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 case of:

Guigal, Cote Rotie La Turque, 2009

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: 

Affectionately known as the La La’s, Guigal produces a trio of top wines that are known as the most consistently great wines not just from the Rhone but the world.  

Critic Score: 100 Points – Robert Parker
This wine is reviewed regularly and consistently maintains the perfect score. I wonder if the Bordeaux 100 pointers were tested as regularly they would perform as well?

Region Rating: Cote Rotie, 98 T
The only vintage to ever score over 96 in the region, an incredible accolade considering the Rhones consistency of climate. 

Drinking Window: 2016+
La La’s are enormous wines designed to last for decades, this will trade deep into this century. 

Production Volume: 400 cases
When you combine 30-year-old vines with such an incredibly labour intensive and high-quality process it is no wonder the case count is so small. 

Summary:
This is another wine where each of the quality vectors are either equalling, if not setting new levels of quality. The fundamentals are extremely strong and help categorise this as a blue-chip wine. 

The key vectors to consider here are the ultra-low production levels and muscular composition. The wine will trade deep into the future allowing for the considerable tightening of supply and demand necessary for favourable price performance. 


“Ultra-fine, yet building tannin and a finish that just won’t quit”

Dunnuck 


Money Matters:

Brand Power: 72/100, rank 62nd in JF Tobias Brand Power Metric
The Rhone is a growing market. Those looking for relative value for their big points are moving from the bloated Bordeaux market. Guigal offers the most reputable and trusted point of contact. 

Liquidity: 50%
The wine is less liquid than the Bordeaux market, a large portion of the market is yet to be educated and exposed to the value in the Rhone. Subsequently the pool of buyers is a little smaller and timelines are slightly extended.  

Inter-Trade Price Volatility: 12.5%
For a wine with only 400 cases produced the data is quite informative, shows the wine to trade within a safe range with low volatility. This is to be expected from such a high quality, fundamentally sound item. 

Price History: 

Summary:
The wine behaves like a blue-chip should, very predictable price moves and a pleasing level of price transparency.

As can be seen from the price chart, the market has stepped down in the last 6 months representing a discounted entry point.


Position for Profit: 

Follow The First Mover. 

Wines from the Rhone region have all the underlying traits to command enormous prices. Low volumes, ultra high quality and the capacity to trade.

Parker was a big proponent of the region and loved their style, big bombastic wines. This helped to push interest in the region higher but it is yet to take off in quite the same way as Burgundy. That is where the opportunity lies. The wines have very little downside risk to buy and hold, but should interest flood into the region then these will be the first to react. 

A great way to diversify your portfolio and build in some safe exposure. 

The Author

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Jake Leighton