– Myles Mayall
I remember in late 2010, sitting on my sofa reading the initial vintage reports coming out of Bordeaux for that year’s recently gathered grape harvest. Growers were already tipping it as a wonder, maybe the best in a century.
My first sentiment when reading this was unease – a quesy sense of dread, that was, it turned out, shared by thousands of wine professionals the World over: the Bordelais, those guardians of the top tier of global fine wine, had overreached themselves. Their mistake would change the world of super-fine wine.
In the last ten years the fine wine market has begun a slow but inexorable evolution. In 2006 ask a wine investor as to where they invest, and the answer would be Bordeaux with a smattering of Burgundy, and the high-flying California Cabernet to ensure a little variety. When you speak of investment grade wines, you are looking at $80USD plus per bottle, and usually far beyond. But the Bordeaux hegemony is fast-eroding, owing above all to two significant factors – the astonishing speed at which extraordinary, super-fine wines are being developed in other regions, countries & continents, and the detrimental impact of the superb 2009 and 2010 back-to-back vintages in Bordeaux.
When I helped launch the first Bordeaux En Primeur (or futures) campaign in India, it was with all of the marketing power of the 2009 Bordeaux campaign in the background. This region alone generates an average of $2.5 billion in annual revenue, solely from wine, and weather conditions play a massive part, albeit a gradually diminishing one owing to the annual creeping advance of technology.
Erosion in Bordeaux
The Bordeaux wine regions sit in a changeable maritime climate, warmed by the Gulf Stream – with the concurrent unpredictable rainfall linked with the phenomenon. The famously changeable southern British Summers are another Gulf Stream product, to give slight context. A large element of the style, quality and quantity of wine produced is dependent on good weather, and, in Bordeaux, a fine summer is by no means a given.
In 2009, the first of the duo, conditions were astonishing. The long, late summer gave birth to unusually punchy, powerful wines. Even the winemakers themselves where surprised by the result, producing not precisely classic, but massive, fruit-fuelled and long-lived products. Folk began to refer to this as a more ‘American’ style of vintage – dense fruit and high alcohol, over the classic Bordeaux perfume and earthiness. Two additional factors added to the end problem: The first was the awakening of the Chinese market. While still a relatively small amount of the great wines were sold directly into the country, an unknown, but extremely large volume sold at auction in London, Hong Kong, New York and Bordeaux itself to Chinese buyers. China is now fast becoming a power in fine wine – at least 60 significant Bordeaux Chateaux now lie under Chinese ownership – with significant investment and a typically hands-off attitude, Chinese interest has largely been a boon to the region.
The second factor, and possibly the touchstone of the massive uptake from China, was infamous American critic Robert Parker’s awarding of 100 point perfect scores to no less than 18 labels, and echoing the loud cries of the Bordeaux ‘Place’ (Bordeaux’s elegantly rambunctious trading space) that this was finest vintage in 100 years, and a must-buy for anyone with a couple of thousand dollars to spare, wine-lover or no.
Result? Prices jumped by as much as 300% on the previous (modestly decent) 2008 vintage. As an example, Chateau Margaux released at $7200 a case of 12 bottles for the 2009 vintage, up from $1900 for the new release of the 2008. In spite of the mad pricing, people bought. The success of the campaign bucked the trend of the 2008 financial meltdown. With its history of uninterrupted, regular growth from the 1970’s onwards, fine wine was seen as a safe bet investment. Merchants touted 10% a year growth – ‘eventually you can drink it, or sell it for a profit. There is no catch!’. The marketing campaign was a huge success. After the maelstrom of 2009, we sat back, shook hands with our neighbours and looked forward to an ordinary decent 2010 vintage. Then those harvest reports started to trickle in. Good. Awfully good. Spectacular. Better than 2009. The prices went up again, by up to another 40% – exultant piling on top of ambitious.
The market effectively tanked. With the 2009s we had wheedled and cajoled, teasing out every last dollar from existing and (many) new clients. The 2010 vintage made folk suspicious, and anyway, their budgets had been spent the previous year. Buyers began to look elsewhere for quality, and many dropped out of fine wine altogether. What a con! Two ‘best in a Century’s’ back to back? Those who remained with wine went to Burgundy of course, but also to other, less polished regions of France, Italy, Spain, the US, and certain Latin American & Australian labels – Grange, Hill of Grace, Seña, new names started to grace the tablets of the very top tier.
By 2014 prices of both the 2009s and 2010s had dropped to well below release point, wiping out (at least temporarily) millions of dollars in investments.
So here is where we are today: a demographically younger and better informed super-fine market, and the sight of many top-grade wines from many countries and regions breaking into a top-table that once belonged almost exclusively to Bordeaux.
Terroir is the Key
So how good are they, these wines? Is it possible for a bottle to be intrinsically worth $1000, and for the impact of a bit of sun enough to make a wine three times as good the same wine from the same vineyard in the previous year (those 2009s)? No, of course not. Most great wines that cost are truly exceptional – although emphasis on most! However the total cost of production of a Margaux or a Screaming Eagle Cabernet doesn’t necessarily reflect the end consumer price. Reputation has an immense impact, especially where wines have been exported commercially at a high level for a long period of time, like in Bordeaux.
Here is where the term terroir enters the conversation – the unique marriage of soil (mineral/ph/drainage, etc.), gradient, weather, flora/fauna and other factors that makes one vineyard produce great wines, while wines from the almost identical neighbouring plot are not quite as good. From ten years experience in the wine trade (and a love of Burgundy, that most terroir-driven region), it is a huge factor. Brand establishment of course plays a huge part – even in Burgundy, with its tiny vineyards and growers. Some growers very much brands in their own right, through successive vintages of extreme precision winemaking, and the ownership of great plots of vines. Rarity of course also plays large part in price. Margaux may make 120,000 bottles in a vintage at, say $700 a bottle, and sometimes struggle to sell out. The legendary, and tiny, Burgundy vineyard of Romanée Conti will produce about 5500 bottles selling at up to $14,000 each, and sell everything immediately on allocation. Both wines very different, both utterly superb – but the great collectors are increasingly knowledgeable of the innate value of the wines they desire, and of the conditions of the market. They will pay top dollar for the best, but they want to know that they are still getting the best price on the market. This is where the reputation of the end merchant enters play.
At this kind of pricing forgery becomes an issue. Buyers will often pay a premium to source a coveted bottle through a supplier with a long-standing reputation. They go through reputed experts, as they would if they were buying a work of art.
So who are these buyers? Surprisingly many of them are not so different to you and me. I used to sell to a number of Russian and Middle Eastern clients in central London, but we also found many young professionals, not just from finance, but also from law, property, tech and many other sectors cautiously becoming enthused. There are more super-fine wines available today, from an increasingly eclectic variety of locations than ever before. And that trend is matched with an increasingly eclectic global market. The ease of buying fine wine from traditional merchants like Berry Bros and online peer-to-peer trading platforms like Wine Owners in the UK have increased the ease and spread fine wine buying, to anyone with money and Wi-Fi.
India is really the last great piece of the global puzzle to take part in this, but as restrictions on movement of capital ease, this will change. India will eventually become a player in this exciting global phenomenon.
Myles Mayall began his career in the London fine wine trade, evangelising Burgundy & Bordeaux to the residents of Kensington & Belgravia. Since then he has worked variously in London and India, including a four- year stint as head of wines for the wines for the Wine Society of India (From 2009 to 2013).