Unsold this week: One third of lots at Christie’s International’s Wine Auction in Hong Kong

(More wine news on www.vitabella.fr) Hong Kong may start looking twice at fine wine prices...From Saturday to Sunday, 9 to 10 April, 2011, Christie's International offered a "Tour of Bordeaux" with exceptional Wines from The SK Networks Collection and a "Superb Collection of Rare Pétrus and Mature DRC".

This auction of "Finest & Rarest Wines" went unsold for around one-third of total lots. For the first time, in a recent period, unsold lots of fine wines reached a level which may signal a downturn in the chinese buyers' appetite. Is it a sign that the chinese market is giving a break to the spectacular strong demand recorded over the last 2 years? Or are chinese buyers becoming more selective? Or is it a first sign that luxury in china is entering a new era? In fact, in the world's second largest luxury goods market, a new ban on some luxury themes in outdoor advertising takes effect from April 15th, according to an announcement on the website of Beijing's industry and commerce bureau.This move could prove authorities' willingness to have more control on luxury products' promotion and consumption in order to avoid showiness which could arouse popular resentment. Social stability may be at stake in this new policy of controlling more strictly the promotion of luxury goods. Fine wines are entering this category and chinese buyers may have already anticipated a move which could have an impact in the future consumption of expensive wines. At this stage, the trend is not clear but scrutinizing next auctions' results should give more insights on which direction the market takes.

David Elswood, Head of Christie's International Wine Department, said, “The sales in Hong Kong over the two days of 9 and 10 April demonstrate a growing diversification in Asian buyers’ collecting tastes and buying habits. In addition, the New York sales on April 9th show a healthy comeback for the U.S. market. Together these overall results prove that demand for wines of the highest quality and provenance remains very strong around the world, and Asia remains a fast-moving and increasingly sophisticated market.”

Charles Curtis, MW, Head of Wine for Asia at Christie's, commented, “Our sale on April 9th and 10th saw continued growth in demand for older vintages, such as the superb collection of 60 years of Château Mouton-Rothschild from 1945 to 2005 (estimate: HK$400-600,000, sold HK$960,000), and an emerging interesting in the rarest Burgundies, in particular vintages from Romanée-Conti and La Tâche. While Asian buying made up the majority of our top lots, the extensive worldwide bidding, especially for the very top end of the spectrum, signals a welcome recovery of the global wine market and the attraction of Christie's Hong Kong wine sales as an important platform for international buyers to acquire the finest and rarest wines.”(More wine news on www.vitabella.fr)

The future of Bordeaux en Primeur: Are you ready to taste buds and score them?

(More wine news on www.vitabella.fr) Bordeaux Primeurs 2010 was an exciting time for those who took part to this event. Great dinners as usual with Chateau Gruaud Larose offering the most unbelievable experience to a few privileged ones with a vertical tasting from 2001 down to 1831 (yes, you read it right, we are talking here about wines from the nineteenth century). As Jeannie Cho Lee, a famous asian journalist, mentionned it, vintage 1921 was magnificent and 1961 gorgeous.

We also tasted great 2010s. A splendid range at Chateau Latour (Pauillac, Forts de Latour, Grand vin de Chateau Latour): this year, the gradual increase was so evident and reached such a high level! Also a delicate Chateau Margaux, with a "low level" of alcohol for the vintage (13.5% compared to the regular 14.5%), certainly due to a concern with the sensation of alcohol that we can feel in their 2006 and 2007. A very elegant Chateau Mouton Rothschild that may have reached, this year, the highest level of precision and complexity in a different style from precedent vintages (a more delicate and voluptuous style). There are many great wines inculding chateau Montrose, which is so classic and so "Montrose" that you wonder why they do not make such a wine every year. The answer is quite evident: 2010 is both exceptional and singular.

Bordeaux Primeurs 2010 were also exciting as a "polemical" point was suddenly raised by some. When should samples be tasted? How should this tasting be organized? Can some privileged ones taste the wines before others? Should an organization define an "embargo" date before which wine critics can not disclose any score?

In fact, what we see now is a race to be the first to disclose wine scores. First problem is that wine is a natural product and, as such, it needs time to reveal itself. It was particularly clear for 2010s and many chateaux declared they would have preferred to have those wines tasted at vinexpo in June. Second problem is that it is difficult to avoid some persons to set up meetings with chateau owners at a very early stage to write and score the new vintage. This situation, which was recently described, analyzed and criticized by some renowned jopurnalists reminds me of a situation, ten years ago, when financial analysts, after having pushed to get public companies publish their earnings on a quarterly basis, were starting dreaming of a monthly earning report. Dreadful! A nonsense if you consider that an analysis (here I am talking about shares as well as fine wines) should be supported by a long-term view to avoid making a decision too fast. Such a race to score fine wines at an early stage could simply lead us to a scenario like this one:

- First score at harvest time: critics would give scores to the grapes they tasted.

- Second score for juices: How promising are the juices? Splendid..let's go for a 99 points!

- Third score after fermentations.

- Fourth score when blend is done: the structure of the wine would be scored.

- Fifth score : Right before bottling the wine.

- Sixth score: The wine is released, offered on the market. Let's tatste it and score it!

At this point, if someone follows this score assessment model (let's call this person "Speedy Bob") it would be difficult to imagine another wine critic who could deliver more detailed scores at an earlier stage. Difficult but not impossible...Anyone ready to taste buds and score them? (More wine news on www.vitabella.fr)

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)

Potential acquirers for Champagne Piper & Charles Heidsieck may include LVMH with Thienot Group or Lanson BCC with Investors: Two « Best Fits »?

(This editorial is the executive summary of an exclusive VitaBella report)(More wine news on www.vitabella.fr) At the time when COFCO Wines & Spirits, a subsidiary of COFCO (chinese largest food processor, manufacturer and trader), is announcing a new acquisition in Bordeaux and global luxury group LVMH's company Moet Hennessy, in a first-time move, has crushed about 150 tonnes of grapes in India, Champagne makes its slow revolution with the soon-to-come announcement of the Piper & Charles Heidsieck acquisition deal. After a first analysis - on December on www.vitabella.fr - of potential non-French acquirers, let's now focus on two French collaborations (LVMH with Champagne Thienot and Lanson BCC with investors) which could finally make the deal. Should we consider it as a "French Affair" or as a perfect strategic and financial match? In fact, both associations would make sense but sometimes for different reasons...

LVMH / Thienot Group

1) Makes sense as LVMH is looking for new grapes sourcing contracts. In fact, listed company LVMH has recently prepared the financial market and said that there could be a "Champagne shortage". So it's high time to buy new parcels and get more grapes to secure the next sales made by a powerful distribution network.

2) This association makes sense as LVMH is mostly interested in securing grapes sourcing contracts and less in acquiring new brands. LVMH"s Strategy is about strengthening an already large brand portfolio and not broadening it. Prices and margins are key focuses in the future.

3) The historical roots of Thienot Group are in Champagne. Thienot Family has already developped a brand portfolio with Canard Duchene, Marie Stuart and of course Champagne Thienot. Financially, the group recently invested heavily in CVBG to get access to grands cru wines from Bordeaux. Strategically, in terms of image, it is crystal clear Thienot group wants to go more up-market either in Bordeaux or in Champagne. Consequently, after the clever acquisition of CVBG, it would make sense that "A grand house of today " - as they name themselves - invests in a widely recognized Champagne brand. And in this particular situation they would get two, with the "up-market boutique" Charles Heidsieck champagne brand and the globally renowned Piper Heidsieck brand which is currently quite successful in terms of image with the top Rare Cuvee.

Lanson BCC / Investors

1) Association would make sense as an "investors only deal" would rapidly may be confronted to a lack of a strong "Champagne related support" that would secure and strengthen existing grapes sourcing contracts, make the day-to-day operations work properly and also sell bottles through an existing distribution network.

2) Also makes sense as listed company Lanson BCC has a great experience in integrating big companies (The management team worked on the Lanson integration into the entire group and this can certainly be considered a major achievement when we look at the excellent future prospects for Lanson BCC).

3) Makes sense as Lanson BCC continues its expansion and is always interested in considering new opportunities for strengthening sales and developping new markets.

Any non-French company could acquire Piper and Charles Heidsieck, but it appears that both French associations look very attractive and "well fitted". Now let's think about "what's Next?". After the acquisition, those who buy parcels and get grapes sourcing contracts will get prepared for a future "champagne shortage". And those who buy assets and liabilities will have to focus on value maximization which is first of all a matter of achieving great results on a day-to-day operational level. Just considering brand assets, the new marketing team will have to play without the "third Heidsieck key", the Heidsieck Monopole brand owned by Vranken. It will certainly make future brand marketing plans for Piper and charles Heidsieck more complicated. Confusion among consumers may continue to exist. And, for this reason, the future repositioning of both brands may be at risk. (More wine news on www.vitabella.fr)

QR Code or Microsoft Tag…Wine Estates take to Mobile Devices for Social Media but what Technology should they use?

(This editorial is the executive summary of an exclusive VitaBella report)(More wine news on www.vitabella.fr) QR Code, a strange name for wine promotion...You may already have seen these 2D bar codes, a black-and-white industrial look of a standard bar code. They can be found on shelf-takers, bottle-neckers or wine list stickers and consumers with smartphones can quickly and easily scan a bottle of wine that catches their eye to get more information about the wine, the winery, recommended food pairings and much more. In fact, it is a very good idea to promote a winery and its wines with this new technology and there will certainly be competitive initiatives in the future.

PSFK, a marketing trend service, has recently released a report on “The Future of Mobile Tagging.” They analyzed the future use of technologies that include QR codes, barcodes and Microsoft Tags in branding activity and communication campaigns. They mentionned mobile tags offer a unique opportunity for brands to interact with potential and existing customers. "The two dimensional barcodes can be applied to almost any surface and the information contained within them can be leveraged to create incentives and drivers that lead consumers along the purchase path. By bridging the online-offline divide with a click of a mobile phone button, mobile tags can drive a brand or product’s awareness."

And Microsoft is getting into this market with a powerful new offer, Microsoft Tag. Microsoft Tag is a dynamic and no-cost solution to enhance marketing campaigns. Wineries can create a unique personality and customize interactive experiences with customers. Wineries can also create standard or custom Tags for brochures, ads, catalogs, in-store displays, posters, business cards, or just whenever they want a unique design. With Microsoft Custom Tags, the code can be integrated into the look and form of the messaging itself.

In fact, Microsoft is pitting its Microsoft Tag technology against the QR Code, which is an open industry standard, originally created in Japan. USA Today is using this technology and readers can scan a tag to be directed to online videos, photo galleries or updated financial and sports news. Universal Pictures also adopted the Microsoft's version of the QR code, the "3D barcode" for the launch of a new film. Smartphone users can interact with full-page ads in magazines and have access to a large content.

A number of publishers have been looking at the use of these kinds of tags for some time. Mostly, mobile barcodes have been pretty successful in Japan, but have been slow to catch on in the rest of the world. But as smartphone (Apple’s iPhone, BlackBerry and Android devices) penetration increases, the use of tags will certainly become more prominent. Wineries should leverage on this new technology ang get a modern approach in their marketing strategy. But before choosing between QR Codes or Microsoft Tags, they must get prepared to invest some time and money before getting any return on this new technology...(More wine news on www.vitabella.fr)

Tignanello and Solaia, a Pure Definition of Luxury Wine by Antinori

(More wine news on www.vitabella.fr). Tenuta Tignanello, with its famous Tignanello and Solaia vineyards, is situated between the Greve and Pesa valleys in the heart of Chianti Classico exactly between the little villages of Monteridolfi and Santa Maria a Macerata, 30km south of Florence. Tignanello covers 350 hectares of land, 147 of which are planted with vineyards, These are divided into small plots: the Tignanello vineyard covers 47 hectares with the 10-hectare Solaia alongside. These lands derive from Pliocene marl, with shaly, chalky elements, and are situated at an altitude of 350-450m, enjoying warm days and cool nights during the growing phase.

The native Sangiovese variety and the non-native Cabernet Sauvignon and Cabernet Franc varieties are planted at Tignanello. There is also a small quantity of white grapes - Malvasia and Trebbiano - used in the production of Vinsanto. Other non-native varieties grown at Tignanello include small quantities of Syrah, Pinot Nero and Merlot, planted experimentally in the Seventies. Antinori initially experimented with Cabernet Sauvignon and Cabernet Franc in the Twenties, but these varieties were then abandoned during the Second World War; they were replanted in the Sixties and began to be used commercially in the Seventies. The grapes are picked in about three weeks, between the end of September and early October and crushed and fermented on the estate. Afterwards the wine is aged in the old cellars below Villa Tignanello.

The 16th century villa on the estate was built on the foundations of one dating back to 1346, when the land belonged to the Buondelmonti (like much of the Val di Pesa). The estate was later taken over by the Niccolini who renamed it Poggio Niccolini, and in later years it was purchased and resold by various local aristocratic families. In the 17th century it passed to a cadet branch of the Medici family, who named it Fonte dei Medici, and subsequently to the Antinoris in the mid-19th century.

In this beautiful environment, Tignanello and Solaia are grown, made into wine and aged at Tignanello while other grapes grown on the estate are used in the production of Santa Cristina, Villa Antinori and Tenute Marchese Antinori. In his artistic-historical guide of the town of Sancasciano Val di Pesa (1892), Carocci describes Tignanello (now a large estate with extensive vineyards) as one of the highest and most picturesque points of the whole area. On the top of the hill, a scenic position rich in plantlife, stands a small group of houses, some of which are very old indeed. A splendid tuscan scenery for a beautiful wine story recognized internationally. (More wine news on www.vitabella.fr).