Wine, in particular fine wine, has always been shrouded in an air of mystery. First there is the fear that accompanies it – will it be corked? Oxidised? Overpriced? Then there are the bragging rights – wine is seen as a status symbol the world over, and who can fail to be impressed by someone who has a cellar full of Lafite and Latour? Finally, there are the wines that we specialise in here at Vindome.com; investable worthy wines that will (hopefully) gain in quality and price over time.
Whatever your “fear” of fine wine may be, one thing is for sure. Good wine is expensive. It starts off by being expensive, it becomes more expensive over time, and by the time it is “ready” for drinking, it is more expensive still. This expense can seem off putting to some, particularly those who are only starting their wine investment journey. But like most things, if you understand where the price point is coming from, it might be a bit easier to swallow.
There is one main reason why wine (fine wine, not the cheap wines at the bottom of the sale barrel) is so expensive. Quality. I’ll say it again. And again, and again. Quality, quality, quality. And that quality is made up of three pillars: harvesting, ageing and terroir. When talking about expensive wines, time is literally money.
First of all, let’s mention the harvesting process, perhaps the most easy to understand cost. Fine wine is made in limited quantities, so the production area is smaller, thus costs are automatically higher. Producers that harvest in larger quantities with a goal to make a cheaper product make wine much faster, as the turnaroud time is only about 12-24 months (from vine to bottle). These producers favour a quantity over quality modus operanti. And to keep up the pace they’ll need to harvest quickly, which means using machines and chemicals.
Premium wines however are made for ageing, and so everything is done at a slower pace. Many fine wine producers favour biodynamic farming, a process which considers all the components of the farming as a whole, and use the biodynamic calendar for things like pruning and harvesting. This process eliminates the use of chemical and pesticides but increases the time on the vine and in barrel. Production costs for expensive bottles too are far higher: a low quality wine will be harvested by machine and it only take one person to run one machine. In contrast, wines that are made for ageing are harvested by hand, so only healthy and ripe grapes are selected. Natrually, all this comes at a cost.
Aging in Oak Barrels
Next comes ageing. Fine wine is aged in oak barrels, which can cost between $600 and $2,400 per barrel (yes, you read that right. Just think how many barrels some of the bigger estates have). The best wines in the world – from the first growths in Bordeaux to Napa Valley’s Opus One and Dominus Estate will age in oak, with many producers preferring to use new oak. The reason for ageing in oak is simple; it adds flavour. The broad spectrum of taste that ageing in oak offers is something winemakers adore – this is like a palette of paint for an artist. The longer the wine stays in the barrel, the more complex the body. Oak imparts a heady mix of vanilla, spice and cedar to the product, while aslo exposing the wine to oxygen. Oxygen is a bit like magic dust to fine wine – it attenuates the tannins which makes the wine smoother and silkier. The oxygen permeated the wine wine through the pores of the oaks barrels, so the process is very harmonious. Inversely, some wine evaporates through those same pores. You may heard of the famous “angel’s share” that whisky makers talk about – well, it is the same for wine. About 2% of the product evaporates each year, giving the wine a more concentrated taste.
Additionally, when ageing in oak, you can play around with the amount of oxygen before sealing (this is what the French call “élevage”), which will help “civilise and refine the wine’s structure”, according to François Mitjavile, winemaker-proprietor of St-Emilion’s Tertre-Rôteboeuf. All these elements contribute to the unique taste of the wine, and the reputation of the estate.
Wine makers can use one of two types of oak for ageing: American or French oak barrels. Each wood imparts its own personality. American oak barrels tend to be more potent in their flavour, delivering a creamier texture. They’re also cheaper. French oak has a tighter grain, and conveys an allegedly more elegant flavour (think dark chocolate, roasted coffee beans and exotic, savory spices).
Of course, mass produced wines don’t use oak barrels. Some try and get those lovely spicy notes by cheating and using oak chips, but the result is mediocre at best. Oak chips can aid in the stabilisation of colour in the finished wine and helps build tannin structure but they are no substitute for the real deal.
Next comes terroir. Oh that magic word that means so much in this industry. Good terroir is quite literally like gold dust. And good terroir is not usually found on flat plains like those that line the motorway. Mais non. Think of Bordeaux’s Left Bank predominantly gravel-based terroir. The drainage is excellent, but the nutrients on the soil are poor, meaning farmers have to continuously feed the land. Think also of Argnetina’s Bodega Cantena Zapata’s high altitude inwes. Yes, the product is impressive but my goodness it is not easy getting up 2,000 metres of mountain for pruning, harvesting and the like.
Many producers believe that the most flavoursome grapes grow in adverse conditions with many fine winemakers limiting their best wines to a single, hard to reach plot. Rather than try to grow as many grapes as possible they prefer to limite their yield and concentrate on the product. Thus, a product that is scarce will naturally have a higher price point. And when demand oustrips supply, such as with these wines, covetability becomes a factor.
Fine wine’s complex taste results from its unique terroir. This, in fact, is the very embodiment of the wine. The terroir captures all the influences of the various wine regions such as culture and climate (among others). Prestige is another element to factor into wine prices. Land prices for terroir in Bordeaux are subsequently higher than in lesser known parts of the world – I mean, who can realistically compare a Bordeaux to a Bulgarian?
Apellations are in place to protect the terroir of a vineyard, and to keep quality consistent. Again all this comes at a price. The right terroir will be in scarce supply, something that the producers are well aware of. So if you want your 2018 Lafite Rosthchild, to taste like a 2018 Lafite Rosthchild, then basically, you’re going to have to pay for it.
Bottles and Packaging
They say you should never trust a book by its cover, but surely I am not the only one who has bought a bottle of wine because I preferred the label? The look and feel of the bottle will communicate a brand’s identity, personality and quality, before the cork has even been pulled. While there is not much creativity allowed in the shape of the bottle, more and more producers are looking to the label to differentiate their product on the shelves. Of course, the liquid inside a bottle is of crucial importance, but the wine’s packaging is of near equal importance.
Thus, some producers have looked to the art world to set them apart. Château Mouton Rothschild is well known for going the extra mile and has been commissioning artists including Salvador Dali (1958), Picasso (1973) and Andy Warhol (1975) every year since 1945 to design its labels. Contemporary artist Tracey Emin lent her talent to the world of wine in 2013 and designed labels as part of a partnership between Quinta de la Rosa in Portugal’s Douro Valley and British restaurateur and chef Mark Hix. Rebecca Horn’s 3-D label for the salmanazar of 2008 Ornellaia is a spectacular chef d’oeuvre that takes the concept of a wine label to another level. Naturally, this uniqueness in an investment for the producer but also the buyer: the bottle was sold among a collection of nine commemorative bottles of Ornellaia 2008 designed by Horn in 2011 for €130,000, with the salmanazar fetching €40,000.If you want to try your hand at investing in wine, then why not read our detailed guide on the subject?