Midas Touch

Bordeaux continues to dominate the auction scene by such a broad margin that predictions of a new investment order with the rise of Burgundy, the Rhône, Spain, Italy, and the New World are proving, at least for now, wide of the mark. True, the likes of Harlan and Screaming Eagle do well enough in California and Grange in Australia. But these markets are essentially parochial, and as the global market expands to include a young, moneyed clientele in China, Russia, Malaysia, India, Brazil, and North America, the tried and tested crus classés of Bordeaux, First Growths especially, take greater pride of place in the secondary auctions and investment market than ever.

According to the fine-wine exchange Liv-ex, the value of top bordeaux
increased by more than 90 per cent, with fine wine second only to oil as an
investment. An in-depth look at Sotheby’s 2007 US sales reveals that First
Growths represented 37 per cent of the total lots sold by value. If you factor
in Cheval Blanc and Pétrus, the total rises to 50 per cent. Pétrus alone
represented 10 per cent of the lots sold by value. Until the slowdown in the
latter half of the year caused by the subprime crisis in the USA, extravagant
prices were obtained not just for large formats and rare, older vintages, but
for younger vintages too. The burgeoning economy, the entry of so many
rich new players, and the fact that Bordeaux can claim three good to great
vintages in the first six years of the millennium – 2000, 2003, and 2005 –
have given the investment market a massive boost.

But a new order of sorts has begun to emerge. Until quite recently, First
Growth châteaux Margaux and Latour had performed consistently well
among the top five of the Médoc and Graves, but Rothschild is in the
ascendant. Thanks to a reputedly monumental 2006, Mouton Rothschild saw
its stock rise to an average price increase of 50 per cent for the year and
the highest level of trading on the Liv-ex exchange at 13.2 per cent, ahead
of Lafite Rothschild, where a strong revival is also under way. There was
an almost exact parallel at Sotheby’s in the USA, where Mouton was the
leading First Growth (13 per cent by value), followed by Lafite (9 per cent).
A number of other top Bordeaux châteaux are also jostling for high
honours, most notably Château Ausone, joint top of the St-Emilion tree
with Cheval Blanc, yet, until Alain Vauthier took over recently, it was
failing to live up to its potential.

Before even hitting the auction rooms, the 2005 bordeaux vintage,
in part thanks to the spectacular performances of Le Pin and Ausone,
showed a big increase on the secondary market in the 18 months since
its offer en primeur in the spring of 2006 and the end of 2007. Next to it,
1986, 1996, and 1990 have also been highly successful vintages, while
2003 and 2000 have performed the strongest. Among top performers,
the 2003 Montrose rose by 64 per cent to reach £1,540 ($3,000) a case,
2003 Margaux moved from £3,325 ($6,550) to £5,225 ($10,290) per
case over the year, and Léoville-Poyferré registered one of the more
impressive gains with an increase of £360 ($710) to £750 ($1,480).

What of the market beyond Bordeaux? Certainly, a select number of
burgundies continue to outperform the rest, most notably the extraordinary
Domaine de la Romanée-Conti, whose wines represented 9 per cent of
all lots sold by value at Sotheby’s US over the year. The great vintages of
1959, 1962, 1971, 1978, 1985, and 1990 are also in strong demand,
particularly from producers such as Henri Jayer, Leroy, Comte Georges de
Vogüé, Coche-Dury, Leflaive, and Lafon, while Roumier’s Bonnes Mares,
Rousseau’s Chambertin, and Mugnier’s Musigny grow in stature. In the
Rhône, the 1961 Hermitage La Chapelle outperformed the market, and
the names of Guigal, Chave, and top Châteauneufs continue to do well,
while in Champagne, Roederer Cristal, Dom Pérignon, and Krug remain
on fizzing form. Outside France, Italy’s Sassicaia and Spain’s Vega Sicilia
command international respect, although cult California and Australia
don’t quite cut it yet in the mainstream global investment market.

Of course, like Janus, auction houses
face both ways. If a vintage, château,
or style goes off the boil, they tell you
what great value it’s become for the
drinker. So what goes down in the
investment broker’s esteem may well
go up among those who enjoy drinking
wine. What’s flopped, then, from an
investment point of view? Primarily
vintage port, which has barely moved –
so much so that it’s no longer a
sound investment, except in the most
exceptional circumstances. In Bordeaux,
the fact that trophy vintages have
done so well points, in Christie’s David
Elswood’s view, to the value of “lesser”
vintages such as 1983, 1985, 1988,
1995, and 2001, not forgetting 1997
and 1999. The 1982 vintage continues
to do well, but with falls in value for
1982 Lynch-Bages and Léoville-Barton,
some Super-Seconds may have peaked,
while garage bordeaux such as
Valandraud and Mondotte has been
shown to be wine’s answer to the
emperor’s new clothes.

Despite the 18-month boom that
preceded the credit crunch, it was
almost inevitable that there would be
a slowdown of some sort. By the turn
of the year, however, there was a
resumption of strong demand, especially
from the hypersensitive emerging Asian
countries. The outlook for the market,
however, remains uncertain.

WIZARDS OF OZ

Penfolds Grange dominated the 2007
wine-auction list compiled by leading
Australian auctioneer Langton’s. With
its top sale a bottle of 1951 Bin 1 for
A$50,854 (£22,250), Grange registered
all top 10 prices, 15 of the top 20, and
48 of the top 100 during the year. The
1951 was the first but experimental
vintage made by Max Schubert and
was so derided in its early years he had
to conceal the fact that he was still
making Grange, then known as Grange
Hermitage, from the Penfolds board.

The next-highest price was A$14,950
(£6,650) for the 1957 Bin 113 Grange,
while a 1962 Bin 60A Penfolds
Coonawarra Cabernet/Barossa Shiraz
recorded the 11th-highest price of
A$3,106 (£1,380). Moss Wood, one of
the founding wineries of Margaret River,
posted a record price for a post-1970
bottle of Australian wine with A$2,301
(£1,020) paid for a 1973 Cabernet
Sauvignon, the 14th-highest price of
the year, while a 1974 Moss Wood
Cabernet Sauvignon fetched A$1,726
(£770). A 1955 Wynn’s Coonawarra
Estate Michael Shiraz sold for A$1,588
(£705) and a 1965 Lindemans Bin
3100 Hunter Valley for A$1,398 (£620).
Overall, Barossa Shiraz emerged as the
strongest regional performer.

THE AUCTIONEERS

The major auction houses realized
some £167 million ($333 million) in
2007, up from the previous year’s
£121 million ($242 million). At the
forefront of the international wine
auction market, Christie’s International
Wine Department reported its best year
ever, with a global total of £36 million
($71.7 million). In the USA, NY Wines/
Christie’s realized a grand total of
£13.7 million ($27.2 million), while in
Europe, Christie’s grossed £22.3 million
($44.4 million) in 29 sales, up from
£15.4 million ($30.7 million) in 2006.

Langton’s Top 10 Wines

1 1951 Penfolds Bin 1 Grange Hermitage: A$50,854 (£22,250)
2 1957 Penfolds Bin 113 Grange Hermitage: A$14,950 (£6,650)
3 1958 Penfolds Bin 47 Grange Hermitage: A$12,995 (£5,775)
4 1953 Penfolds Bin 2 Grange Hermitage: A$12,651 (£5,600)
5 1953 Penfolds Bin 9 Grange Cabernet: A$12,650 (£5,600)
6= 1952 Penfolds Bin 4 Grange Hermitage: A$10,926 (£4,860)
6= 1954 Penfolds Bin 11 Grange Hermitage: A$10,926 (£4,860)
8 1956 Penfolds Bin 14 Grange Hermitage: A$9,205 (£4,090)
9 1952 Penfolds Bin 9B Grange Cabernet: A$7,935 (£3,525)
10 1955 Penfolds Bin 95 Grange Shiraz: A$3,451 (£1,530)
Conversion rate: £1=A$2.25.

Christie’s King Street’s top lot of the
year was a 12-bottle case of 1961
Hermitage, La Chapelle, which sold
at London King Street for £123,750
($243,760), setting a new world
auction record for a case of Rhône and
for any case sold in Europe. American
auctions included “Rarities from the
Cellars of Mähler-Besse” in New York
and “The Quintessential Modern
Cellar” in Los Angeles, while “Grands
Crus Part II: Finest and Rarest Wines
from the Superlative Collection of
Christen Sveaas” was a highlight,
raising £3.3 million ($6.8 million).

Sotheby’s International Wine
Department sold £24.3 million
($49.3 million) worth of wine
globally, surpassing its 2006 figure
of £20.3 million ($37.3 million) by
some distance. The top lot of the year
was a jeroboam of 1945 Mouton
Rothschild, which sold for £155,850
($310,700) in New York. UK revenues
totalled £10.4 million ($20.9 million),
a 23 per cent growth over £9.2 million
($17 million) in 2006. The sums
included income from five successful
single-owner sales, including “Treasures
from the Private Cellar of Baroness
Philippine” ($2.2 million/£1.1 million),
“Magnificent Wines from the Warren
A Stephens Collection” ($3.8 million/
£1.9 million), “The Cellar of Thomas
O Ryder” ($1.7 million/£840,000), “The
Adrian Bowden Cellar Part II”, and
“The Great Bordeaux Cellar”.

Aulden
Cellars/Sotheby’s edged out its rival NY
Wines/Christie’s in North America, with
£14.3 million ($28.4 million) in sales.
Acker Merrall & Condit again
dominated the North American
market, with 24 auctions bringing in
£30.2 million ($60 million). Zachys,
which held Las Vegas’s first-ever
commercial wine auction in February
2008, grossed £26.4 million
($52.5 million) from 13 auctions,
exceeding its 2006 total of £19 million
($34.7 million), while Chicago’s rising
star, Hart Davis Hart, held seven
auctions totalling £13.52 million
($26.9 million) in just its third year.

In
San Francisco/Los Angeles, Bonhams &
Butterfields’s simulcast sales achieved
£3.7 million ($7.3 million) from six
sales. Morrell & Company realized
£3.1 million ($6.1 million); Edward
Roberts International, a Chicago
boutique, £850,000 ($1.7 million);
while, in its debut year, Skinner, a
Boston house, managed £150,000
($300,000). The growing attraction
of the Internet was illustrated by
California-based WineBid.com’s tally
of £13.1 million ($26 million).

KOCH AND BULL STORY?

The saga involving the American übercollector
Bill Koch, his nemesis the
German bon viveur and dealer Hardy
Rodenstock, and several controversial
bottles said to have belonged to former
US president Thomas Jefferson
continues. The fabled 1787 “Jefferson
Lafite”, engraved with the initials “Th.
J.”, was, at £105,000 (US$206,830),
the most expensive bottle ever sold at
auction, but doubts later surfaced as to
its authenticity. Similar doubts were
raised over a number of “Jefferson”
bottles sold to Koch that the German
collector Hardy Rodenstock claimed to
have discovered behind a bricked-up
wall in Paris. After Rodenstock was
sued by Koch, who alleged that four
Rodenstock-sourced bottles attributed
to Thomas Jefferson were fakes, Judge
Barbara S Jones, a federal judge in
New York City, dismissed Koch’s fraud
lawsuit, ruling that the court lacked
“personal jurisdiction”.

Koch, along with collector Russell
H Frye, has vowed to continue his
pursuit of the German dealer, while
federal authorities have launched an
investigation into wine counterfeiting.
The US Department of Justice is
working with the FBI, gathering
evidence into allegations of counterfeit
bottles being sold, while Zachys in New
York and Christie’s in London are also
both cooperating with the authorities.
Koch says that experts who examined
the 35,000 bottles in his cellar
discovered a number of fakes, almost
all purchased at auction, that hadn’t
been detected earlier. The interest
provoked by counterfeiting has spread
to Hollywood, where the film rights to
a book on the case, The Billionaire’s
Vinegar by Benjamin Wallace, have
been bought by a consortium including
actor Will Smith, while the rights to a
New Yorker article on the subject have
been snapped up by HBO Films.

THE 147TH HOSPICES
DE BEAUNE

Inaugurating a new era of virtual
bidding in November with the 147th
Hospices de Beaune auction of red
and white burgundy, 469 barrels of
red wine and 138 barrels of white wine
were sold for a total of €4.65 million
(£3.33 million), including premium,
representing an increase of 27 per cent,
and for red burgundy of 38 per cent.
Overall, the Domaine des Hospices de
Beaune was offering a smaller amount
of wine for sale: 607 barrels, compared
to 680 last year (down 10.7 per cent)
because of stringent sorting and further,
rigorous sifting of vineyard plots. A new
cuvée was offered this year, the Corton
Clos du Roi Cuvée Baronne du Baÿ,
bringing the sale to a total of 30 cuvées
of red wine and 12 of white.
With international demand for
burgundy strong and production down
compared to 2006, record prices were
established for Corton Vergennes, Clos
de la Roche, and Mazis-Chambertin.
The seven barrels of the new Cuvée
Corton Clos du Roi were bid up to
record levels for a Corton at Hospices
de Beaune: averaging €12,000
(£8,590) per barrel (excluding
premium). For the third year in a row,
private individuals were able to
participate and buy barrels of different
cuvées under the hammers of François
Curiel, chairman of Christie’s Europe,
and Emmanuelle Vidal-Delagneau of
Christie’s France.

CHRISTIE’S AND
SOTHEBY’S GLOBAL
TOP 10S

In US dollar order, and estimates do
not include buyer’s premium.
Christie’s
1 30 dozen bottles of 1986
Château Mouton Rothschild:
US$288,000 (£137,799) on
estimate US$240,000–360,000
(£115,000–172,000)
2 12 bottles of 1990 Romanée-Conti,
DRC: US$252,000 (£122,927) on
estimate US$100,000–150,000
(£48,800–73,100)
3 Ditto
4 12 bottles of 1961 Hermitage La
Chapelle Jaboulet: US$252,000
(£120,574) on estimate
US$80,000–120,000 (£38,300–
57,400) (US$ world auction
record for a case of Rhône)
5 12 bottles of 1961 Hermitage La
Chapelle Jaboulet: US$247,747
(£123,750) on estimate £40,000–
50,000 (US$80,000–100,100)
(European auction record for a
case of wine)
6 12 bottles of 1985 Romanée-Conti
DRC: US$240,000 (£117,073) on
estimate US$100,000–150,000
(£48,800–73,100)
7 Ditto: US$237,000 (£119,697) on
estimate US$100,000–150,000
(£50,500–75,800)
8 12 bottles of 1961 Hermitage La
Chapelle Jaboulet: US$225,225
(£112,500) on estimate £40,000–
50,000 (US$80,000–100,100)
9 12 bottles 1990 Romanée-Conti
DRC: US$216,000 (£104,348) on
estimate US$100,000–150,000
(£48,300–72,500)
0 12 bottles of 1945 Château
Mouton Rothschild: US$204,000
(£98,551); no estimate given

Sotheby’s
1 1 jeroboam of 1945 Château
Mouton Rothschild: US$310,700
(£158,457) on estimate
US$80,000–150,000
(£40,800–51,000)
2 12 bottles of 1990 Romanée-Conti
DRC: US$262,900 (£128,821) on
estimate US$120,000–200,000
(£58,800–98,000)
3 12 bottles of 1947 Château Cheval
Blanc: US$146,429 (£71,300)
on estimate £40,000–60,000
(US$82,100–123,200)
4 12 bottles of 1989 Romanée-Conti
DRC: US$143,400 (£70,266) on
estimate US$100,000–150,000
(£49,000–73,500)
5 84-bottle 2000 Great Growth
Superlot: US$143,400 (£70,266)
on estimate US$70,000–100,000
(£34,300–49,000)
6 12 bottles 1967 Romanée-Conti
DRC: US$119,587 (£58,650) on
estimate £15,000–20,000
(US$30,600–40,800)
7 1 nebuchadnezzar 2000 Château
Mouton Rothschild: US$119,500
(£60,945) on estimate
US$15,000–25,000 (£7,650–
12,750)
8 10 bottles 1961 Château Pétrus:
US$117,435 (£59,800) on
estimate £25,000–30,000
(US$49,100–58,900)
9 24 bottles 2000 Right Bank
Horizontal Lot: US$95,600
(£46,844) on estimate
US$50,000–70,000 (£24,500–
34,300)
0 6 magnums 1982 Château Pétrus:
US$94,852 (£48,300) on
estimate £22,000–28,000
(US$43,200–55,000)
Prices may vary due to the fluctuation
of currencies, most notably the US
dollar, throughout the year.

GLOBAL REPORTS WINE AUCTIONS & INVESTMENT
% growth
annualized2
% growth1
Exceptional growth 1999–2007
Position
’08 ’07 ’06 ’05 Vintage Wine 1999 2004 2005 2006 2007
1 1 – 3 1978 La Tâche 5,136 15,860 N/S 30,3604 41,455 707 29.81
2 2 8 8 1982 Lafleur 5,532 10,260 9,340 23,0005 36,800 565 26.71
3 8 7 5 2000 Mouton3 N/A 4,370 3,110 4,140 9,600 500 29.16
4 9 2 7 1982 Pétrus 7,800 14,690 20,900 15,870 43,700 460 24.02
5 5 4 4 2000 Margaux3 N/A 4,570 3,400 5,520 8,400 425 26.72
6 4 6 10 1989 Pétrus 6,156 8,640 12,870 23,000 32,200 423 22.96
7 – 3 2 1998 Le Pin 2,900 9,180 6,230 N/S 13,340 360 21
8 3 1 1 1961 Latour 7,920 29,020 22,600 31,900 33,200 319 19.6
9 6 5 9 1982 Le Pin 11,550 18,380 24,500 39,7206 33,650 191 14.29
10 7 – 6 1978 Guigal Côte Rôtie 2,736 5,440 N/S 9,000 5,660 107 9.51
La Landonne
Prices in GBP per case of 12 bottles (best hammer price
achieved in year indicated).
Sources: Christie’s, Sotheby’s.

1 Percentage growth between 1 July 1999 and 30 June 2007
2 Annualized growth between 1 July 1999 and 30 June 2007.
3 £1,600 en primeur in 2001.
4 £2,530 a bottle.
5 Magnums.
6 £6,620 per magnum.
% growth
annualized4
% growth3
© Anthony Rose 2008
Prices in GBP per case of 12 bottles.
Sources: En primeur prices (excluding VAT)
Wine Society in bond.
1 En primeur price 1 July 1999.
2 Best auction price in year indicated.
3 Percentage growth over 1 July 1999 to 30 June 2007.
4 Annualized growth over 1 July 1999 to 30 June 2007.

Blue-chip growth: 1998 vintage
Position
’08 ’07 ’06 ’05 ’04 ’03 Wine 19991 20022 20032 20042 20052 20062 20072
1 1 1 2 3 3 Pétrus 3,800 7,520 6,460 7,260 9,680 15,870 19,550 415 22.7
2 3 6 6 7 5 Lafite 800 1,150 1,035 1,060 1,245 2,100 3,795 374 21.47
3 N/A 2 1 1 1 Le Pin 2,900 6,540 7,590 9,180 6,230 N/S 13,340 360 21
4 2 3 4 4 4 Cheval Blanc 1,150 2,110 1,840 1,725 2,420 4,140 4,485 290 18.53
5 9 10 10 5 7 Ausone 1,150 1,420 1,725 935 1,300 1,210 4,025 250 16.94
6 8 5 5 6 6 Haut-Brion 875 1,090 1,230 1,210 1,470 1,200 2,530 189 14.18
7 5 4 3 2 2 Trotanoy 800 1,740 1,550 1,210 1,470 1,550 2,070 159 12.61
8= 6 9 8 8 9 Margaux 780 830 860 750 1,010 1,270 1,840 136 11.32
8= 4 7 7 9 8 Mouton 780 910 800 940 1,130 1,550 1,840 136 11.32
10 7 8 9 10 10 Latour 780 780 710 665 1,020 1,250 1,670 114 9.98

Blue-chip growth: 1999 vintage
Position
’08 ’07 ’06 ’05 ’04 Wine 20001 20032 20042 20052 20062 20072
1 1= 4 2 2 Lafite 775 1,092 1,040 825 1,270 2,415 212 17.62
2 1= 2 3= 5 Margaux 775 912 960 858 1,270 2,400 210 17.52
3 6 6 6 4 Mouton 775 936 780 748 1,090 2,100 171 15.3
4 4 1 1 6 Latour 775 900 1,080 880 1,210 2,070 167 15.06
5 N/A 10 8 Ausone 1,146 1,044 N/S N/S N/S 2,990 161 14.68
6 1= 3 5 3 Pétrus 3,650 5,076 3,680 3,960 6,000 7,360 102 10.53
7 8 5 3= 1 Haut Brion 775 1,476 960 770 940 1,430 85 9.14
8 5 N/A 7 10 Le Pin 3,300 N/A 3,330 N/S 5,060 4,370 32 4.1
9 9 7 8 7 Cheval Blanc 1,146 1,272 960 1,020 1,130 1,320 15 2.04
10 7 N/A 9 9 Trotanoy 550 408 410 N/S 700 460 –16 –2.52
© Anthony Rose 2008
Prices in GBP per case of 12 bottles.
Sources: En primeur prices (excluding VAT)
Wine Society in bond.
1 En primeur price 1 July 2000.
2 Best auction price in year indicated.
3 Percentage growth over 1 July 2000 to 30 June 2007.
4 Annualized growth over 1 July 2000 to 30 June 2007.
% growth
annualized4
% growth3

Blue-chip growth: 2000 vintage
Position
’08 ’07 ’06 ’05 Wine 20011 20022 20032 20042 20052 20062 20072
1 1 1 N/A Le Pin 2,640 N/S N/S N/S 20,300 17,940 19,000 620 38.93
2 6 3 5 Latour 1,600 2,375 3,450 3,280 3,680 5,060 10,580 561 36.98
3 10 5 2 Mouton 1,600 1,850 2,990 4,370 3,110 4,140 9,600 500 34.78
4 3= 8 3 Lafite 1,600 2,050 3,220 4,200 2,690 5,520 9,100 469 33.59
5 3= 4 1 Margaux 1,600 2,400 3,910 4,570 3,400 5,520 8,400 425 31.81
6 2 2 6 Pétrus 5,500 N/S 8,370 10,580 15,280 21,850 25,300 360 28.95
7 7 10 8 Ausone 2,400 N/S N/S 4,180 3,250 7,200 10,350 331 27.57
8 5 7 4 Las-Cases 780 N/S 1,640 1,680 1,430 2,530 2,250 189 19.3
9 8 9 9 Cheval Blanc 2,500 N/S 5,290 3,900 3,820 7,480 7,200 188 19.27
10 9 6 7 Haut-Brion 1,600 2,095 2,990 3,000 2,970 4,600 4,370 173 18.22
© Anthony Rose 2008
Prices in GBP per case of 12 bottles.
Sources: En primeur prices (excluding VAT)
Wine Society in bond.
1 En primeur price 1 July 2001.
2 Best auction price in year indicated.
3 Percentage growth over 1 July 2001 to 30 June 2007.
4 Annualized growth over 1 July 2001 to 30 June 2007.
% growth
annualized4
% growth3