Wine Investment Friday

This newsletter is designed to bridge the gap between trade and the investor. Each week we aim to 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:

Hundred Acre, 2007

With the Napa valley churning out 100 points left right and centre, how do you know which estate to buy for your portfolio?


Beneath the Label: 

The nuance in Napa is that unlike the rest of the world, there appear to be tiers of 100 points. Large swathes of estates achieve them in the great years thanks to the simply perfect climate. Then there are those that achieve 100 points even when nature doesn’t throw them an underarm set up. Hundred Acre sits in the latter. 

Critic Score: 100 Points – Robert Parker
He described the Hundred Acre style as like Latour, but on steroids. 100 points are almost metronomically hit. 

Region Rating: Napa Valley – 96E 
A climactic high point in the early 2000’s for the valley. 

Drinking Window: 2018-2045
The weather imparted superb levels of both sugar and acidity, combine this with a well-constructed set of tannins and you have a wine capable of eating up the decades. 

Production Volume: 1,500 cases
Average production levels for the boutique burgundy-esque region. 

Summary:
As always we are looking for top performance across all vectors. This wine clearly has this and with the already low levels of production needed to give the wine an air of rarity straight out the barrel. Compounding these observations, the 2007 vintage sits in a decade when the weather was more tumultuous making this a unique stand out wine and one collectors wishing to drink this era will gravitate toward. 


“It is hard, almost impossible in fact, to believe a total novice vigneron could produce a perfect 100 point wine for his debut release.”


Money Matters:

Brand Power: 80/100, rank 51st in JF Tobias Brand Power Metric
Only recently have top Napa estates moved beyond supplying only their loyal mailing lists. A recognition that to be truly great the world over must lust after the brand and enjoy the wine.

Liquidity: 55%
These wines are still seen as value alternatives for the likes of Screaming Eagle and Harlan. They attract a Napa lover who can’t quite bring themselves to open their prized Screagle. 

Inter-Trade Price Volatility: 16.8%
With low production volumes, price transparency is low making this wine volatile. However, like top Burgundy, this is frequently positive volatility, with a 36% increase from release as it only now enters into the drinking window. 

Price History: 

Summary:
Clearly, this is a wine with room to improve on the financial vector side of the scoring. However, the estate’s owner is doing everything he can to alter this. The presentation of the wine is impeccable, the design of the case, the bottle, the literature, everything screams of a brand on the move. Then he himself has been all over the globe impressing his wines on the world. With sizeable financial backing and a drive to push this wine to new heights, it seems only a matter of time before this wine is a real force.


Position for Profit: 
Low Risk Portfolio Diversification.  

Cases of top Hundred Acre offer a unique opportunity to capture two normally diametric factors for use in your diversifying cases. A result of the estate honing their skills with a mailing list distribution and now coming to the global scene with all their ducks in a glistening row. 

The cases on one side hold extremely strong fundamental characteristics of quality. The type normally associated with blue-chip, low-risk Bordeaux. While simultaneously carrying an almost start-up, newcomer like quality. The brand is very much growing, the relative global awareness is yet untapped and as such the desire and audience for this wine has not yet reached its peak. When you combine these two together you have a wine that offers a great deal of upside potential while being securely underpinned by true quality. 

This is ultimately what you want from your diversification. Cases that will expose you to potential upside through managed increased risk levels. Yet not leave you holding an unwanted case when the music stops or its time to exit.

A great estate whose prices will be interesting to watch closely in the coming years. 

The Author

Avatar

Jake Leighton