Sitting in a warm, comfortable West London restaurant on a cold February afternoon with my Managing Director, I reflected on just how lucky I am to be in the fine wine business...

After a brief blind tasting of the 2006 Domaine des Beaumont Chambolle Musigny, our main course of red mullet arrives at the table; the crisp skin and delicate flavours of the fish marries perfectly with the gentle, subtly perfumed Musigny. As the conversation turns from our respective summer holiday plans to the upcoming 2010 en primeur campaign, a small party of people spills through the front door, including none other than Mr. Jacques Thienpont, owner of Chateau Le Pin. This unexpected surprise provides the perfect opportunity for an impromptu catch-up and the chance to discuss the 2010 vintage (which we can’t wait to taste). It also serves to remind us all of what a small world it really is.

Trying to keep my waist line as thin as possible for The Antique Wine Company’s impending marathon effort this weekend - when, along with Will Buckland, Wine Investment Analyst and Levi Hensel, Online Marketing Manager, I will be going the full 26.2 miles for the first time! - I opt for the assortment of sorbet to finish. It is a perfect palate cleanser.

Normally, I would accompany the description of such a gastronomic and vinous treat with a picture of us enjoying the wine as well. However, as we were both laid a bit low with winter colds, any photos of us imbibing were off the menu this time around. Check back here regularly for more accounts of beautiful meals, great wines and interesting encounters with renowned individuals from the world of fine wine.

Nicholas Connell, Executive Assistant to Stephen Williams

Overview -

It’s likely that those who have invested in fine wine over the past few years were able to enjoy some great bottles during the holiday season; 2010 was another boom year for wine investors.

Economic circumstances over the past several years have had relatively little impact on the overall value of upper-echelon fine wine. This is because during times of prosperity demand for fine wine is driven by consumption. However, during more economically adverse periods, fine wine may also be considered a safe haven thereby resulting in an inflow of capital from investors as they switch to tangible asset classes.

As a commodity, fine wine is rather unique. There is only a finite amount produced by each chateau in each vintage and great vintages get better with the passage of time. Yet, because the product is consumable, while the quality is improving the volume is simultaneously decreasing.

Over a reasonable timeframe this situation can be capitalized on as portfolios can either be partially or fully liquidated and returns are paid out. Additionally, the returns generated may be re-invested into younger vintages, with a few cases skimmed off and consumed for free, having been funded by the profits.

Fine wine investment indices have steadily outperformed the FTSE 100 over the last five years and should therefore be a leading candidate for inclusion in any portfolio as an additional investment class.

2010 Retrospective -

Two topics dominated the fine wine investment conversation over the past year - the much anticipated 2009 en primeur campaign and the effect Asia is continuing to have on fine wine prices.

To say the en primeur campaign was eagerly awaited would be an understatement. Traders, investors, collectors and drinkers alike all held their breath in anticipation. With reports declaring unprecedented quality across the board the big question was going to be what quantities would be available and at what price.  Unsurprisingly, the prices were unanimously high and the first growth wines lead the charge.  Price levels of the very top wines inevitably spooked many prospective investors. This forced those individuals to look elsewhere, often by seeking value lower down the hierarchy of quality. The high scoring ‘Super Seconds’ and the St Emilion Grand Cru Classe wines became areas of heavy investment activity.

One of the unexpected side effects of last year’s campaign was that back vintages of first growths suddenly started to become relatively good values, creating a situation where the en primeur campaign had the effect of pulling up the prices of older vintages. Ultimately, the market illustrated that it was still willing to absorb the high 2009 prices. The question now is, in the short term, whether the wines leading the price charge can keep up the current rate of growth and, if so, will they continue to drag the rest of the market up with them?

As predicted, the Asian market grew considerably over the last 12 months.  The only aspect of the market to disappoint traders, to an extent, was the limited appetite of Asian buyers for the 2009 campaign. On the growth side, the demand for all things Chateau Lafite Rothschild has been unprecedented. This trend was illuminated by the many Hong Kong auctions that brought in stunning sales numbers. The resulting movement in this market sector has had a hugely positive effect on portfolios which include any vintage of Lafite Rothschild or Carruades de Lafite.

Investment Pick of 2010 – Chateau Lafite Rothschild, 2008 – The steady increase in value of this wine over the last 24 months highlights how comparatively undervalued the wine was at release. This growth was only bolstered by the craze created when it was announced that the Chinese symbol for the number ‘8’ would appear on the bottle.  The graph below shows the performance of Lafite Rothschild 2008 vs the FTSE over the last two years.

Looking forward to 2011 -

It is hard to imagine any circumstances that would cause consumers in the emerging ‘BRIC’ economies of Brazil, Russia, India and China to reverse their burgeoning interest in historically Western lifestyle products and symbols, including fine wine.  The biggest of these economies is certainly China. Whilst we currently see China as an abnormal sales market due to the complete fascination with Chateau Lafite Rothschild, we also observe an enormous appetite to learn about wine. As educational programs and opportunities expand there is no doubt that Chinese consumers will begin to appreciate other high-end wines as well.

Which top-tier wines the Chinese market eventually pursues may seem to have a somewhat random nature to Westerner observers. Partly these choices are driven by the translation of the brands into Mandarin and the symbolism of the labels.  In this brand driven environment, it is likely that some of the up and coming wines are going to be estates like Chateau Leoville Las Cases (which translates to “wine of the lion”), Chateau Angelus (“golden bell”), or Chateau Beychevelle (which has a ship on the label not dissimilar to a Chinese dragon boat).

It is also interesting to note that current per capita wine consumption in China is half a litre per person per year. This compares to 55 litres in France and 18 litres in the US.  In the event that Chinese consumption increases to just half of US per capita levels then the whole wine business, on a global scale, will change dramatically.

As we move fully into 2011, it appears that the popularity of Lafite Rothschild in Asia will continue unabated. Be this as it may, I predict that the other first growths will start to enjoy some of the same popularity over the coming months.  Following on Lafite’s tip of the hat to the Chinese market with their 2008 bottle, Mouton made a similar move by offering their 2008 label design to Chinese artist Xu Lei. This acknowledgement of the importance of Chinese consumers will go a long way towards fostering goodwill in the marketplace and increasing demand.  At this stage Mouton is still looking undervalued compared to the other first growth estates, creating an investment opportunity which could prove to be a shrewd long-term move.

Having spent considerable time with Chateau owners and winemakers in Bordeaux over the past 6 months, the word at some properties is that 2010 is reckoned to be an even better vintage than 2009. Yet, given the successes of 2009, are 100 Parker Points going to be enough to sell through the available stock of the 2010 campaign? At this point we have yet to taste the wines or get a solid feel as to whether the market still has deep enough pockets to absorb another top vintage. Although, if the rumours are true, we could be looking at another pair of successes along the lines of the famed fin de siècle vintages of 1899/1900, which would offer investors further opportunities to enhance their portfolios.

To all of our fine wine investors in 2011, here’s raising a glass to a successful coming year and many great returns.

Hong Kong

The Mandarin Oriental’s limousine is ready and awaiting my arrival in Hong Kong and I am immediately impressed with the efficient service that is the norm in this fast-paced city.

This landmark hotel is now managed by one of my very first Asian clients, Jonas Schurmann, who when I met him twenty years ago was the Food & Beverage Director at the legendary Oriental Bangkok.

Within two hours of my plane landing, I’ve checked into to my room, have showered fresh, and I am sitting at my desk in The Antique Wine Company’s Hong Kong offices enjoying the sunset view over Hong Kong’s exclusive residential district ‘The Peak.’

After taking care of a few administrative matters, my local director (Julien Froger) and I set off for dinner with ‘Mr. Pavie,’ one of Hong Kong’s numerous wine collectors. We dine at Cepage, a Michelin-starred restaurant owned by an Antique Wine Company client from Singapore, and take pleasure in a dinner that would knock the socks off many meals at notable European restaurants.

During the evening we compare the various virtues of La Mission Haut Brion versus Chateau Haut Brion from the now deliciously drinkable 1999 vintage. The La Mission is deep and powerful, with an austerity that will serve the wine well for a long life yet to come. The Haut Brion is more about elegance, finesse, and the classic minerality that for me is the hallmark of this great wine.

Afterwards it is back to the hotel for a mandatory nightcap and some time to play catch-up on the ever-growing email inbox because the European business day is still in full swing. I am finally ready for bed around 2:00AM, which I take as a good indication that my jet lag has reduced itself from seven to a mere three hours of discomfort.

The following two days are spent in client office meetings and hashing out deals over lunches and dinners. It is a very full agenda, but I also manage to sit for an interview with the Wall Street Journal about the phenomenon of the Hong Kong wine market. The interview includes making a visit to a private wine cellar at a spectacular home on Hong Kong's famous St. Andrews Golf Course, which is located about an hour drive away in the New Territories. Here we see another side of Hong Kong which reminds me of Gibraltar twenty years ago.

My final day in Hong Kong includes a visit to our logistics company. They provide us with a very secure and temperature-controlled storage facility in the Sha Tin District. The visit is followed by lunch with another one of our importers/exporters to mainland China. Over the best Dim Sum lunch I have ever tasted we talk about the Chinese market and how consumers are now developing interest in wines other than just Chateau Lafite.

While Lafite looks certain to remain the iconic wine for gift-giving, it seems there is a rapidly growing demand for many other Grand Crus and their second wines.

We spend some time studying the 1855 Classification in detail and interpreting the Chinese translation of each name. Leoville Las Cases, for example, means “Wine of the Lion.” Angelus is translated as “Golden Bell.” In China it is not only the taste of the wine but also its name, its meaning and its price that are important factors in the market.

I manage to get an hour in at the Mandarin Oriental's spa before my final dinner, a meal with one of Hong Kong's most prolific collectors, ‘JC.’ We meet at one of his buildings in the former manufacturing, but now choice residential, area of Kowloon.

It is a modest 50-storey affair, about the same size as London's Park Lane Hilton, and inside JC has installed two wine cellars.

One cellar houses about 10,000 bottles of his personal wine collection, and the other is divided into 100 smaller lockers which are rented out to fellow wine collectors for their own storage. "It’s just a hobby business," he tells me casually as we sip on Pol Roger's 1998 Cuvee Winston Churchill and tour his personal cellar - which seems to contain every great wine ever produced. We examine cases of DRC, Comte de Vogue, and Comtes Lafon going back to the 1950's, along with Petrus, Cheval Blanc and all the other First Growths.

Later, over a Japanese dinner in his boardroom, we share Louis Latour's 1989 Corton Charlemagne, Bouchard Pere et Fils Batard Montrachet 2000, Armand Rousseau's Gevrey Chambertin Clos St Jacques 2000, and Chateau Palmer 1983. It is a delightful finale to my three day visit to Hong Kong, and I am dropped back at my hotel with enough time to pack for my 5:00AM departure.

However, as I step into the hotel elevator, out walks ‘Charlie’ - one of our longest-standing clients from Bangkok. What a coincidence in this small world!  Charlie, who is now running JP Morgan's Hong Kong office, and I enjoy a nightcap at the bar together, a drink well worth it because I pick up an order for a few more cases of 1982 First Growths, including a case of Chateau Latour in superb condition that we acquired recently in a cellar purchase in Switzerland.

Thank goodness I am able to get some sleep on my Singapore Airlines flight back to Europe the following day. That is of course after the Krug, caviar, and roast lamb washed down with plenty of their standard Bordeaux - Chateau Cos d'Estournel 2004!
 
For The Antique Wine Company, Asia is currently the fastest growing sector of our customer base, but we still don’t know enough about our clients there. They remain a complex mix of wine traders, hoteliers, and private collectors. During the coming year my objective is to get to know them and their needs better.

Travel arrangements booked by Amex Platinum Travel Service.

A Busy Autumn

The last trimester of each year is always my most hectic. Since relocating to France ten years ago, I’ve resigned myself – with only minimal protest - to the fact that one cannot help but be dragged into the vacation month of August. The entire business economy comes to a halt, the schools are all closed, and with the kiddies in tow, away we go with the rest of the nation to embrace the remaining warmth of summer.

When September returns, it is always with a bit of a shock. The days become shorter and cooler, wine lovers move from poolside to fireside and from veranda to dining table, and cellars become progressively depleted as evening consumption increases.

As we move forward in these continually rising market conditions, many wine lovers are keen to replace their diminishing stocks and prepare for the remainder of the year and coming winter months. For wine merchants worldwide, fall is definitely the busiest trading period in the yearly cycle.

This year my business activity has returned with a vengeance. This has included two trips to the United States, one to the Middle East, almost daily travel around Europe throughout September - including Burgundy and Bordeaux during the harvest - and most recently, a seven day visit to the important regions of Singapore and the ever-expanding markets of mainland China and Hong Kong.

Singapore

Although I say the trip was seven days, I do not officially count the weekend of arrival. This adjustment is made because I am such a terrible traveler that jet-lag always seems to wipe out the first two days after any long flight. This recovery period is something I now purposefully make allowances for in my schedule.  On this occasion, my adjustment was spent at the truly splendid resort hotel Cappella on Sentosa Island. A former British Army camp that has been rebuilt as Singapore's modern entertainment capital, Sentosa now features a Universal Studios theme park and a massive casino.

Thankfully, Capella offers an oasis of tranquility amid the lights and noise. It is a fantastic hotel with an exacting attention to detail. Just opened in February 2010, this was already my second visit to the hotel. As a testament to its quality the hotel was also recently listed on the prestigious annual 'Hot List' from Conde Nast Traveller that lists the top 134 new hotels around the world. When the resort staff is expecting you, the effort they put into your welcome is something quite special. They take every opportunity to use your name, know that feather pillows and extra large bath robes is what are required, and they don’t need to be asked twice.
 
Capella's wine list is under development, but it still offers a host of First Growth Bordeaux and fine Burgundy including Romanee Conti. Already it is a wine list that makes the top restaurants in London appear modestly conservative in comparison.

Economically, Singapore is on the cusp of becoming the entertainment capital of South Asia. Since the government granted operational casino licenses to the Malaysian Genting Corporation and the Las Vegas Sands (both of which, incidentally,

are clients of The Antique Wine Company), they have picked up US$500M in tax revenue during the past three months alone!

How even the conservative Singapore Government can get this equation right, in comparison to the UK's aborted gaming reforms, is a debate for another day.

Starting in the 1980’s, Singapore became one of the earliest Far East markets to develop a taste for fine French wine. Due to this head start, it now has one of the most advanced and competitive wine markets (with some of the finest wine stores you will see on the planet) in all of Asia, along with a host of food and wine events for enthusiasts to attend.

Over afternoon tea with one of my importers, a former electronics and real estate entrepreneur who extended his wine hobby into a business, he tells me his current list of great wines includes 1982 Lafleur, Le Pin and Armand Rousseau’s 1985's. This year his operations have grown from six shops to ten, but he emphasizes how fiercely competitive the business is becoming in Singapore.

Later in the evening, my second importer tells me that the country is now so competitive he has actually spent more time selling wine in Russia this year than in Singapore. These days the wine business has few geographic boundaries!

Travel arrangements booked by Amex Platinum Travel Service.

Earlier this week, our client services team visited some of the most exclusive domaines in the Cote d’Or. The weather was outstanding, the vines were verdant and heavy with fruit in anticipation of harvest, and a more perfect setting for our time in Burgundy would be hard to imagine.

Our first visit was to Domaine Ponsot. Situated on the hillside above Morey St-Denis, the views from the Domaine are both glorious and expansive. Perfect vines stretch out in neat rows towards the village, drawing your eyes eventually towards the horizon and the Alps which appear there on clear days. To describe the environment as picturesque just doesn’t quite do it justice.

Adjacent to Clos du Lambrays, the Ponsot chai was constructed in 2001 and was purpose-built to provide not only extensive production and cellar space, but also as an ideal architectural example of a gravity-flow winery. From the moment the fruit arrives, it is treated as gently as possible. After crushing, it is fed into wooden basket presses which have been in continuous use by Ponsot since 1945. This is just one testament to the importance the Domaine places on history and the utilization of long-standing and proven winemaking practices.

Laurent Ponsot served as our charming tour guide. A kind and eminently knowledgeable winemaker, Ponsot wears an expression of perpetual bemusement. Perhaps this is due to his unwavering confidence in how he runs the winery operations. Ponsot knows, with absolute certainty, that he will produce great wines, and he is secure in that knowledge.

After a brief tour of the library – replete with vintages dating back to the 1920s – and the main production areas, we were led to the barrel room.  Avoiding new oak and letting nature take its course are the fundamental principles of Ponsot’s winemaking, and he is careful to emphasize that he is just one element in a grand combination of elements that create these phenomenal wines.

Standing in the beautiful vaulted chamber, the back wall of which is exposed to bedrock for passive cooling, Ponsot further described his winemaking philosophy and practices for us. He was careful to draw a distinction between bio-dynamic, organic, and natural winemaking, and the methods which he uses to produce his wines. Ponsot made it clear that he dislikes putting specific labels on winemaking methodology and that above all else, he strives for minimalist intervention. “In many ways, the wines make themselves; I am simply their steward during the process.”

Taking us through the barrels (some of which are as much as fifty years old) we were impressed by how evocative of place each wine was. From the Chambolle-Musigny Les Charmes to the Griotte Chambertin, each wine leapt from our glasses shouting, ‘This is what I am, and this is where I am from!’ Truly, there is no better expression of the concept of terroir than a wine’s ability to do just that.

Ponsot produces more Clos de la Roche than any other domaine, and barrel-tasting the 2009 edition of his Vieilles Vignes was yet another lesson in why this wine is so sought after. Not only is it layered and deep, with red and black fruits on both the nose and palate, the  most striking thing about this wine is the intense stream of minerality running through the mid-palate. When combined with a finish of confounding length, it is clear that this wine will provide enjoyment for many decades ahead.

After our visit to Domaine Ponsot, and our tasting of these exceptional wines, it is no wonder that Laurent claims to have more than a dozen people waiting in line for every bottle he produces. Known for their legendary ability to age and arguably second only to Romanee-Conti in their collectability, count yourself lucky if you are ever able to get your hands on these fine wines.

Make sure you view the following amusing video of Laurent informing us about the 2010 harvest.

Laurent Ponsot discusses the 2010 Burgundy Harvest from Antique WineCompany on Vimeo.

 

 

Often, in our mission to provide our clients with the highest level of service possible, we must verify the legitimacy of bottles. Our staunch anti-fraud stance has been well-documented in the past and we have taken many unprecedented measures to ensure that we only conduct transactions with wines of traceable provenance. This position is exemplified by our continued support of the National Centre for Scientific Research (CNRS) in Bordeaux which we partnered with to develop a series of tests using PIXE and Caesium 137 analysis to verify the age of both glass bottles and the wine contained therein.

Here is a bit of further insight into how this verification process begins. This week we were approached by a private individual regarding our interest in selling an Imperial of 1945 Petrus. The first step in any potential transaction like this is that we must verify, to the very best of our abilities, the legitimacy of the wine.

Upon receiving the bottle at our London offices, we began a visual inspection. The bottle provided the following clues:

1.)    Label – The label was clearly photo-copied. This was easy to identify because the visual ‘texture’ lines on the front of the label were neither tactile, nor did they press through to the back-side of the label (which was peeling in one corner so both sides could easily be inspected). It is important to note that simply because the label is photo-copied does not automatically mean the wine is fraudulent. In the 1960s and 1970s many chateaux and negociants photo-copied labels as replacements when they were missing the originals.

2.)    Capsule – The capsule was worn, but showed no signs of seepage or much physical deterioration. It was somewhat discoloured and the foil had clearly been twisted out of shape at some point. The capsule was also imprint-branded as Petrus and had ‘Mis En Bouteilles Au Chateau’ printed on the side.

3.)    Cork – We were unable to see the cork because it was entirely hidden by the capsule, however, the cork was pushing/bulging slightly.

4.)    Additional Labels – There were two further labels on the bottle, one at the base of the neck (front) reading ‘Caves du Chapon Fin – Bordeaux’ (restaurant) and one on the back reading ‘Selection Alexis Lichine’ (negociant).

After the above observations were made, it was established that the next step would be to carefully cut the capsule to reveal the sides of the cork. This would allow us to verify whether the cork was chateau-branded or not.

Upon receiving explicit permission from the owner, Julien Froger, head of our Bordeaux and Hong Kong offices, served as chief surgeon for the operation. Despite carefully peeling back three-quarters of the capsule, Julien was unable to clearly see any identifying markings on the cork.

This leads us to believe that the bottle may not be genuine. However, the verdict as it stands now is that we still do not know. The next step is that we are going to see if the owner would like the wine sent to the Bordeaux lab for further analysis.

Something happened this weekend here in Hong Kong that made me reflect upon the early days of my wine career, in the late 1980’s, when new customs regulations in England allowed travellers to hop over the channel to France, load up their car with wine, and bring it home to the UK, without any duty charges.

The “Grande Finale" to Vinexpo Asia in Hong Kong this week was two auctions conducted on Friday and Saturday, one by New York auctioneer Acker Merrill which raised some HK$152million (£13m/US$20m),  and running concurrently was Christies sale of their “liquid Gold” Chateau Yquem collection. As both of these sales contained items originally supplied by The Antique Wine Company, especially numerous older vintages in the Christies Yquem collection, it was very satisfying to see this lot achieve HK$8m. Following the sale, David Elswood informed me that it had become the firms “biggest wine lot ever lot sold”, falling only slightly short of that achieved by  The Antique Wine Company in 2007 when we supplied the unbroken line of Yquem vintages 1855-2005 to a French buyer for $1.5m. But what I find especially surprising is the fact that the Yquem sold last weekend was, according to Christies, purchased by a EUROPEAN PRIVATE BUYER!

With Europeans going to Hong Kong to buy wine, it seems that the former colony’s  desire to become the “Fine Wine Hub for Asia” is not only being achieved, but might well go beyond their dreams and aspirations to become the “Fine Wine Hub for The World”!

Here at The Antique Wine Company we are currently sitting on  an even larger collection of Chateau d’Yquem with various other documents and items from the bygone Lur Saluces era.  In the aftermath of the exciting auction I was asked “will you sell it in Asia?” I replied, “it might be best to keep it until the Chinese market really gets going”!

國語版本

Whilst here in Hong Kong anticipating the lines of Chinese visitors for tomorrow’s opening of Vinexpo Asia, I wonder who would have thought ten years ago that this Asian market would be the driving force behind the fine wine business as it is today? It’s an explosive phenomenon best illustrated by the rise in value of Lafite 1982. Three years go The Antique Wine Company was supplying this wine at £10,000 per case. We are now supplying the same wine for £40,000 per case and every case of Lafite, not only the 82 but even the shadow vintages of its second wine, goes to China and we still can't find enough. This is good news if you're a European client with an odd case or two in the cellar that you might wish to sell!

Two years ago, whilst at The Antique Wine Company's “Three Centuries of Lafite” event (co- hosted by Chateau Lafite and The Antique Wine Company) at Grand Hotel du Cap Ferrat in the South of France, I asked Lafite's winemaker Charles Chevallier, over a glass of their 1959 vintage, "what do you attribute the apparent popularity of Lafite in China to?” He answered, two reasons, the first being that "Lafite makes the best wine in Bordeaux" (an answer which the world’s most esteemed  winemaker is almost duty bound to give with hand on heart and one which is perhaps true), but the second reason was probably equally important; "Lafite is a name that is pronounceable in Mandarin, and there's also something special about the word "la feet" in the world's biggest, fastest growing economic force.

During this Vinexpo show, I'll be taking a massage of La Feet every day!

© 2010 Stephen Williams

 Pic; The Great Antique Lafite Collection 1787-2000 sold by The Antique Wine Company in 2007