Wine Investment Friday's

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 look at the titanic thrust into the limelight performed by the now rarified 3rd growth:

Calon Segur – 2016


How and why has this St. Estephe winery has become the wine of the moment?


Beneath the Label

In 2012 a large insurance company, along with the owner of Petrus bought Calon for 170 million euros. They immediately renovated the historic estate up to the cutting edge at a further cost of 20 million euros more. With a total replant of the vineyards and new management Calon was ready to change its standing. 

Critic Score: 96 Points – Wine advocate
Matching the highest score ever achieved by a wine produced from Calon. The first real statement of quality. 

Region Rating: St. Estephe – 98R
2016 is arguably the rival for 2009 in terms of climatic perfection. The two are the undisputed best modern vintages. 

Drinking Window: 2021-2045
Calon is a well made, Cabernet dominant wine and as such will have lengthy ageing capacity.

Production Volume: 20,000 cases
Despite this apparent large production volume, finding a case of 2016 Calon at E.P time was a real task. It was the wine of the campaign. 

Summary:
So far this is a good wine, but not necessarily a stand-out wine. It is significant from a vintage perspective, coming from the mighty ’16. It is the highest scoring Calon so far, yet at 96 this is on the lower edge of the quality we are looking for. Finally, the potential drinking age and production volume are about average for a well-made modern Bordeaux. At this stage, we should be interested but not quite yet sold. 


“I make my wines at Latour and Lafite, but my heart is in Calon”

Marquis de Calon


Money Matters

Brand Power: 82/100, rank 33rd in JF Tobias Brand Power Metric
Calon is by no means a global brand of real note. However, perceptions are changing, especially in Europe. When Petrus DNA and big money flows into an estate, quality is sure to follow. So watch this space. 

Liquidity: 90%
At this price point this is a highly liquid and desirable wine. Exits could take place within days. 

Inter-Trade Price Volatility: 9.7%
A high volatility for a Bordeaux mid tier wine. However this is likely a result of a clamouring audience buying at all prices after missing out at E.P time. A trait unlikely to persist as the wine ages.  

Price History: 

Summary:
The vectors here continue to offer positive momentum to this wine’s investment case. Highly liquid, strong demand especially in Europe and managebale levels of volatility. Perhaps the only pause for concern would be brand power. With slightly more well-known estates their reputation around the world underpins the exit and the price. However, as a financially reinvigorated brand, I would count this a small risk, if one at all. 


Position for Profit: 

The frame of reference for picking this wine is in value investing. Choosing an asset or stock for the simple fact that its price at present in the market is lower than the quality of its performance. In wines case this is referencing the price against the quality vectors we find in section 1. While those vectors were not necessarily wildly exciting on their own, they are when combined with the price of the Calon Segur. At £1,000 per 12*75 this is a wine priced beneath where it should be. When reviewing the vintage horizontally, identifying wines of a similar quality it is clear that the pricing still remains 20% shy of those more established mid to high tier wines. So from this perspective this wine should be very exciting indeed as it is yet to match price and performance to the accepted market equillibrium. 

Equally when we review older iterations of this wine we find some exciting results. To buy a case of Calon Segur 2009, the last wine to score 96 points you would have to pay £2,370. That is currently 137% higher. The potential for 19% per year for 7 years from a low risk, high liquidity Bordeaux wine should register this wine as a superb investment in anyone’s book. 

The Author

Jake Leighton