THE RISING TIDE OF LIQUID ASSETS

SAVOUR For relatively modest amounts up front, fine wines can deliver excellent returns when diversifying your portfolio.

At first glance, fine wine presents almost unlimited opportunities for passionate investors. While drinkers might balk at the US$3,000 (RM12,000) average price of a bottle of Petrus, one of Bordeaux’s greatest reds, that sum is trivial beside the cost of a new Bugatti sports car or Patek Philippe watch.

“In the last few years, it has been the top wines from the best producers in great, mature vintages that have appreciated the most,” observes Jamie Ritchie, head of Sotheby’s global wine business. As prices for young wines soared at the beginning of the millennium, mature bottles increasingly looked like a compelling proposition.

Red Burgundy has led the field by a significant margin, says Ritchie, as bottles of the region’s most coveted estates have multiplied in value. This appreciation has occurred with young wines as well as old. The wines of Domaine de la Romanee- Conti (DRC), one of the region’s most prestigious addresses, have witnessed particular growth. “Even when clients without much knowledge of Burgundy have invested in DRC, it’s amazing to see how well some of their purchases have performed,” notes Julien Froger, director of Hong Kong–based L’imperatrice, a specialist Burgundy importer. “For example, La Tache 2004 and 2007 (the least attractive vintages of the decade, thus the cheapest) have more than doubled in price over the past four years. Even DRC’S Echezeaux (typically among the least ardently pursued grand crus in the domaine’s portfolio) saw prices increase by nearly 50 per cent in the past year.” What applies to DRC applies equally to other benchmark producers. The wines of Domaine Leroy, Domaine Armand Rousseau and Domaine Roumier have experienced

Mature bottles increasingly looked like a compelling proposition.

While trends in the world of fine wine are driven by numerous factors, quality and scarcity invariably top the list. Well- informed oenophiles will likely be eyeing the following handful of producers in the near future. similar gains. In Hong Kong, Froger points out, bottles of Musigny from Leroy and Roumier now trade for the same sums as DRC’S best, having respectively tripled and doubled in price in just a few years.

“The list of collectible growers has been expanding,” says Ritchie, citing Domaines Mugneret- Gibourg and Robert Groffier as examples. Froger mentions Domaines Sylvain Cathiard and Cecile Tremblay as two new stars; Warren Leonard of Washington DC’S Weygandt Wines points to Domaine Fourrier; and Patrick O’connor of London’s Fine + Rare singles out Arnaud Ente and Domaine Bizot. “Buyers who’ve already assembled substantial cellars are coming to see producers such as these as a key component of their collections,” observes O’connor.

Another region that has witnessed rapid growth is Piedmont in northern Italy. According to Wine Lister, the region’s five top brands – which include producers Bartolo Mascarello and Giacomo Conterno – have been appreciating by 26 per cent over the last two years.

Where does Bordeaux – long the dominant region in the fine-wine trade in terms of both value and volume – fit into this equation? Anthony Maxwell, director of Livex, a London-based exchange for investmentgrade wine, says: “Bordeaux was 90 per cent plus of the market a few years ago and is now circa 70 per cent.”

But if Bordeaux’s appreciation has been sluggish, the region does seem to be rebounding from the price crash that began in 2011. Some producers have performed especially strongly. Wine Lister points to such examples as Le Pin and Chateaux Figeac, while Ritchie singles out Chateaux PontetCanet and Montrose as high performers.

Oenophiles in search of opportunities are finding their quest a complicated one. Burgundy seems set to continue soaring, but these wines are difficult to find thanks to the region’s minuscule volume of production. DRC’S Romanee-conti vineyard, for example, yields around 5,000 bottles in a good year; by comparison, Bordeaux’s Chateau Lafite Rothschild produces 240,000 bottles in an excellent vintage. “Burgundy will always be the ultimate collectible, but it’s a tapped market,” says sommelier-turned-winemaker Rajat Parr. “Retailers will only sell the top wines to good customers who support their portfolios across the board.”

Further complicating matters, release prices are higher than they once were for ex- domaine and ex- Chateau. Not long ago, a keenly priced allocation of blue- chip Burgundies bought directly from the source amounted to a licence to print money. But today, according to Greg Castells, president of Martine’s Wines: “Producers have caught up on pricing.” Castells, who imports the coveted Burgundies of the region’s grande dame, Lalou Bize-leroy, observes that formerly undervalued wines have been radically repositioned in the last decade in response to their burgeoning market value. “The days of making a 600 per cent return on a bottle are long gone,” he concludes.

Burgundy still offers opportunities for investment. The same scarcity that makes the wines so hard to locate also guarantees their appreciation. But building a meaningful collection today likely requires expert advice