Strauss & co - 10 - 11 May 2020, Cape Town

11 Investing in FineWine With the launch of Strauss & Co Fine Wine Auctions, along withWine Cellar’s existing brokerage platform, liquidity in the secondary market has increased considerably, totalling R8 million sales in 2019. While minute when compared to the world’s estimated fine wine market of £6 billion, it constitutes a solid foundation to realise growth in fine South African wine prices. South African wine prices at the entry-level and super premium are the least expensive of the major wine producing countries, presenting a major investment opportunity. ‘Treat yourself. Order a few bottles. Don’t deny yourself. Yes, those prices are a fraction compared to other wine regions, as the Cape continues to offer unbeatable quality combined with affordability…Trust me when I say that in a decade’s time, youmight well rue not grabbing some of these exceptional wines.’ – writes Neal Martin, recently voted the BWW 2020 most influential wine critic in the world, in his 2019 SA Report on Vinous.com Unlike the fine wines of France, for example, very little South African vintage stock exists for sale on the secondary market. While Strauss & Co Fine Wine Auctions aims to formalise the current market, Wine Cellar has launched various investment packages to seed the future market. VIP 2015, Wine Cellar’s first Investment Portfolio launched in September 2018, has shown over 30% price growth. Investment potential is considered according to price, volume, sales data, customer demand, brand equity, consistent quality and ageability. The top 10 investment wines according to 2019 sales data are: Kanonkop Paul Sauer, Mullineux Olerasay, Klein Constantia Vin de Constance, Alheit Vineyards Magnetic North Makstok, Beeslaar Pinotage, Mullineux Syrah, Sadie Family Old Vines Series, Rustenberg Peter Barlow, Alto Cabernet Sauvignon and Vilafonté Series C. An introduction to Bordeaux Of all the wines of the world, no other style has had as significant an influence over South African wine as Bordeaux. Not only do the Bordeaux varieties seem to proliferate in the Cape, but over the last four decades South Africa has established icon status with its Bordeaux-styled reds, including the likes of Meerlust Rubicon and Kanonkop Paul Sauer. Apart from being a region in southwest France with the significant port city of Bordeaux as its capital, Bordeaux is France’s largest wine region by volume and value. In fact, the region matches South Africa’s entire wine production. It has a history of wine production dating as far back as 300 AD and claims spiritual residence to some of the world’s most known and noble varieties. As with the famous wine regions in France, the Appellation d’Origine Contrôllée – AOC – system applies in Bordeaux. This regulates styles, volume and grape variety in accordance with the physical site, or ‘terroir’. The five red varieties grown are Cabernet Sauvignon, Merlot, Cabernet Franc, Malbec and Petit Verdot. Thus, any red wine made from one or more of these varietals in another part of the world can correctly be referred to as a Bordeaux-style red. Note that it doesn’t have to be a combination of all five, or even a blend at all, as is commonly mistaken locally. Although a major factor in the success of their wines is their mastery of blending, a 100% Cabernet Sauvignon is a legitimate Bordeaux red. In 1855 the French authorities, in line with growing trends in the industry, assigned designations to the most expensive wines of the Medoc, the left-bank of Bordeaux. Sixty-one wines were categorised from 1st through to 5th Growth. The classification was formalised by the Bordeaux brokers and the open- market and remains an important quality indicator today. St Emilion and Pessac Leognan followed suite with their own classifications, while Pomerol interestingly remains unclassified. While the heights of Bordeaux in great vintages is realised by many chateaux, the greatest properties are able to produce high volumes and high quality in almost every vintage. Fine Bordeaux is broadly sold on an en-primeur , or futures, basis two years before release. The en- primeur, which sells through a massive network of merchants around the world, has been driving the market for more than a century. Traded much like an equity, often a wine will change hands numerous times before landing in a cellar. In recent years the appetite for fine wine from the developing world has been rising. Increased transparency around the mythical world of wine has opened new markets, with continued growth ahead. With prestige comes demand and Bordeaux’s large supply has fed the global fine wine auction scene. Bordeaux was once dominated by influential wine critic and Bordeaux authority, Robert Parker, who made a bold and accurate prediction on the 1982 vintage. His appraisal of a chateau would directly influence the price. Today there are several critics who decide on the quality of each vintage and chateau. Prices are less correlated with critics and more with brand equity and limited supply. Prices are generally higher on release in today’s market and there is increasing competition from Burgundy and the New World at the top of the wine order. South Africa has produced incredible Bordeaux- styled wines over the last few decades, but the recent era has been even more exciting. Maturing vineyards, better understanding of fine wine and great vintages such as 2009, 2015 and now 2017 have pushed South African Bordeaux-style wines to new heights.