Fancy investing in burgundy? “Forget it,” is the advice of Adam Russell of Domaine Direct, a noted London burgundy specialist. “With the exception of DRC [the Domaine de la Romanée-Conti] and Leflaive, we don’t,” says Peter Lunzer of The Wine Investment Fund. “I was asked specifically to create a low-risk fund,” he adds, by way of explanation. “Burgundy is just four per cent of our turnover,” says Stephen Browett of Farr Vintners, the wine world’s leading broker and often first call for those wishing to buy wines for investment. “We sell more champagne than burgundy.”
Such negativity is odd. The greatest burgundies rival their bordeaux counterparts for finesse, beauty and the ability to modulate and acquire grace and harmony as the years drop away. Burgundy, like Bordeaux, is in the middle of a golden age at present. Winemaking and viticultural standards have never been higher; vintages rarely more propitious. And quantities in Burgundy are always delectably small, adding that frisson of Le Pin-like rarity to every wine. The Domaine de la Romanée-Conti itself has broken more auction records than any other wine-producing estate in the world. So why are the brokers so baleful?
“Access is the big problem,” says Browett. “Burgundy investment returns can be good – but only from the top vineyards from the top producers in the top vintages. Those wines are all sold by agents or merchants, and you cannot buy them unless you are a very good customer of theirs for other wines, and even then the quantities are very small. You cannot buy Montrachet from Leflaive in case quantities under bond, which is what you need. Burgundy hasn’t got the reassurance of Parker points, either – Robert Parker hasn’t set foot there for 10 years. And it’s very complicated. One man’s Richebourg could be great; another’s will be rubbish.” Inconsistency and the lack of tradeable mass are fatal flaws when in comes to wine investment. Rhône wines are held in check by the same weaknesses; indeed only bordeaux effortlessly surmounts them.
The hazards are amply illustrated by the demise of the AWM Fine Wine Fund run, between 2000 and 2005, by the Geneva-based, Cayman-Islands-registered Ascot Wine Management SA. It had three ‘share classes’: Bordeaux Crus, Burgundy Crus and World Crus. There was a tiny quantity of DRC and Leflaive among the ‘Burgundy Crus’ – but the jewels were padded out with fatally large quantities of wines which, in investment terms, were no-hopers. Eventually the floundering fund was wound up and its wines offered for general sale via a broking intermediary. Majestic Wine Warehouses snapped up most of the heterogenous ‘Burgundy Crus’ (which included, for example, 1500 bottles of the profoundly uninvestible 1998 St Aubin Premier Cru of Marc Colin). It then sold these on to its customers at closely shaved prices. Within six weeks, 85 per cent of the stock was gone to good, modest homes. “I personally wouldn’t buy burgundy to invest in at all,” was the conclusion of Majestic’s buyer Nick Dagley, having picked over the bones of the corpse.
Yet when I mentioned the “never invest in burgundy” message to another burgundy lover I know, he laughed. “That’s crap,” he said, as the laughter subsided, “and it’s never been more crap than just now.” He claims to have quadrupled his money in a matter of months this spring by buying carefully selected 2005 Grands Crus from key growers directly from the importing merchants and selling them on to brokers – though, significantly, he didn’t want me to use his name since it would jeopardise his future allocations with those importers. Burgundy is a very personal business; merchants struggle over years to build up precious and hard-won allocations. The idea that the individual customers to whom they are selling might turn a quick buck by churning those precious bottles off through the broking trade enrages them.
My source claims that, for burgundy, the scores of Allen Meadows (published via his subscription website www.burghound.com) have similar market-making ability to those of Robert Parker on bordeaux. Burgundy is, moreover, now tasted and rated for Robert Parker by the fine palate of David Schildknecht, so ‘Parker scores’ for burgundy cannot be discounted, either; Jancis Robinson’s and Steven Tanzer’s websites are other key sources of assessment. He stresses, though, that it is the exceptional quality of the 2005 vintage which is driving his rapid and unusual recent gains. One broker which does take burgundy very seriously is Fine & Rare Wines (burgundy accounts for 19 per cent of its turnover), and Fine & Rare’s Jamie Graham confirms that “2005 burgundy has taken on a life of its own.” The company first offered Ponsot’s 2005 Clos de la Roche at £1,300, for example; it is now trading at over £9,800.
So which burgundies are truly investible, year after year, supposing one could actually get hold of the stock? The same names tend to recur: DRC; Laflaive; de Vogüé’s Musigny and Bonnes Mares; Meursaults from Lafon and Coche-Dury; and Ponsot’s Clos de la Roche. Astonishingly, the first three are all exclusivities (in the UK) of one merchant: Corney & Barrow. When I rung Corney & Barrow’s managing director Adam Brett-Smith to ask how he had succeeded in pulling this off, I could almost hear the grin crinkling his spare-fleshed cheeks. “It all happened completely by accident,” he claimed, nearly convincingly. “I just wanted them with a visceral passion. The dreaded ‘I’ word wasn’t even on the radar.” Brett-Smith says that if anyone confesses a primary investment interest when seeking an en primeur allocation of any of these wines, then “we just say ‘No’. We have thought long and hard about this. We don’t specifically offer an investment service. But of course we can’t be so big-brotherish as to tell customers exactly how they ought to dispose of their wines.” The company also has a broking arm, and Corney & Barrow urges any customer who finds himself or herself overstocked to offer the wine back to that broking division, which in turn welcomes investment enquiries. These arrangements mean that Corney’s is still the most magnetic phone number in London for anyone who fancies a burgundy flutter. Domaine Leflaive’s 2002 Premier Cru Les Pucelles, initially offered at £655, is now trading at £1,500 and the 2005 has already moved from £775 to £1,500. You might have thought that Romanée-Conti 1990 was expensive at £550.09 a bottle. It now costs £7,000 a bottle. Even the 2005, offered just months ago at £1,332.26, now trades at £5,000 a bottle.
By comparison with the £15 to £30 most of us think of spending on a bottle of burgundy, of course, these prices are insane. The investor, though, should never confuse business (for which cold sobriety is required) with pleasure (drinking). More millionaires in the world means ever higher prices for the best bottles; the emotional power and symbolic force of wine will always win it a unique place in the wealthiest hearts. When the millionaire population falls, though, the game may be up. And burgundy, as the most risky of wine investments, will fall first.
Investible Burgundy: the Top Six
Domaine de la Romanée-Conti The gold standard. Its seven wines are all highly investible, though the three top wines (the large La Tâche and much smaller Romanée-Conti and white Montrachet) have historically produced the most dazzling returns. After DRC, any list becomes contentious, but the following five domains and specified wines are strong contenders.
Domaine Leflaive Sumptuously endowed, fastidiously run white-wine estate. Its four Grands Crus and Premier Cru Les Pucelles offer most investment interest; its ‘village’ Puligny and Bourgogne Blanc, by contrast, offer none (though make excellent drinking).
Domaine Comte Georges de Vogüé Fine-grained red classics from the scented heart of the Côtes de Nuits. Investors covet the Bonnes Mares and, especially, the Musigny Vieilles Vignes.
Domaine des Comtes Lafon A little red wine, but investors confine themselves to white, and specifically Montrachet and the two top Meursault Premiers Crus: Perrières and Genevrières.
Domaine Ponsot Investors focus on the high-scoring Clos de la Roche Vieilles Vignes.
J-F Coche-Dury White wine estate whose quality is questioned by some – but adored by enough to make the top wines (Corton-Charlemagne, Meursault Perrières and Meursault Genevrières) durably investible.
UK Merchants: Corney & Barrow for its exclusivities; Fine & Rare Wines for the widest brokerage selection, though much of it is lying abroad. Other merchants with attractive burgundy allocations include Domaine Direct, Goedhuis, Berry Bros & Rudd, Lay & Wheeler, O.W.Loeb, Justerini & Brooks, Howard Ripley, Uncorked, Montrachet, Haynes Hanson and Clarke, A&B Vintners, Wine Society.