Carruades de Lafite/ Lafite-Rothschild/ 2007/ (En-Pr)/ 360/ 45,360
Carruades de Lafite/ Lafite-Rothschild/ 2007/ (En-Pr)/ 12/ 3,024
Carruades de Lafite/ Lafite-Rothschild/ 2008 (En-Pr)/ 1200/ 152,400
Cheval Blanc/ Cheval Blanc/ 1947/ (BT)/ 1/ 5,497
Cheval Blanc/ Cheval Blanc/ 1948/ (BT)/ 4 7,372
Cheval Blanc/ Cheval Blanc/ 1961/ (BT)/ 1 1,351
Cheval Blanc/ Cheval Blanc/ 1982/ (BT)/ 30 24,480
Cheval Blanc/ Cheval Blanc/ 1990/ (HB)/ 12 5,484
Cheval Blanc/ Cheval Blanc/ 2000/ (BT)/ 61 59,627.50
Cheval Blanc/ Cheval Blanc/ 2000/ (DMG)/ 1 3,578.50
Cheval Blanc/ Cheval Blanc/ 2005/ (BT)/ 7 4,726.75
Cheval Blanc/ Cheval Blanc/ 2006/ (En-Pr)/ 36 23,220
Cheval Blanc/ Cheval Blanc/ 2006/ (BT)/ 120 77,400
Cheval Blanc/ Cheval Blanc/ 2007/ (En-Pr)/ 72 31,464
Haut Brion/ Haut-Brion/ 1949/ (BT)/ 6/ 9,342
Haut Brion/ Haut-Brion/ 1952/ (BT)/ 8/ 5,088
Haut Brion/ Haut-Brion/ 1953/ (BT)/ 6/ 5,766
Haut Brion/ Haut-Brion/ 1964/ (MG)/ 3/ 1,817
Haut Brion/ Haut-Brion/ 1989/ (BT)/ 8/ 8,432
Haut Brion/ Haut-Brion/ 2000/ (BT)/ 12/ 6,188
Haut Brion/ Haut-Brion/ 2005/ (BT)/ 4/ 2,286.67
Haut Brion/ Haut-Brion/ 2006/ (BT)/ 48/ 27,264
Haut Brion/ Haut-Brion/ 2006/ (En-Pr)/ 12/ 6,816
Pétrus/ Petrus/ 1948/ (BT) /1/ 3,923.50
Pétrus/ Petrus/ 1961/ (DMG)/ 2/ 160,043
Pétrus/ Petrus/ 1961/ (MG)/ 1/ 18,395.67
Pétrus/ Petrus/ 1970/ (MG) /1/ 3,547
Pétrus/ Petrus/ 1971/ (BT)/ 4/ 6,717.33
Pétrus/ Petrus/ 1978/ (BT)/ 8/ 7,244
Pétrus/ Petrus/ 1982/ (BT)/ 1/ 4,658.50
Pétrus/ Petrus/ 1982/ (IMP)/ 1/ 60,000
Pétrus/ Petrus/ 1982/ (MG)/ 3/ 26,475
Pétrus/ Petrus/ 1983/ (BT)/ 14/ 13,699
Pétrus/ Petrus/ 1986/ (BT)/ 1/ 1,343.50
Pétrus/ Petrus/ 1989/ (MG)/ 1/ 6,963.50
Pétrus/ Petrus/ 1990/ (BT)/ 12/ 41,994
Pétrus/ Petrus/ 1995/ (BT)/ 5/ 6,166.25
Pétrus/ Petrus/ 1995/ (BT)/ 12/ 14,799
Pétrus/ Petrus/ 1998/ (BT)/ 11/ 26,826.25
Pétrus/ Petrus/ 1998/ (DMG)/ 1/ 17,000
Pétrus/ Petrus/ 2000/ (BT)/ 8/ 26,126
Pétrus/ Petrus/ 2000/ (MG)/ 1/ 7,211.50
Pétrus/ Petrus/ 2005/ (BT)/ 19/ 67,570.33
Pétrus/ Petrus/ 2005/ (MG)/ 1/ 10,117
Pétrus/ Petrus/ 2005/ (BT)/ 6/ 21,338
Pétrus/ Petrus/ 2006/ (En-Pr)/ 12/ 23,004
Yquem/ Yquem/ 1900/ (BT)/ 1/ 5,245
Yquem/ Yquem/ 1921 (BT) 13 102,730.33
Yquem/ Yquem/ 1937 (BT) 1 3,175.50
Yquem/ Yquem/ 1938 (BT) 1 1,171
Yquem/ Yquem/ 1945 (BT) 2 5,994
Yquem/ Yquem 1959 (BT) 1 1,593.25
Yquem/ Yquem 1966 (BT) 2 689
Yquem/ Yquem 1967 (BT) 46 59,581.50
Yquem Yquem 1967 (MG) 2 7,600
Yquem Yquem 1983 (BT) 6 2,506
Yquem Yquem 1996 (BT) 120 31,240
Yquem Yquem 1996 (HB) 240 26,040
Yquem Yquem 1996 (IMP) 4 8,060
Yquem Yquem 1996 (MG) 24 17,988
Yquem Yquem 1997 (BT) 96 32,352
Yquem Yquem 1997 (HB) 240 46,560
Yquem Yquem 1997 (IMP) 6 15,346
Yquem Yquem 1997 (MG) 48 29,688
Yquem Yquem 2000 (BT) 12 5,202
Yquem Yquem 2001 (BT) 1 468
Yquem Yquem 2005 (BT) 28 17,220
Yquem Yquem 2006 (En-Pr) 12 6,036
Yquem Yquem 2007 (En-Pr) 180 105,600

Burgundy

Bâtard Montrachet/ Leflaive/ 2000/ (BT)/ 12/ 3,312
Bienvenues-Bâtard-Montrachet/ Leflaive/ 1999/ (BT)/ 12/ 2,076
Bonnes Mares Grand Cru/ Comte de Vogue/ 2005/ (BT)/ 6/ 3,912
Chambertin/ Leroy/ 1996/ (BT)/ 6/ 9,684
Chambertin/ Armand Rousseau/ 1990/ (BT)/ 2/ 2,242
Chambertin/ Armand Rousseau/ 2003/ (BT)/ 3/ 1,212
Chambertin/ Armand Rousseau/ 2005/ (BT)/ 18/ 15,705
Chambertin Armand Rousseau 2005 (MG) 1 3,187
Chambertin Clos de Bèze/ Armand Rousseau/ 1999/ (BT)/ 5/ 2,762.50
Chambertin Clos de Bèze/ Armand Rousseau/ 1999/ (MG)/ 1/ 1,105
Chambertin Clos de Bèze/ Armand Rousseau/ 2005/ (BT)/ 12/ 12,868
Clos de la Roche/ Ponsot/ 2005/ (BT)/ 6/ 5,432
Corton Charlemagne/ Coche-Dury/ 1990/ (BT)/ 12/ 30,912
Corton Charlemagne/ Coche-Dury/ 1997/ (BT)/ 5/ 5,075
Corton Charlemagne/ Coche-Dury/ 1998/ (BT)/ 3/ 2,494.50
Corton Charlemagne/ Coche-Dury/ 1999/ (BT)/ 1/ 2,205
Corton Charlemagne/ Coche-Dury/ 2003/ (BT)/ 2/ 1,544
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 1990 (CW) 2 66,641.33
DRC (Assortment) (1RC / 3LT / 2R / 3RSV / 1GE / 2E) DRC 1993 (CW) 1 11,300
DRC (Assortment) (1RC / 3LT / 2R / 1RSV / 2GE / 3E) DRC 1996 (CW) 1 15,348.25
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 1GE / 3E) DRC 1997 (CW) 1 13,450
DRC (Assortment) (1RC / 3LT / 2R / 3RSV / 1 GE / 2E) DRC 1998 (CW) 3 37,800
DRC (Assortment) (1RC / 3LT / 2R / 4RSV / 2E) DRC 1998 (CW) 1 12,600
DRC (Assortment) (1RC / 2LT / 3R / 2RSV / 2GE / 2E) DRC 1999 (CW) 1 33,250
DRC (Assortment) (1RC / 3LT / 1R / 3RSV / 2G3 / 2E) DRC 1999 (CW) 1 33,250
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 1999 (CW) 4 133,000
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 1GE / 2E) DRC 2000 (CW) 1 14,610
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2000 (CW) 2 29,220
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2001 (CW) 5 68,965
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2002 (CW) 2 28,818
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2003 (CW) 2 37,681
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2004 (CW) 4 88,000
DRC (Assortment) (1RC / 2LT / 3R / 2RSV / 2GE / 2E) DRC 2004 (CW) 2 44,000
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2 GE / 2E) DRC 2005 (CW) 4 111,980
DRC (Assortment) (1RC / 3LT / 2R / 2RSV / 2GE / 2E) DRC 2006 (CW) 15 219,420
DRC (Assortment) (1RC / 3LT / 2R / 3RSV / 1GE / 2E) DRC 2006 (CW) 1 14,628
DRC (Assortment) (1RC / 3LT / 2R / 4RSV / 2E) DRC 2006 (CW) 1 14,628
Echézeaux/ Henri Jayer/ 1978/ (BT)/ 3/ 17,502
Echézeaux/ Henri Jayer 1978 (MG) 1 12,971.25
Echézeaux/ Henri Jayer 1980 (BT) 1 2,288
Echézeaux/ Henri Jayer 1984 (BT) 2 3,896
Echézeaux/ Henri Jayer 1985 (BT) 12 68,052
Echézeaux/ Henri Jayer 1986 (BT) 3 7,405.50
Echézeaux/ Henri Jayer 1987 (BT) 3 7,125
Echézeaux/ Henri Jayer 1988 (BT) 28 61,600
Echézeaux/ Henri Jayer 1989 (BT) 22 58,190
Echézeaux/ Henri Jayer 1989 (MG) 1 7,935
Echézeaux/ Henri Jayer 1990 (MG) 1 8,791.50
Echézeaux/ Henri Jayer 1991 (BT) 18 44,469
Echézeaux/ Henri Jayer 1992 (BT) 9 13,536
Echézeaux/ Henri Jayer 1993 (BT) 12 26,748
Echézeaux/ Henri Jayer 1994 (BT) 12 15,528
Echézeaux/ Henri Jayer 1995 (BT) 3 7,081.50
Echézeaux/ Henri Jayer 2001 (BT) 13 17,563
Griottes Chambertin/ Claude Dugat/ 1990/ (BT)/ 3/ 4,966.50
Griottes Chambertin/ Ponsot/ 2005/ (BT)/ 3/ 1,180.50
La Romanée/ Leroy/ 1962/ (BT)/ 12/ 20,172
Montrachet/ Comte Lafon/ 1992/ (BT)/ 2/ 3,494
Montrachet/ Comte Lafon/ 1993/ (BT)/ 1/ 1,250.50
Montrachet/ Comte Lafon/ 2003/ (BT)/ 1/ 745
Montrachet/ Comte Lafon/ 2005/ (BT)/ 12/ 19,692
Montrachet/ DRC 1968 (BT) 2 6,000
Montrachet/ DRC 1969 (BT) 3 6,816
Montrachet/ DRC 1973 (BT) 13 64,389
Montrachet/ DRC 1976 (BT) 2 7,573
Montrachet/ DRC 1978 (BT) 4 30,480
Montrachet/ DRC 1982 (MG) 1 9,000
Montrachet/ DRC 1988 (BT) 1 2,545
Montrachet/ DRC 1989 (BT) 7 23,863
Montrachet/ DRC 1990 (BT) 1 2,500
Montrachet/ DRC 1991 (JERO) 1 14,127
Montrachet/ DRC 1996 (MTH) 1 35,307
Montrachet/ DRC 1997 (BT) 5 10,133.33
Montrachet/ DRC 1999 (BT) 3 5,635.50
Montrachet/ DRC 1999 (MG) 1 4,191
Montrachet/ DRC 2000 (BT) 2 4,520
Montrachet/ DRC 2001 (BT) 1 2,258.67
Montrachet/ DRC 2002 (BT) 1 2,645
Montrachet/ DRC 2003 (BT) 2 6,151
Montrachet/ DRC 2003 (JERO) 1 11,100
Montrachet/ DRC 2003 (MG) 3 18,165
Montrachet/ DRC 2004 (BT) 6 13,881
Montrachet/ DRC 2004 (MG) 1 5,783.75
Montrachet/ DRC 2005 (BT) 37 173,604
Montrachet/ DRC 2006 (BT) 3 5,899.50
Montrachet/ Leflaive 1998 (BT) 3 7,161
Montrachet/ Leflaive 2003 (BT) 1 1,500
Montrachet/ Leroy 1969 (BT) 9 11,322
Montrachet/ Ramonet 1990 (MG) 1 4,250.67
Montrachet/ Sauzet 2003 (BT) 1 287
Musigny Grand Cru/ Comte de Vogue 2005 (BT) 6 5,229
Vosne Romanée/ Cros Parantoux Henri Jayer 1980 (BT) 15 62,250
Vosne Romanée/ Cros Parantoux Henri Jayer 1988 (BT) 1 3,757.50
Vosne Romanée/ Cros Parantoux Henri Jayer 1988 (MG) 1 9,393.75
Vosne Romanée/ Cros Parantoux Henri Jayer 1989 (BT) 2 10,273
Vosne Romanée/ Cros Parantoux Henri Jayer 1990 (BT) 1 7,834
Vosne Romanée/ Cros Parantoux Henri Jayer 1990 (MG) 5 71,457.50
Vosne Romanée/ Cros Parantoux Henri Jayer 1993 (MG) 2 15,009.50
Vosne Romanée/ Cros Parantoux Henri Jayer 1994 (BT) 2 3,354
Vosne Romanée/ Cros Parantoux Henri Jayer 1996 (BT) 13 43,368
Vosne Romanée/ Cros Parantoux Henri Jayer 1997 (BT) 8 14,628
Vosne-Romanée/ Henri Jayer 1992 (BT) 2 2,329
Vosne-Romanée/ Henri Jayer 1993 (BT) 2 2,355

Champagne

Clos d'Ambonnay/ Krug/ 1996/ (BT)/ 12/ 23,598
Clos du Mesnil/ Krug/ 1996/ (MG)/ 1/ 2,017
Cristal/ Roederer/ 1990/ (BT)/ 24/ 7,712
Cristal/ Roederer/ 1990/ (MG)/ 1/ 1,438.50
Dom Perignon/ Moet & Chandon/ 1964/ (MG)/ 4/ 5,020
Dom Pérignon/ OEnothèque Dom Perignon/ 1959/ (BT)/ 2/ 4,000

Rhone

Chateauneuf du Pape/ Réserve des Célestins/ Henri Bonneau/ 1978/ (BT)/ 10/ 9,100
Hermitage La Chapelle/ Jaboulet/ 1961/ (BT)/ 2/ 18,693
Hermitage Rouge/ Chave/ 1990/ (BT)/ 2/ 1,094
Hermitage Rouge/ Chave/ 1999/ (BT)/ 3/ 664.50
Hommage à Jacques Perrin/ Beaucastel/ 1999/ (BT)/ 10/ 2,640

Italy

Piedmont

Barolo Brunate R. Voerzio/ Roberto Voerzio/ 1998/ (BT)/ 24/ 2,724
Barolo Cannubi Sandrone/ Sandrone/ 1998/ (BT)/ 108/ 12,636
Barolo Cerequio R. Voerzio/ Roberto Voerzio/ 1998/ (BT)/ 54/ 5,724
Barolo Ciabot Ginestra D. Clerico/ Domenico Clerico/ 1998/ (BT)/ 18/ 1,971
Barolo Gran Bussia A.Conterno/ Aldo Conterno/ 1996/ (BT)/ 54/ 6,750
Barolo La Serra R. Voerzio/ Roberto Voerzio/ 1998/ (BT)/ 18/ 1,728
Barolo Le Vigne Sandrone/ Sandrone/ 1998/ (BT)/ 108/ 17,010
Barolo Rocche Annunziata Ris./ Scavino/ 1996/ (BT)/ 300/ 39,600
Barolo Rocche Annunziata Ris./Scavino/ 1997/ (BT)/ 300/ 68,400
Barolo Rocche Annunziata Ris./Scavino/ 1998/ (BT)/ 300/ 33,300
Gaja Sperss/ Gaja/ 1990/ (BT)/ 6/ 954
Gaja Sperss/ Gaja/ 1997/ (BT)/ 60/ 16,650
Massetto/ Tenuta dell'Ornellaia/ 1990/ (MG)/ 1/ 1,437.50
Massetto/ Tenuta dell'Ornellaia/ 1992/ (MG)/ 1/ 575
Massetto/ Tenuta dell'Ornellaia/ 1995/ (DMG)/ 1/ 1,604
Massetto/ Tenuta dell'Ornellaia/ 2004/ (BT)/ 36/ 14,364
Massetto/ Tenuta dell'Ornellaia/ 2004/ (DMG)/ 3/ 6,417
Massetto/ Tenuta dell'Ornellaia/ 2004/ (MG)/ 1/ 1,128
Ornellaia Edition Special 20 ans/ Tenuta dell'Omellaia/ 2005/ (DMG)/ 1 932
Ornellaia Edition Special 20 ans/ Tenuta dell'Omellaia/ 2005/ (MG)/ 2 633
Sassicaia/ Tenuta San Guido/ 1970/ (BT)/ 2/ 2,398
Sassicaia/ Tenuta San Guido/ 1985/ (BT)/ 6/ 8,946
Sassicaia/ Tenuta San Guido/ 1985/ (MG)/ 8/ 34,589.33
Sassicaia/ Tenuta San Guido/ 1990/ (MG)/ 3/ 4,497

Spain

L'Ermita Alvaro Palacios/ Alvaro Palacios/ 1996/ (JERO)/ 1/ 1,391.50
Vega Sicilia Unico/ Vega Sicilia/ 1962/ (BT)/ 12/ 6,268
Vega Sicilia Unico/ Vega Sicilia/ 1970/ (BT)/ 12/ 6,366
Vega Sicilia Unico/ Vega Sicilia/ 1970/ (MG)/ 1/ 1,583.33

United States

Cabernet Sauvignon/ Caymus/ 1995/ (MG)/ 2/ 976.89

Luxury Wine Auctions and Cultural aspects to consider for marketing Wines globally

(More wine news on www.vitabella.fr) At the time when the fine wine auctions' season starts in New York, London, Paris, Geneva, Chicago and Hong Kong, it is a great opportunity to consider an aspect of wine marketing: selling a luxury wine internationally does imply that communication is differientated according to the economic situation and to the cultural aspects of the different regions (Europe, America or Asia).

In the coming weeks, more than $15 million worth of first-growth Bordeaux and Burgundies will be going under the hammers. Zachy's began the auction season during the weekend in Hong Kong with more than 900 lots on offer, including 1990 La Tache Domaine de la Romanee Conti, which sold for $50,262, and cases of 1989, '90 and '95 Chateau Petrus which fetched $40,837, $40,837 and $23,560 respectively. In fact Hong Kong, again this year, will be the hottest place for luxury wines. Acker Merrall & Condit will offer a six-pack of magnums of 1971 Romanee Conti, three cases of 1982 Chateau Petrus and three cases of 1982 Chateau Lafite Rothschild. Christie's will also be offering lots in Hong Kong which include more than 80 cases of Lafite-Rothschild with high-end estimates of $11,000 to $24,500 depending on the vintage. Also in Hong Kong, Sotheby's will offer a massive collection of Chateau Lafite dating back to 1869 (one bottle of 1869 with an estimate of $8,000). Of course, these are about the most glamourous lots but there will be many more and not only in Hong Kong but everywhere in the world. How will collectors react? Will all the wine auctions in the world be as successful as the ones in Hong Kong? At this point, two major points could be considered to understand the success of some auctions:

1) Depending on the region, buyers are not in the same mood and will make acquisitions according to their expectations in a near future. In the US, the consumer mood is biased toward lower price points and increased talk of a double dip recession does not inspire confidence. In Asia (excl. Japan), the market seems to be the least price sensitive in the world and the booming economy gives buyers a very positive mood to acquire the best wines at any price. In Europe and Japan, the market is somewhere in between.

2) Depending on the region and the cultural aspects, buyers won't make their decisions for the same reasons. Of course, all of these wines need credibility to be offered and acquired at high prices but, again, depending on the region, wine lovers/collectors do not share the same behaviours. European and japanese collectors are very much attached to the history of the wine estates and the success they gained through decades or even centuries. On the contrary, the need for credibility through established reputation is less of an impediment in the US. Having some good history is merely icing on the cake. Americans are much more concerned with style, quality and performance. Finally asian collectors are right in the middle but tend to favour an other aspect when they are in the process of acquiring luxury wines: the "social status impact".

Having briefly considered these two points, I wish all the best to all the bidders who may either make a good investment for their future pension or enjoy with wine lovers some of the best wines Nature could have ever made in this world...(More wine news on www.vitabella.fr)

Aspirational Consumers and Asia, the next two Challenges for Luxury Wines.

(This editorial is the executive summary of an exclusive VitaBella report)(More wine news on www.vitabella.fr). Recently, the luxury industry showed figures for the first six months of 2010 which were looking quite good. This rebound is mainly due to increased consumer demand and restocking by wholesalers and retailers. The question now is whether it can continue for the rest of the year and into 2011.
- Firstly, if the first six months of last year was the weaker half of 2009 for luxury, further slowdown is likely as comparables will get tougher.
- Secondly, it seems luxury consumers have traded down to less prestigious wines.
- Thirdly, the real problem in the near future is the "aspirational consumer" behaviour. Aspirational consumers are people who do not usually buy luxury wines but would like to do so. And during the recession, many consumers who would trade up to luxury previously simply pulled out of the luxury market.
The future performance for luxury wine estates will depend on two major points:
- Get back these aspirational consumers into the market. They played a key role in the western countries in accelerating the growth since the 90's and in that sense would help again. The challenge is difficult as increased talk of a double dip recession does not inspire consumer confidence.
- Develop sales in Asia. Over the last few years, we saw an increased demand for luxury wines from China and some other countries. Deeper penetration of new, large luxury goods markets is likely to bring a new wave of consumers in the future.
These are the two big challenges that the management of luxury wine estates is facing. Success will depend on how and how fast wine estates will adapt to these new demographics.(More wine news on www.vitabella.fr).

Paris Biennale des antiquaires: Could Luxury Wines join Haute Joaillerie and take part to this prestigious fair?

(More wine news on www.vitabella.fr) The 25th Paris Biennale des Antiquaires will take place from September 15th to 22nd in the Grand Palais, one of the most beautiful place in Paris. Some jewellery houses including Van Cleef & Arpels, Cartier or Harry Winston will display their finest wares alongside antiques. To this new edition, Vuitton (a newcomer to the haute joaillerie) will take part for the first year as well as Piaget. For some it may appear strange that these brands are now setting up shops at the Grand Palais in Paris while we would expect to see only fine antiques and arts, and not high jewellery. So why are these brands interested in participating to this event alongside tapestries or porcelain. In fact, jewellers want to reach a larger population than the strictly limited population they could reach through their shops. And at the same time they want to associate their names to other areas of creativity. Cartier understood it immediately and has been present since the first biennale. Over the last decade, the dramatic price increase for haute joaillerie and the internationalisation of the clientele changed the game rules. And being present at a fair full of wealthy and erudit international collectors now become a necessary privilege. Jacques Perrin, a member of both the executive committe at Syndicat National des Antiquaires and of the Biennale des Antiquaires recently said to the Financial Times: "Some people say to me 'why do you invite jewellers such as Harry Winston to the Biennale?' Because they pay for their booth is my reply. They too have rich customers and they sell luxury things." So why not luxury wine estates in a near future as the wine business also penetrated this luxury segment.With the reputation for producing the priciest and rarest wines in the world, the presence of some wine estates may be as natural sa some jewellers. Presenting wines in a prestigious fair which shows the most exceptional objects to a large public (it is in fact open to the public) and with a population of international connaisseurs would be a great opportunity for wine estates. Making contacts with existing and new clients and follow up with them when the wines will be presented in the home country of the collectors could be an advantage. Great wines are about art, craftmanship, excellence and brand's status. And in that sense, I would expect in the future to see some of them in this exceptional Biennale I would never miss.(More wine news on www.vitabella.fr)

Harvest in Europe: First indications from the Best Winemakers

(More wine news on www.vitabella.fr) Europe is now scrutinizing its vines to check maturity and find the best period to pick grapes. White grape varieties' harvest already started in some part of this region but most grapes still have to get picked and then will follow the natural process that will change them into wine. I was discussing with some great winemakers in Europe and they all were excited about this new harvest. Spain, Portugal, France...It is always surprising to find that Europe, with all its beautiful wine regions, have plenty of different stories to tell when it comes to climate effect. I was talking with Cristiano Van Zeller, the winemaker at Quinta Vale Dona Maria who is producing white wines and red wines including Ports, and his first indications were quite enthusiastic: "We already started harvesting white grapes last friday. 2010 was a good year, with quite heavy rains until end of june, and hot during the summer with cool nights. In terms of volume, it seems that volume produced will be among the highest reported in Douro. At today, degrees are still low which is quite rare in our region. Red grapes' harvest should start soon but we do not rush for harvest as phenolic maturity is not yet obtained." During this discussion, we also talked with Cristiano Van Zeller about Spain as he is also producing a beautiful wine in Toro. "Toro suffered from hot temperatures during this summer. It was hot during the day and still warm at night. Harvest will take place earlier this year with a splendid quality and mature grapes. Old vines particularly will produce a good quantity of wine with a beautiful balance. This year, I am particularly impressed by the expression of ripe fruits that grapes will deliver."
Further North in Europe, I was then talking with Christine Vernay who is producing spectacular Condrieu and Cote Rotie at Domaine Georges Vernay: "Right now we are just having the right weather to complete the maturity for our white and red grapes. A bit of rain which was necessary and then a cool weather. I am very excited about this harvest and I walk everyday in the parcels to check the maturity and the taste of the grapes. It is always exciting to define the best day to pick the grapes and get them at their best potential." In September and October, more stories from winemakers in Europe will be reported everyday on www.vitabella.fr.

Three Lessons from the world’s second-biggest luxury goods group that Luxury Wine Estates should learn.

(More wine news on www.vitabella.fr). Richemont, the world’s second-biggest luxury goods group, announced yesterday higher sales in the first five months of the year, but warned that momentum might not be maintained for the full year.The maker of Cartier jewellery and Montblanc pens said sales had jumped 37 per cent in the five months to the end of August, compared with the same period last year.By product, Richemont’s specialist watch brands, led by upmarket Vacheron Constantin and Jaeger-LeCoultre, proved strongest, with unadjusted sales up 40 per cent. Jewellery, including the Van Cleef & Arpels brand, rose 32 per cent. These are the facts and let's now analyze it through the lenses of a luxury wine estate owner. Three major lessons could be learnt and could benefit to the success of luxury wine estates in the future.

1) Sustainability of the economic recovery
If sales were satifying during the first 6 months, luxury wine estates should be very cautious about their estimates for the end of the year. Richemont pointed out that the strong growth was achieved on the back of low comparisons and that the second half will be a tougher period. Expensive wines may suffer from a lower demand in restaurants or wine shops if this recovery is not sustainable.

2) A strong distribution network in Asia
Richemont demonstrated that they were very successful by expanding in Asia to offset a slowdown in the U.S. and Europe. Asia proved particularly buoyant, with sales up 51 per cent in the period (36 per cent adjusted for currencies and the acquisition). At the same period, Europe and the Americas were very resilient. In fact, Hong Kong has become the biggest market for Swiss watches as shoppers from mainland China buy timepieces there to avoid luxury tax. Wealthy Chinese consumers own 4.4 luxury watches on average, according to the Hurun Wealth Report, which estimates there are 875,000 people in the country who have assets of more than 10 million renminbi ($1.47 million). The same trend is happening for luxury wines (and more particularly for French wines from Bordeaux and Burgundy) and therefore estates must build stronger relationships with this part of the world. A strong distribution network in Asia is now key for wine estates if they want to develop sales and increase margins.

3) An online strategy for luxury goods
Selling luxury wines online? An idea that still sounds crazy for many luxury wine estates. In fact, even if the wine business is tied to strict regional rules with strong restrictions on selling bottles on the internet, the recent acquisition of U.K.-based fashion retailer Net-A-Porter.com by Richemont shows the luxury market is going online very rapidly. Richemont announced that Net-a-Porter, the luxury goods market website they bought in April, will soon expand internationally (they currently sell to customers in the Americas, Europe and the Middle East) which is a strong sign about their confidence in this business. This online business is a way to reach people who do not live in places where Richemont brands are sold and who can afford buying expensive items. This argument could also be used for luxury wines but estates are sometimes still reluctant to go further into this online business.(More wine news on www.vitabella.fr).

The vintage which could make Robert Parker even more influential on Luxury Rhone Valley Wines

(More wine news on www.vitabella.fr). It has been traditionally considered that the famous american wine critic Robert Parker was essentially influential on Bordeaux wines and more specifically on first growths. His current visit in Rhone Valley, for mainly tasting the 2009s, may build a stronger image of his name in a near future not only as a Bordeaux specialist but also as a Rhone Valley specialist.
Currently in Rhone Valley to taste the 2009s, Robert Parker is preparing a future review of this beautiful vintage. What may result from his tastings could impact on US sales and abroad as it already happened for 2007 Chateauneuf du Pape, which he considered in his reviews as the greatest vintage he ever tasted in this region. Well, wine professionals and consumers as well should be prepared to such an announcement for the 2009s he is tasting now. Let's guess his choice will be more on the reds than on the whites (which sometimes have a lack of acidity and nervosity) but considering Rhone Valley wines from the northern part (Cornas, Saint Joseph, Hermitage, Cote Rotie), he may review this vintage as The best he ever tasted in Northern Rhone Valley and could compare it to some great old vintages ending in 9. If this is the case, after the 2007 Chateauneuf du Pape, this new strong opinion on Rhone Valley wines would be marketed worldwide and his recommandations would take even more value in a region where some of the greatest luxury wines are produced. If wine professionals should go even further, they should guess about which appellation would be highlighted by Robert Parker in 2009. If it is Hermitage, it will have a strong and powerful marketing effect on these wines which are produced in a very limited area and which still deserve a bigger recognition in many parts of the world. And then the last guess would be: who would be the top performer in Hermitage for this 2009 vintage? Maybe Chapoutier, which is always producing great Hermitage wines that Robert Parker appreciates much ("L'Ermite" and other small parcels). Chave, whose production for whites or reds is always of extremely high level. But let's guess the one who could much more benefit from this Robert Parker's effect (just because his flagship wine has been underperforming in terms of wine critics' scores over the last few years) would be a famous producer which makes the most renowned name in the Hermitage Appellation. Did you get it? I give you a hint: his wine (red or white) is called after a religious building and it is particularly admired for the 1961 vintage. All this story is just a guess but I love to guess...(More wine news on www.vitabella.fr).

Medoc Marathon: when Sport and Luxury Wine make the perfect blend.

(More wine news on www.vitabella.fr). I was recently attending a wine tasting in Dublin and an irish lady came to me and asked me if I would attend this year the famous Medoc Marathon. I said I would not be able to take part to it and that I was rally sad because this marathon is a beautiful sport event as well as a magnificent human experience. She said she would never miss it because she never felt like making extraordinary efforts when she was running in such a beautiful scenery. Then she started to talk about the most beautiful chateaux, the first growths and all the most renowned names that Medoc could boast.In fact, when you have experienced former editions yourself and have a quick look at the program this year on www.marathondumedoc.com, you are pretty impressed by the great adventure it is. Shared by 8,500 people coming from all over the world, this adventure shows that the passion for both sport and wine can go together very well. And I am convinced that this human experience would not be as successful if it was not also about great wines. Also, behind this adventure, you can discover the most efficient communication tool that was invented up to now to build a stronger image of Bordeaux wines in the world. In fact, as I said to this charming irish lady, if we would rate this blend, it would be the perfect note: 100 points or 100/100. In that sense, as more and more people want to experience, one day, a 100 points' blend, the success of this Marathon seems unlimited. Now, being obliged to miss this edition, I have a great thought to all my friends running this marathon and all the joggers who will attend this event. And, of course, I will raise a glass of fine wine to them, right at 9.20 am on saturday 11 September when the Handi-race start will be announced. (More wine news on www.vitabella.fr).