Thursday, February 7, 2008

Elixir Wine Report's First Posting: A New Wine Blog to Kick Off 2008

Rob Landsness

Introduction

Elixir Wine Report is all about sharing commentary on the wine market, upcoming events, and experiences from industry insiders. Postings will be coming from renowned sommelier and Wine Director for the Michael Mina restaurant group, Raj Parr, Boris Guillome (formerly heading up wine buying for Dean & Deluca and Vintrust ) our in house French paradox due to his expertise in Napa wines, and yours truly.

Full disclosure: Elixir Fund (http://www.elixirfund.com/) buys and sells wine collections and is very much In the Business. We'll try not to make this a shameless self promotion of those services and focus more on trends, tastings, and general adventures in wine.



Market Review

To begin I wanted to opine on what's happening on Wall Street and how that is affecting the market for wine in general and fine wine specifically. Between the impending presidential election, the ups and downs in the stock market due to the fallout from the sub-prime mortgage market, and the falling value of the dollar, what's happening to all of those winery mailers that are dropping as we speak?

BOND and Littorai are just two of the dozens being sent out, with BOND showcasing its Pluribus vineyard as a new addition to their lineup (from private equity guru Bill Obendorf's vineyard in Oakville). According to the NYTimes, stocks "pulled back Wednesday as many investors, still uneasy about the economy, cashed in earlier gains after a Federal Reserve official suggested that rising inflation could prevent the central bank from making further interest rate cuts." Are wine collectors going to pull back the throttle on their buying habits as we slide into a possible recession?

Buying on Comfort

I suspect US buyers are going to stick to the brands they associate as having the best track record for appreciation over time. So if I receive a dozen or so mailers I will be much more selective this time around. When it comes to BOND (and I love BOND wines by the way) I'll max out on Harlan Estate instead.

There is a reason, as several recent posters on erobertparker.com cited, that those BOND mailers keep arriving in your mailbox even if you haven't ordered from that catalogue in a few years. Try doing that with Screaming Eagle or Colgin! There are so many new wineries vying to hit the cult status and the secondary market is really the easiest way to see who is winning. Rarely its the spinoffs and once in a while there's a newbie that rockets to the top with that rare combination of velvet rope image plus a top Parker score, ie Scarecrow. There's way too much competition at the $100+ price point and I believe people will be buying on comfort in this market-- it's a class divide. Love Maybach and glad I am on their list. Am I going to max out on their next offer, probably not.

Movers and Shakers

It's no surprise that the biggest mover of 2007 in terms of value was Chateau Lafite Rothschild, according to Liv-Ex top 100 wines. I think that this trend will continue, no surprise that I received orders I couldn't immediately fulfill from overseas collectors. How about 100 cases of Carraudes de Lafite 2000, or 10 cases of its older sibling Lafite 2000?

So from an investment perspective I say stick to the top and don't chase too many spinoffs and garagistes for a while. The demand is there, and the rarest will only become more so over time. If you never considered wine to be an appreciating asset, here are some numbers to think about:

Change (+ or -) in Indexes from 2007-2008

Liv-Ex 100 Top wines--+40.10%

Liv-Ex 500 Top Wines--+25.20%

FTSE 100--+3.80%

S&P 500--+3.50%

Nikkei-- -11.10%

While I think a cooling is inevitable in the marketplace the best wines are going to beat the market in 2008. Just as there was a fire sale happening with our banks writing off billions of dollars and then selling major stakes to buyers abroad, the rarest and best wines also seem like a bargain to many abroad. Here are some predictions and it will be interesting to come back to this in a year's time. Producers that are going to continue to climb in value and appreciate significantly--Henri Jayer (who sadly passed away this last year), DRC, Leroy, 1st Growth Bordeaux, and only the top tier of New World cult wines. These are wines to break the piggybank now for a long term return on your investment-- the Bentleys and Rolexes of the wine world.

If your price point budget keeps you out of the 1st Growths and their kin, stick to names like Pichon-Lalande and other recognized names. As noted in a recent Liv-Ex report "picking the right brands will probably be key to 2008 and the second growths – with strong name recognition – " it is the only way to invest. Best thing to buy right now regardless of how expensive you think it is at the moment--2005 Burgundy. With only a few categories of '06 and '07 wines looking like smart buys, '05 is going to continue to move up at the top tier and don't we wish we all had Euros to play with right now!

Wine Events and Adventures

Off to Oregon for the weekend to visit three wineries that are having open houses, Domaine Serene, Domaine Drouhin, and Sokol Blosser:

Domaine Drouhin– A Match Made In Heaven Saturday, February 9 11am – 3 pm

Pinot Noir and Chocolate Day at Sokol Blosser--Enjoy delicious locally made chocolates paired with Pinot Noir, taste our full flight of wines and pick the perfect bottle. Cost is $10; Cellar Club members admitted at no charge.

Wine & Chocolate Day at Domaine Serene - Dundee Hills, OR--February 9 11am – 3 pm

Its going to be cold, rainy, and perfect for Pinot Noir by the fire. I'll have some pictures and memories to share from the Northwest next week, and also plan on raiding the wine cellar and going to my favorite Oregon wine country restaurant, The Painted Lady. If you haven't been, someday you definitely need to go to the Willamette Valley and revel in its down to earth charm. It is not Napa and that's just fine!

Event I can't wait for is the La Paulee in San Francisco. Those lucky few who are able to get tickets expect to be blown away. Stay tuned...

3 comments:

Kitri Culbertson said...

We hope you enjoyed the Pinot Noir and Chocolate Day at Sokol Blosser Winery. Come back and see us again soon - we're definitely looking forward to reading more from your blog!

Cheers,
Kitri Culbertson
Marketing Coordinator
Sokol Blosser Winery

Elixir said...

Kitri,

Thanks so much! I really enjoyed it. What a fun weekend to be in the Willamette Valley wine country!

Best,
Rob Landsness

Toby Valentine said...

Thx, good luck in the future.

Best regards
Toby, data room software