FINANCIAL TIMES SPECIAL REPORT | Tuesday June 19 2012

The FT wine expertlooks at thedifference betweenyouth and age – oneof the most absurdaspects of thecurrent finewine market

Buying & Investing inWINE

Inside this issueMatter oftasteRobert MParker Jr,inventor ofthe ratingscale, isstill acentre of controversy, saysMaggie Rosen Page 2

What goes up Ella Listersays that 2011 saw amuch-needed correction inthe price of BordeauxPage 2

Older the betterMature vintages can besurprisingly affordable,writes Jancis RobinsonPage 3

ThatbiancoItalianproducersare wakingup to theirheritagewhites,

says Walter Speller Page 4

On FT.com● Maggie Rosen looks atthe burgundy fraud case

● Yquem is in a class ofits own, says StephenBrook

● Guy Woodward mapsAustralia’s wine tourism

● Margaret Rand on thebest virtual communities

● Geraint Carter considersthe prospects for investors

● Richard Hemming looksat glasswear

● Chris Smith examinesforex rates

● TomCannavan onBYO politics

www.ft.com/reports/wine-investment-2012 | twitter.com/ftreports

A sense of déjà vu hasbeen the overridingfeeling for wine inves-tors over the past 12

months. This has been largelythanks to last year’s sharp cor-rection in fine wine prices,which sent the Liv-ex 100 FineWine Index plunging a fifth inthe second half of 2011.

To many, it was a virtualrerun of what happened in 2008.

Once again, the causes of thecorrection were not difficult todissect. On the macro front,recession, stock market volatil-ity and the eurozone sovereigndebt crisis were all factors. Butthe final tipping point was FirstGrowth prices, which had shotout of control after a two-yearbull run, during which theLiv-ex 100 index had risen by astaggering 76 per cent.

Much of this price increasehad been driven by soaring Chi-nese demand, led by ChâteauLafite. But by the middle of2011, the slowdown in the Chi-nese economy coincided withconcerns that prices had alreadyovershot demand. This wasespecially true in Hong Kong,where the retail and auctionmarkets for First Growth clarethad become saturated.

A mishandled and aggres-sively priced 2010 primeur cam-paign also did the bordeauxmarket no favours. Instead, itonly fuelled resentment andaccelerated a feeling of “FirstGrowth fatigue”. As the marketturned from July onwards,investors and collectors became

increasingly spooked; the onlyquestion then was how quicklyand by how much prices and theLiv-ex Index would recoil.

Inevitably, recent vintages ofLafite took the biggest hits.Having traded at a premium of129 per cent to its fellow FirstGrowths, some vintages, such asthe 2008, slumped by 45 percent. Latour, Haut-Brion, Mar-gaux and Mouton fared lessbadly, but they too suffereddents to their pride and prices.

Some had seen the writing onthe wall. Most obviously, sev-eral funds had already quietlymoved out of Lafite. Merchantsalso sought to reduce stock lev-els from the late summer. Butmany newer and more specula-

tive investors were caught un-awares. After two years snap-ping up First Growths in a rap-idly rising market, many werenow equally keen to offloadthem as the waters subsided.

Fortunately, the market hadlearnt some lessons from 2008.This time, many investors, trad-ers and fund managers kepttheir nerve and the sell-off wasnothing like as disorderly andpanic-stricken as before. Norwas there the same level ofredemptions from funds.

But the correction was seriousand prolonged. In the final sixmonths of 2011, the Liv-ex 100fell 21.5 per cent to end the yearon 286 points – a year-on-yeardrop of 15 per cent. As Liv-ex’s

Justin Gibbs pointed out: “Witha weighting of 68 per cent in the100 Index, the decline in theFirst Growths cast a longshadow on the market.”

It wasn’t all bad. Some sec-ond-line châteaux benefitedfrom a flight to value and per-formed extremely well, evenmanaging to finish the year on apositive note. These includedthe increasingly fashionablePontet-Canet, Beychevelle,Lynch-Bages and Pichon Baron.

However, if bordeaux took astep back in 2011, ultra-fine bur-gundy took a huge stride for-ward. As seems to be the casethese days, this latest phenome-non was almost entirely due tonew demand from China –

driven mainly by a few super-rich buyers who had developeda powerful thirst for the region’sgreatest names. Inevitably, topof their shopping lists was theDomaine de la Romanée-Conti(DRC), which quickly took overLafite’s mantle as the darling ofthe secondary market.

Given DRC’s legendary qual-ity and scarcity, prices rocketedcausing the Liv-ex DRC Index tohit record highs from 2011onwards. In May 2012, it roseanother 2 per cent and is nowup 19 per cent on this time lastyear.

Other Burgundy domaineswere also swept up in thefrenzy, including de Vogue,Leflaive, Roumier and Rous-

seau. To some this was furtherevidence of a Bordeaux backlashand a broadening of the market.The same was true of a pricerise for top Italian wines. Here,the leading contenders were thelikes of Sassicaia, Ornellaia,Masseto and Solaia.

However, both Burgundy andTuscany are simply too smalland modish to satisfy thedemands of the global marketover the long term. Equally, itwould be foolhardy to write offBordeaux for too long. Greatbordeaux is a like the timeless“little black dress” which nevergoes out of fashion. Ultimately,bordeaux is all about price. If

Hopes rise again after correctionIt is a year since theFirst Growth bubbleburst but the marketlearnt from 2008 andis keeping its nerve,says John Stimpfig

Continued on Page 2

On the rack: recent vintages were hit hard by the slowdown in the Chinese market but some fund managers now predict double-digit growth in the market this year Dreamstime

Jancis Robinson

2 ★ FINANCIAL TIMES TUESDAY JUNE 19 2012

Buying & Investing in Wine

the wines are perceived as offer-ing value, they will sell.

By January, many believedbordeaux prices were back inthe “buy zone” and that therecovery was only a matter oftime. IG Wines reported Euro-pean buyers returning to themarket and First Growth “off”vintages starting to pick up at£300 a bottle. It also noted bidoffer spreads were tightening, asbuyers began to exceed sellersby two to one. By the end ofJanuary, the Liv-ex 100 Indexhad recorded its first positivemonth since June 2011.

Fund managers becameincreasingly optimistic as theChinese year of the Rabbit gaveway to the Dragon. Andrewdella Casa of The Wine Invest-ment Fund predicted the marketwould grow by a steady 10 percent by the year end.

“Falls such as those in 2011have generally been followed bystrong returns for those invest-ing at the right time,” he said.“We believe this could be the‘right’ time and predict double-digit growth this year.”

Much of this cautious opti-mism was predicated on newmoney flowing into the market,and on two other factors. Thefirst was Robert Parker’s latestrevised scores for the highlyregarded 2009 vintage, whichprovided a timely fillip to prices.The second was a quick andwell-priced en primeur cam-paign, though this had yet tohappen by the middle of May.

Since January’s initial rise of1.4 per cent, the Liv-ex 100 Indexcontinued to climb closing thefirst quarter up 2.5 per cent.

But after disappointing earlyen primeur release prices, it fell

in April by 1.2 per cent. “So far,the recovery has been prettyanaemic at best,” says MikeLaing, managing director ofArmit, the London-based finewine merchant. “I’m not surewhere the game-changer isgoing to come from.”

“It’s a very tricky market,”says Gary Boom, managingdirector of Bordeaux Index’s.“There is still a fair amount ofstock around and returnshaven’t been great. That’spartly because the big redemp-tions that took place three yearsago have yet to be matched bynew money flowing in. I thinkthat will continue for sometime.

Mr Boom’s view is that themain indices will only do plusor minus 3 per cent to the end ofthe year. “After that, it’s diffi-cult to predict,” he says. But heis confident that “the marketwill resume its upward trend atsome future point.”

Mr Boom is launching his ownsmall “First Growth WineFund” this month. “I think thetime is right for certain stocks,including a limited number ofhigh-scoring First Growths fromthe 1990, 1996 and 2000 vintages.At the moment though, it’s verymuch a stock picker’s market.”

Nevertheless, there are someshort-term bulls. One is PeterLunzer, manager of LunzerWine Investments. Lunzer’s fig-ures suggest to him that a lot ofmature wines are slightlybehind their natural price curveand will benefit from an expen-sive en primeur campaign.

He predicts the market “willput on between 14 and 18 percent by the end of the year”.

Such a recovery would cer-tainly be celebrated by inves-tors. But, in the world of wineinvesting, only time will tell.

Hopes riseafter lastyear’scorrectionContinued from Page 1

Robert M Parker Jr, the influen-tial US wine critic, has beencalled guru, emperor, pope, andother names – not all of them soreverent.

Since the late 1970s, when hebegan publishing his tastingnotes and launched a 100-pointratings scale, he has redefinedthe role of wine reviewer.

Through the pages of hisnewsletter The Wine Advocate,Parker has influenced not onlyhis readers’ preferences, butmany aspects of the fine wineindustry – from vinificationtechniques and wine styles topricing.

His name is now a verb (Park-erise) used for the creation of astyle of wine that pleases histaste: invoking it can transforma roomful of convivial winegeeks into a verbal mosh pit.

Yet he is now 64, and the wine

world has grown beyond hiscapacity to cover even the verytop end by himself.

In the past few years, he hasexpanded his team, cedingregions to new tasters; he hasalso been embroiled in allega-tions of impropriety involvingtrusted associates.

Both the world of communica-tion and taste-formation havechanged – all of which fuels theever-lively debate, amongParker followers, about whetherhe still sways palates andprices.

Jaime Araujo, founder of Ter-ravina, the wine marketing con-sultancy, says: “He is not as rel-evant to the younger generationof high-end buyers, who don’tcollect in the traditional way, byfinding a few sure values, get-ting on the distribution list andrepeating each year.”

“This reflects the luxury sec-tor in general, whether you aretalking about young Chinese,young Americans, youngFrench. They all want the topbrands, but it’s rare to find a‘Chanel and nothing else’ buyer.They want some Chanel, someDior and some vintage that noone else has.”

For a certain type of fine winebuyer, one who is just startingor who prefers to rely on num-bers rather than experiment –and certainly for regions suchas Bordeaux (which Parker stillcovers) and California (which hehas delegated) – Parker pointsremain the bellwether of awine’s taste and traceability.

“He still sets the bar in Bor-deaux,” says Chris Adams, chiefexecutive of Sherry-Lehmann,the New York wine merchant.

“Positive comments on a winethat has been released willcause an increase in price andnegative comments will causeprices to stagnate.”

The Wine Advocate alsoremains the benchmark for Cali-fornian wines.

“Sometimes, if The Wine Spec-tator gives a very high rating,we’ll get a few calls, but Parkersteers sales,” says James Hock-ing, director of The VineyardCellars, an importer, distributorand retailer of Californian winesbased in Newbury, UK.

“But really no one else comesclose. If Parker gives 95 pointsor more, the phones don’t stop,”says Mr Hocking. Many of hisclients follow Parker “slav-

ishly”, delaying purchases untilhe pronounces, he adds. “Whena new container arrives and Icall my private clients, I knowthe conversation will start with‘what are the scores?’ ”

Calculating the impact ofParker points on futures andbottled wine is a popular game,made more challenging by fac-toring in vintage, economic cli-mate and especially, rescoring.

“You can’t really quantify thecorrelation in dollars but youcan in percentage points,” saysAdams, citing Parker’s recentupgrade to 100 points of numer-ous 2009 Bordeaux (more thanhe gave to any other vintage).

To compare, Château Latourfirst growth was released atabout €540 and the far lessfamous Château Smith HautLafitte, a Graves classifiedgrowth was released at €62.

“When they both got 100points, the price increase forboth was around €100 but, obvi-ously, for Smith Haut Lafitte,the percentage increase wasastronomical,” says Mr Adams

But for Henning Thoresen,chief executive of BordeauxWinebank Group, which sellsfutures, ex-cellar Bordeaux and

manages wine investmentfunds, it is precisely the possi-bility that Parker may changehis mind that reduces his relia-bility for long-term investmentpurposes, as opposed to specula-tion. “For me, his influence isdeclining,” says Mr Thoresen.

“One key reason was how hehandled the 2005 vintage. Hehyped the vintage, but none ofthe numbers lived up to theexpectations.

“When he released his finalscores after retasting in 2008, allthe potential 100-pointers weredowngraded, which caused a lotof jaws to drop.”

Mr Thoresen also says thatthis year many châteauxreleased their prices ahead ofParker’s pronouncements indi-cating his diminishing rele-vance. Some observers say itreflects producers attempting toexert control over prices in alesser vintage.

Determining the impact ofParker points on auction pricesis harder, because of issues ofprovenance and condition.

“I really don’t think there is acorrelation,” says Charles CurtisMW, Christie’s head of sales forAsia. “This is strictly anecdotal,

but intuitively I’d say there arebig swings in price for the samewine from auction to auctionindependent of his scores.”

A sceptic of the 100-point pro-tocol, Mr Curtis says results forthe same wine in two auctionsmay reveal a trend, but don’ttell all. “It’s not as simple assaying ‘Parker moved it up apoint and therefore in bidding,it went two increments more’.

“In the same way that I don’tthink it’s possible to quantifythe beauty of a wine on a scaleof 1-100, I don’t think it’s possi-ble to track the price.

“There are so many factorsthat go into a price at auction,it’s hard to tease them apart.”

Parker’s nose is not as big a pointer as it wasCritics and pricingThe inventor of therating scale is stillcontroversial, saysMaggie Rosen

‘There is a fairamount ofstock andreturns haven’tbeen great’

– Gary Boom

Robert M Parker

T he world of wine auctionsunderwent big shifts in 2011.Many in the trade believed thesudden turnround in fortunes

midyear was a necessary – even wel-come – rationalisation. With somewines’ prices more inflated than others,the correction brought a reassessmentof their relative value and desirability.

For the first half of 2011, auction rev-enues continued the unwaveringascent seen the year before, and byJune were up 58 per cent year on year.

July and August are traditionallyquiet months but, as the autumn sea-son began it became clear that auctionswere not impervious to the wider cor-rection in wine prices.

With a two-month delay, the WineMarket Journal (WMJ) 150 index –which tracks prices at auction – beganits descent in September. By year-endthe index had dropped 5.8 percentagepoints.

Global auction revenues in the sec-ond half were down 7 per cent on the

same period in 2010, bringing the 2011total to $467.3m. This figure nonethe-less represents a 20 per cent increaseon the previous year, because of astronger-than-ever first half.

The number of auctions remainedhigh, at 73 from July to December,exactly the same as in the first half of2011. However, sell-through rates weredown in the second half, averaging 90per cent of lots offered compared with94.2 per cent up to June. Subsequently,each sale was worth less, grossing$2.86m on average, down from $3.54min the first half.

More often than not, unsold lots con-sisted of commodity Bordeaux – bottlesof recent vintages, widely availableand, crucially, not yet ready to drink.Prices for these wines had reacheduntenable heights, overtaking those ofrarer, more mature equivalents.

Robert Sleigh, Sotheby’s head of winein Asia, confirmed that “younger Bor-deaux is what has suffered, but reallyonly the first growths”. That firstgrowths led the downhill charge isclear. The WMJ First Growth Bordeauxindex fell 16.3 per cent from July toDecember, and a further 6.8 per cent inthe first quarter of 2012.

Buyers’ first-growth fatigue was par-ticularly apparent in Asia, where themarket was “flooded with Bordeaux”,according to David Wainwright, man-aging director of Zachys Asia. There

remains “ample demand for rare stuff”,he countered.

Auction houses were quick to caterto the broadening vinous horizons oflocal collectors, with a series of moreadventurous sales in Hong Kong.

In early November, Acker Merrall &Condit held a two-day sale dedicatedalmost entirely to Burgundy from asingle-owner collection. Hong Kongbuyers snapped up 98 per cent of the1,342 lots, which together brought in$14.5m – the highest total for any auc-

tion in 2011. This helped Acker toretain its top spot, as the only house tobring in live wine auction revenues ofmore than $100m to December, morethan two-thirds of which were gener-ated in Hong Kong.

Christie’s all but caught up withSotheby’s in the race for second place,with revenues up 34 per cent on 2010.In another Burgundy success story,Christie’s brought the private cellar ofHenri Jayer under the hammer in

Hong Kong on 10th February this year.At the once-in-a-lifetime opportunity toprocure the fabled wines of the lategrower, all bottles on offer were sold.

Other wine regions are also shiningbrightly, with the Rhône, Champagneand Italy also performing well at auc-tion, but Burgundy has been the pri-mary beneficiary of the shift awayfrom Bordeaux. Domaine de laRomanée-Conti has replaced ChâteauLafite as Asia’s darling, and thereforeeveryone else’s. Asia in general – andChina in particular – is still very muchdriving the wine auction market,despite the slowdown.

Hong Kong is outpacing rival mar-kets in New York and London, withgrowth of 40.9 per cent year on year. Inproportional terms, Hong Kong wasable to move ahead of a flat US market,while Europe’s 21.6 per cent growth forthe year allowed it to retain its 19 percent share.

But the city lost some ground in thelast quarter, accounting for just underhalf of global revenues during 2011, at48.5 per cent. In the third quarter,Hong Kong fleetingly crossed the half-way mark. To April of this year, HongKong’s share had dropped to 44.6 percent.

Respective sell-through rates suggestthat the increasing focus by US auctionhouses on China could be excessive.

Sell-through rates at Hong Kong auc-

2011 was a good year with a slow finishAuctionsElla Lister says that pricesfor commodity Bordeaux,not ready to drink, hadreached untenable heights

Fine growth: an auction in April this year in Hong Kong, which is outpacing rivals New York and London with a rise of 40.9 per cent year on year

The Asian market wasflooded with youngBordeaux but demandremains strongfor rare vintages

tions have gradually decreased sincepeaking near 98 per cent in 2010. Thepercentage of lots sold there averaged94 per cent in 2011, and was 90.2 percent from January to April this year.

In the US, on the other hand, sell-through rates rose to 95.6 per cent bythe end of last year, with auctions inNew York and Chicago easily soakingup supply.

As prices stabilise this year, thereare signs that Hong Kong buyers arebeing tempted back into the saleroom.For private collectors Sam Lin andAnna Lau, the auction frenzy in HongKong had become off-putting. But inMarch this year, they dipped their toesback in the water, spending a total ofHK$250,000 ($32,200) at one sale.

“We got some bargains,” said MsLau.

With a more cautious and exactingpool of buyers, Hong Kong will notgenerate the stupendous growth thisyear that it has done since duty onwine was lifted in 2008. Global auctionrevenues in 2012 will be lower than lastyear, with results from the first fourmonths of the year suggesting a totalof about $400m.

With a steady stream of buyers frommainland China – and a widening spec-trum of wine in their sights – HongKong will continue to play a centralrole in world wine auctions, ahead ofwestern counterparts.

FINANCIAL TIMES TUESDAY JUNE 19 2012 ★ 3

One of the most absurdaspects of the current finewine market is howexpensive young wine is bycomparison with maturevintages.

While too manyBordeaux proprietors seemto be tempted, regrettably,to price their non-stellar2011 above their non-stellar2008, it is perhapsappropriate to turn one’sback on this unsavouryspectacle and turn theobservation on its head.

One of the mostattractive aspects of thecurrent fine wine market ishow inexpensive mature

Buying & Investing in Wine

ContributorsJohn StimpfigContributing Editor

Jancis RobinsonFT Wine Correspondent

Maggie RosenElla ListerWalter SpellerFT Contributors

Martin BriceCommissioning Editor

Steven BirdDesignerAndy MearsPicture Editor

For advertising, contact:Mark C Howarth+44 020 7873 4885mark.c.howarth@ft.comor your usual representative

FT Reports are on FT.com.www.ft.com/reports

Mature vintages can besurprisingly affordable

JancisRobinsonWine

vintages are by comparisonwith their callow,unformed infantcounterparts.

This is particularly trueof serious, classic winessuch as classed growthbordeaux and burgundiescarrying a Grand Cru orsuperior Premier Cruclassification. There issimply no point in payingthe prices asked for suchwines unless you givethem the opportunity toattain their full splendourand nuance by ageingthem for many years inbottle. You want all theyouthful elements to knittogether to form muchmore complex compounds,with flavours that arenever found in young wine– under 10 years old, say.

But the pleasure ofdrinking much older winesis huge. This is whatdistinguishes wine fromother drinks: its ability tolast – partly because of itsalcohol content, and partlybecause its charge oftartaric acidity helpsprotect it from harmfulbacteria – and thanks tothe complexity of its make-up, to do more than that –improve with age.

A fine wine from the1980s or older will offer amuch, much wider array ofscents than the simpler,more brutal appeal of ayoung wine – and it islikely to changeconsiderably in thedecanter or glass, so thatthe experience of drinkingmature wine is one of themost intellectually andsensually rewarding acts ofconsumption that I canthink of – akin toexperiencing a particularlyentrancing painting ormusical performance.

But, unlike a work ofart, a bottle of wine hasnecessarily to be destroyedto be enjoyed, so we owevenerable examplesalertness and dueattention.

As I have written,perhaps ad nauseam, themost glamorous andexpensive vintages of themost famous wines thatproliferate in the marketplace are extremelyexpensive, and great careis needed to ensure theirauthenticity. If you wantto minimise the chances ofencountering a fake, andmaximise the chances ofsecuring a bargain, headfor second-tier wines andsecond-division vintages.

In Bordeaux, forexample, the second-division vintages I wouldrecommend for currentdrinking of fully maturewine at classed growth – agood-value notch belowfirst-growth level are 1996,1995, 1994, 1993 (rightbank), 1988, 1986, 1985,1983, 1981, 1978, 1975, 1971,1964, 1962 and 1952. Othervintages in the second halfof the 20th century tend tobe either too expensive, toodisappointing or too young.

Because most bordeauxis made in such quantity,it is not too difficult tofind mature vintages stilllurking on wine listsaround the world. Thebrilliant and improvingwine search engine, wine-searcher.com, is aninvaluable aid to locatingold wines. You can refineyour search by bottle size,location, whether you areprepared to buy at auction,name of the wine orappellation, and even thesort of price you areprepared to pay.

I recently listed some ofmy favourite suppliers offine wine, and you cancheck up on how aparticular wine is tastingat – present by checkingout the freecellartracker.com orsubscription websites suchas erobertparker.com,winespectator.com and,ahem, jancisrobinson.com –all of which have tens ofthousands of tasting notes.

The grander the wine,the longer it is likely to beable to last, although somegeneralisations may be inorder, such as that Saint-Estèphes tend to beparticularly slow to unfurl,Margaux and lesser Saint-Emilions much quicker.Sauternes and Barsac, thegreat sweet white wines ofBordeaux, are practicallyindestructible.

There is another sort ofwine that it is crazy tobroach too young, andwhich can last even longerthan a classed growthbordeaux, and that isvintage port. Drinkingyoung vintage port isreally no more fun thandrinking a much cheapersingle quinta port ofroughly the same age. Buta fully mature vintage portis a miraculous thing, withevery bit as much nuanceas the finest mature tablewine.

Sadly for those dedicated– some would saydemented – individualswho spend their livesmaking the rich, fortifiedwines of Portugal’s DouroValley, in the past fewdecades vintage port hasnot appreciated in valuenearly as much as themost respected table wines,nor as much as it deserves.

And, because vintageport is, alas, notfashionable, there is plentyof it on the market – notleast because Oxbridgecolleges and gentlemen’sclubs have been divestingthemselves of theirholdings of it.

So, if you are seeking afine 1983, for example, youcould get a bottle of 1983vintage port, alreadydrinking well but nowherenear its peak, from a topsupplier for about £50 abottle, whereas that sumwould get you only themost modest 1983 redbordeaux.

Other fine wines –particularly burgundy, and

to a certain extent rhône –tend to be made in smallerquantities, so locating fullymature examples of goodprovenance is much moredifficult. But at least thesecondary market for allbut a handful of names isvirtually non-existent, so itis possible to pick upbottles bought from privatecellars where they havespent most of their days.

Generalising aboutburgundy vintages is amug’s game, which I amloath to play. Suffice it to

say that superior burgundytends to have two periodsof drinkability: one in itsyouth (youthful charm is amore common attribute ina burgundy than in themore obviously tannicwines of Bordeaux); andone in grand old age. Youmight strike lucky and finda delicious example of thelatter.

See more than68,000 tasting noteson Purple Pages ofJancisRobinson.com

Because most bordeaux is made in such quantity, it is not too difficult to find mature vintages lurking on wine lists Reuters

4 ★ FINANCIAL TIMES TUESDAY JUNE 19 2012

Buying & Investing in Wine

Passion play Investing for the love of itIn wine terms, passion andinvestment are not a classicpairing. The words “wineinvestment”, uttered in thepresence of any wine critic orproducer, will be met with alook of practised disgust.Speculation is widely viewed asa negative force in the winemarket. But why?Because it pushes up prices,

of course, but also becauseoenophiles don’t see wine as aproduct. Wines are individual,reflecting soil, climate, and craft,and consumers should have apassionate response when – notif – they drink it.“The whole point of wine

investment originally was to fundyour cellar; to drink great winesfor nothing,” says Jo Purcell, MDof Farr Vintners in Hong Kong.Hong Kong buyer George

Tong sees his collection as“pure passion,” and will notpurchase a wine he doesn’twant to drink himself, howeverhighly rated. Mr Tong is notexceptional. Purcell is convincednone of her clients buys wine“purely for investment.”For Pierre Lurton, general

manager of Château ChevalBlanc and Châteaud’Yquem, collecting wineshould be all about “thedesire to obtain a certainbottle for love and forpleasure”.This doesn’t mean

passionate collectors arenot also investors. “Asianbuyers are investors ineverything,” says DavidWainwright, managingdirector of ZachysAsia, adding thatevery one of hisclients “has aninterest in wine,”and “starts outloving wine, tastingwine.”Frédéric Engerer,

Château Latour’sgeneral manager,finds the debate “abit useless”, as “aninvestor maybecome a drinkerone day, andsometimes ‘drinkers’resell some cases.”Accidental

investment in wineis an age-oldphenomenon. Onlyrecently have the

pros turned their hand to wineinvestment. Since the advent ofwine funds, the Liv-ex 50 Indexhas increased by 290 per cent.In other words, prices of the

Bordeaux first growths whichmake up the index have risen ata compound annual rate of 12per cent. The argument thatspeculation pushes up pricesseems irrefutable.By June last year, prices had

reached an all-time high. Themarket reacted to unsustainably– and undrinkably – expensivefirst growths, and by year-endthey lost a quarter of theirvalue. This year, prices seem tohave reached a plateau.Wine funds adopt two broad

approaches to investing: strictlyfinancial or passion-based. Ex-finance types swear by arigorous analytical approach,usually resulting in risk averse,Bordeaux-only portfolios.Miles Davis, director of Wine

Asset Managers, believes it is alltoo easy for a wine lover to“cloud the difference betweenan investment and somethingthey’d like to drink.”Other funds are happy to let a

passion for wine influencestrategy. Luxembourg fundNobles Crus allows forsignificant holdings inBurgundy and also someItalian wines.Christian Roger, the

investment manager,believes “you can decide toinvest in a wine only if youunderstand it and for thatyou must have passion,you must taste againand again, you mustlove this particularwine”.These less

restrictive fundshave prospered inrecent monthsbecause of theirdiversified portfolios.Burgundy’s stabilitywhile Bordeauxprices plungedallowed Nobles Crusto buck the trendwith an 11.25 percent gain for 2011.Passion can pay.

Ella ListerSome go forrisk-averse,Bordeaux onlyportfolios

Italy’s vinous reputationmay be firmly based on itsreds, which come in anastonishing variety of

styles, but its whites deserveattention too.

The reason they have beenrelatively unnoticed has, inpart, to do with Pinot Grigio’sworldwide success. Although auseful grape, the blandofferings channelled throughsupermarkets, neither offend,nor beguile, anyone.Unfortunately, it is still Italy’ssignature white, if only bysheer volume.

The consumer is not toblame. The fault lies with Italy,which has only recently begunto reappraise its indigenousvarieties after years of neglect.Before that, the wine sectorwas driven by technology,generous yields and bestsellers(that Pinot Grigio again) andinternationally appealing styles,such as Chardonnay andSauvignon Blanc.

It also encouraged mercilesscapitalisation on well-knownnames by enlarging famousregions ad absurdum andallowing sky high yields, SoaveClassico being just one victimof this policy.

But, from the 1990s, a senseof tradition and identity startedto reassert itself. This triggeredrenewed interest from a newgeneration in local varieties,which only 20 years ago wereconsidered average, at most.

The first step this generationtook was to reduce yields.Quality shot up, and thepreviously scorned localvarieties proved to have bagsof personalty and style.

Italy, with its wide range ofsoil compositions, altitudes andclimates can produce any winestyle the world desires. But itsidentity and originality isdetermined by its indigenousvarieties, cultivated forhundreds, if not thousands, ofyears. It is a heritage thatcannot be copied, and just thething for palates jaded with ahandful of internationalvarieties.

Arneis Although red wineterritory, Piemonte is home toseveral whites. But it is Arneis,with its subtle almond andwhite fruit nose, which has theedge over Cortese (or Gavi), theregion’s bestseller. Because ofits low yields, Arneis almostdisappeared in the 1970s, but afew producers, including BrunoGiacosa, clung to it. Topproducers today are MatteoCorreggia, and Angelo Negro&Figli (single vineyard ‘ArneisPernaudin’ and ‘Arneis SetteAnni’).

Garganega One of Veneto’smost characterful whites andmain ingredient in Gambellaraand Soave. But while enormousyields often result in vapidwines, Garganega, in the righthands, can be a true expressionof terroir, showing chamomile,pear and mineral notes carriedby fine acidity. Top producersinclude Pieropan, AngiolinoMaule (cask-aged ‘Pico’) andPRA (Soave Classico Staforte).

Ribolla Gialla Friuli may befamous for its internationalwhites, but the trend for allthings indigenous proves to bethe wind in Ribolla Gialla’ssails. Confined to the Collio

hills near Oslavia, it used to befermented on the skin longbefore this technique becamefashionable with the ‘naturalwine movement’, giving italmost a red wine quality.Ribolla comes in fresh, spritzyversions as well as serious,cask-aged ones. Highlyrecommended are Primocic,Dario Princic, Radikon and LaCastellada, each producing a‘modern’ as well as a skinfermented version.

Verdicchio The perception ofVerdicchio has been shaped byone of Italy’s great marketingsuccesses: Fazi-Battaglia’sgreen amphora bottle, producedby the millions, reaches everycorner of the world, puttingVerdicchio on the internationalmap. But perhaps it doesn’t do

justice to Verdicchio’sversatility, or its fabled ageingcapacity, which turns it into anutty, lemony and minerallywine. Top producers includeBucci, Collestefano, LaMonacesca and Sartarelli.

Fiano Campania, one of Italy’smost promising yet inertregions, is home to severalgreat whites. Considered a sun-drenched corner of thepeninsula, its mountainouscentre is actually quite cool,and ideal for slow ripeningwhites such as the charismaticFiano. Redolent of peach andlemon it turns minerally andsmoky with age. Fiano comesin several styles, fromcommercial, spritzy, tropicalfruit quaffables to fineexamples, which can stand the

test of time. Top producers arePietracupa, Feudi di SanGregorio and Il Tufiello.

Carricante While Etna Rossois taking its rightful placewithin the ranks of Italy’s finewines, Etna Bianco, made ofthe local Carricante, is at leastas great. It can be found insome of Europe’s highestvineyards, 900m or more,where, during a long, coolripening season, Carricantedevelops fine scents of whiteflowers, lemon and peach. Itshigh acidity makes it a perfectcandidate for bottle ageing,which it needs to show its best.Benanti’s Pietramarina provespatience pays off. Otheroverachievers are Graci,Fessina, Barone Villagrandeand Biondi.

Future ofwhites liesin the pastProfileItalian whitesProducers are wakingup to their rich storeof heritage varieties,as are the consumers,says Walter Speller

Let us spray: work on the vines in a modern Italian vineyard at Barolo, Piedmont Zoonar