Wine Investment Friday

This newsletter is designed to bridge the gap between trade and the investor. Each week we will help investors better understand the nuances of why some cases appreciate and some standstill. We will unpick the characteristics that construct financial potential to help your money work smarter. 


This week we are analysing a bottle of:

Montrachet, DRC, 2005

Explaining what creates a great investment wine and how it interacts with the market. Ultimately showing you the role this case could play in your portfolio. 


Beneath the Label: 

With red Burgundy there could be some debate about which Grand Cru takes the coveted title. With the whites there is no such competition, Montrachet stands alone.

Critic Score: 98 Points – A. Meadows
Highest score ever achieved by a Montrachet, the greatest ever.

Region Rating: Montrachet, Cote de Beaune, 96T
Exceptional score, rarely surpassed. With ‘T’ indicating a long life.

Drinking Window: 2017+
Montrachet matures beautifully for decades but significant consumption will have already begun. 

Production Volume: 250 cases, 1500 bottles
One of the lowest productions of a top producer in the world.

Summary:
The key factors to focus on are the volume and the drinking window. The reduced maturation time required to become accessible for consumption. Then the utterly minuscule production values of this liquid combine to ensure a very early tightening of supply.


“for sheer vinous fireworks, this is hard to beat and to call it a “wow” wine would be a considerable understatement”

Meadows


Money Matters:

Brand Power: 96/100, rank 5th in JF Tobias Brand Power Metric
We have discussed DRC’s incredible brand power here before. However, its worth noting the Montrachet appellation holds its own power and draw. Combine the two and you have a mighty global thirst.

Liquidity: 60%
This wine is more liquid than most DRC, because of its absolute scarcity those that enjoy the wine will nearly always buy when given the chance.

Inter-Trade Price Volatility: NA%
Due to the rarity, this is not a wine that appears on Liv-Ex in any reliable volumes to draw conclusions. Even the market price is inaccurate due to a lack of global merchant listings. 

Price History:

Summary:
The vectors we are going to focus on are an extension of those highlighted in the previous summary. We should not draw conclusions from Liv-Ex historical price data, so we need to focus on what we do know.
The strength of the brand when considered alongside the critic scores act to securely underpin the liquidity. 
We know that high end Burg, as a rule, is a volatile product. However, in this case, volatility is a positive attribute despite the negative connotations. The volatility around DRC is born from the pool of buyers acquiring and consuming these wines. They are wealthy and obsessed with what DRC represents and produces. Then combine this with a minimal number of public transactions the result is a seller’s market, making large price jumps commonplace.


Position for Profit: 

Gain exposure without remortgaging your house. 

What we are offering here is a single bottle of Montrachet 05. A way to gain access to the market without paying £62,000 per case of 6!

DRC is the only producer which we will break one of our investment rules. Typically we advise to only invest into in bond, full cases. However, the single bottle market for DRC is extremely developed and liquid, especially in Asia. 

A single bottle will allow you to enjoy the potential for positive volatility, without holding the exposure and raised illiquidity risk of a whole case. It will also make for a fast exit portion of your portfolio. Should you wish to remove some funds at short notice, a myriad of merchants would buy the bottle in an instant.
It is also an amazing thing to have owned, maybe one of the greatest wines ever made? It is perhaps superlative but its also not impossible. 

The Author

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Jake Leighton