Peter Lunzer : « I expect the price of the good vintages of Sauternes Chateau d’Yquem to double over the next few years »

(More wine news on www.vitabella.fr) Fine wine fund managers, private collectors...We received a great amount of e-mails concerning the recent editorial "Fine Wine Investment Funds: What should they learn from the past to make Great Returns over the Next 10 Years?"posted on www.vitabella.fr . In fact, there is a huge reflexion nowadays on that topic and directions taken by decision makers are not all the same. Of course, results will differ over the next few years (when we write results, we mean return on investment) but there were some very convincing ideas including a suggestion recently made by a wine fund management specialist: Buy the exclusive and underpriced Chateau d'Yquem.

Chateau d'Yquem, the next Lafite? Lunzer Wine Investments predicts rapid rise in value of investments in Chateau d'Yquem. In fact, Lunzer analyzed the impact expected on the wine investment market place less than six months since the announcement that the sweet wines of Bordeaux can be imported into China officially. This fine wine fund management specialist predicts the change means Chateau d'Yquem will become the next big winner for the wine investment market. Wine expert Peter Lunzer, who invented the concept of the Wine Price Ratio, is tipping it could even outperform the current favourite wine in China - Chateau Lafite.

"Chateau d'Yquem is probably the best known of the sweet Bordeaux wines which have not been allowed to be officially imported into China due to their large amounts of natural, residual sugar when compared to other wines which exceeded the limit set by the Chinese authorities. However, now these rules have been relaxed, we believe that demand for these sweet Bordeaux wines will skyrocket. From our experience, Chinese wine buyers have a massive appetite to acquire top quality brands so given Chateau d'Yquem's heritage, and the fact that it has a very limited production with an average of only 60,000 bottles produced each year, we believe it can only get more expensive," said Peter Lunzer, Chief Executive and Chief Investment Officer of Lunzer Wine Investments. Lunzer continued: "I expect the price of the good vintages - including 1990, 1996, 1997, 2001 and 2007- to double over the next few years and that this wine could challenge the high prices of other fine wines such as Chateau Lafite."

Interestingly, the 2004 remains un-scored by renowned wine critic Robert Parker and so, despite its exceptional quality, languishes below the radar. With such an interesting potential for the future, they have been including a greater than normal proportion of Chateau d'Yquem in the portfolios they have acquired for recent investors.

In May 2010, the "Liquid Gold Collection" from Chateau d'Yquem became one of the most expensive lots of wine ever sold in Asia during a Christie's auction in Hong Kong. This collection of 128 bottles and 40 magnums was the largest collection of Chateau d'Yquem ever to come to auction. In fact, if what Lunzer says proves to be right, this phenomenom will have a larger impact on the Sauternes market as a whole. Considering depreciated prices for current vintages of top Sauternes wines as well as for old vintages currently sold at auctions, there could be a strong leverage effect that could boost prices and make this market alive again, after decades of "quiet evolution". In Finance, we call it contrarian and in history some contrarians have made huge gains by investing, before others, in underrated company shares. Right time to bring a contrarian strategy into your wine portfolio holdings to boost overall performance? (More wine news on www.vitabella.fr)

Chateau Grillet: Why regional players like Guigal or Perrin did not close the deal and why Pinault's offer was the most attractive?

(More wine news on www.vitabella.fr) Maybe the most delicate and precious wine for a luxurious aperitif, Condrieu is unique and, at its best, Chateau Grillet got its reputation for fine minerality that was a perfect pairing for food served at the once 3 star Michelin restaurant La Pyramide from Fernand Point. Those times are over and finally, French billionaire Francois Pinault, through his group Artemis acquired the 3.5ha monopole in the Northern Rhône.

During Chateau Grillet's "down period", Coteau de Vernon from Domaine Georges Vernay took the lead

After Jaboulet - acquired by Frey Family - an other family owned estate (since 1830) has been bought by a non regional investor. A 10,000 bottles production a year, Chateau Grillet is a very small domain which has unfortunately made some very disappointing wines over nearly 20 years (in the 80s and 90s). Sometimes oxydized, sometimes with a lack of precision, Chateau Grillet wines were not delivering what experts could have expected from viognier grapes planted in parcels as prestigious as those from Coteau de Vernon. After Bordeaux consultant Denis Dubourdieu joined in 2001, we perceived the strong efforts made to deliver the best expression of viognier grapes and a work done more particularly on the "reductive side" with a focus on fine minerality gave a renewal to those wines since the 2004 vintage. During Chateau Grillet's "down period", Coteau de Vernon from Domaine Georges Vernay took the lead and got the best scores in Condrieu from the most respected international wine critics.

Luxury comes to a price. Monopole too....

On sale for now some time, we could assume that some big names from the region were keeping an eye on this deal. Next door to the Condrieu AOC, Chateau Grillet forms its own wine-growing AOC and Pinault, who owns and heads the French retail group PPR, was certainly attracted by this monopole status. Investment group Artemis S.A., headed by son François-Henri, has always been keen on building a portfolio of unique wine estates. After first-growth Château Latour in Pauillac and Domaine d’Eugenie in Burgundy, here is Chateau Grillet in Rhone Valley.

Why big regional players did not close the deal?

But why regional big players like Guigal, Perrin or Jaboulet did not close the deal and why Pinault's offer for Chateau Grillet was the most attractive? Simply because potential acquirers did not share the same point of view when they had to consider the valuation of this estate. Regional players are into the Rhone wine business for long years and perceived Chateau Grillet as a key investment for its great terroir to make Condrieu. Roughly, they considered the value of the estate and the parcels. Pinault, who is more into the international luxury business, considered Chateau Grillet as a key investment to acquire a monopole estate that makes a unique wine but also took into account current undervalued intangible assets such as brand asset. And in luxury, brand is key and experienced marketing teams can easily bring value over a couple of years to any wine business with a great history and potential like Chateau Grillet. At this point, the different views of potential acquirers on the future business make a big difference in future sales expectations and profit margins written in 5 years' business plans. This, of course, impacted directly the Net Present Value (NPV) calculated by bidders to make an offer to the family. Looking at Chateau Grillet with "luxury business" lenses while others have "Rhone Valley wine business" lenses can simply make the difference at the end. Well done Monsieur Pinault! (More wine news on www.vitabella.fr)