Marketwatch spotlight: California

The biggest names are still calling the shots, but market moves and merchant confidence reveal a broadening of interest

Buyers are broadening their horizons

California is at a fascinating stage of its development on the international fine wine market and is a region to watch closely, merchants and analysts believe. The US west coast state’s secret has been out for decades; it’s 45 years since the late, great Steven Spurrier’s ‘Judgement of Paris’, after all. Yet in 2021 there is a renewed sense of California as an emerging force on the fine wine market, despite various challenges ranging from extreme weather to tight availability beyond US shores.

Within the US itself, California is enjoying a good auction run. ‘We are seeing an uptick in Californian wines that is unprecedented in my 15 years in the business,’ says Charles Antin, Zachys’ head of auction sales.

‘The interest is a bit bifurcated – there is the very high end, the Harlan and the Screaming Eagle; but there is also a concerted effort by folks to seek out mature wines from classic wineries like Diamond Creek and Montelena.’

At the very top of the market, Matthew O’Connell, head of investment at Bordeaux Index, says it is important to consider the different dynamics of super-small-production wines traditionally released via producer mailing lists, such as Harlan Estate, Screaming Eagle and Colgin, as well as producers making larger volumes to different degrees, such as Opus One, Dominus or Ridge.

Prices fell on some ‘cult’ smallerproduction wines last year in pound sterling terms, O’Connell adds. But he believes this was mainly currency-led and California Cabernet’s journey is still quite positive in general. ‘We like the characteristics of the wines,’ says O’Connell. ‘[However] we’d like a more active secondary market.’

Ridge on the rise

In terms of price movement, ‘Ridge has been the standout in the last few years’, says O’Connell.

Using the merchant’s data from ‘executed transactions’ to create an index starting at 100 in the first half of 2018, Ridge Monte Bello 2013 has risen in value by 71% in the past three years. Harlan 2013 has risen slightly, and Screaming Eagle 2013 has dipped.

At Liv-ex, Ridge Monte Bello has also outperformed its peers on the California 50 index, which has flattened overall in the last two years. The trend reflects how Ridge has previously been undervalued, despite its strong international reputation, says Liv-ex co-founder Justin Gibbs.

Wider selection

A common issue for wine merchants outside the US over the years has been low availability of top California wines, but several market observers see signs of a shift.

Liv-ex saw a 150% increase in the number of California wine names traded by merchants on its global marketplace in 2020 versus 2019, although Gibbs cautions that it’s still early days for California on the secondary market (see ‘Monitor’, right).

The Bordeaux Place is increasingly prominent and sells several California wines to non-US clients. Opus One has been on the Place since 2004, but the list now includes Verité, Joseph Phelps Insignia and Harlan’s Promontory among others.

Georgina Crawley, business development director of UK merchant Goedhuis & Co, says the agency model is also something to watch. She says California has become a bigger part of Goedhuis growth plans in recent years, highlighting its deal to become UK agent for Eden Rift, a resurgent Chardonnay and Pinot Noir star in the Cienega Valley AVA. ‘To do that, we’ve got to have the demand,’ says Crawley.

Several observers note that investment going into California also suggests confidence in the market’s development. Just a few examples since 2015 include Chanel acquiring St Supéry, Alfred and Melanie Tesseron of Château Pontet-Canet in Pauillac acquiring Villa Sorriso (now Pym-Rae), LVMH and Constellation arriving at Colgin and Schrader respectively, and Champagne Louis Roederer buying Diamond Creek.

From California, then, there is clearly plenty to keep an eye on.