Sine Qua Non The Pontiff

Getting an allocation from an exclusive winery, such as Sine Qua Non (SQN), can be worth the wait, but do you have to buy everything they offer?

As a wine speculator, what you do want from SQN is Syrah and Grenache from the Eleven Confessions vineyard. If you are offered something else, do you take it? In the case of the 2008 The Pontiff (rose), my suggestion is to skip it, or sell it. Unlike their Syrah and Grenache, the SQN white and rose wines are just not buy-and-hold material.

The question remains, are allocations of the more desirable wines larger for the customers that buy all the other stuff? Fortunately, with Sine Qua Non at least, speculators don't need to worry too much about it. Even in this economy, Manfred Krankl's latest rose can be flipped without too much of a loss (current price $100, release price, $79). You'll lose money on shipping, but you'll break even on the bottle.

William Fevre Chablis

William Fevre Chablis is a good value for drinking at current prices. If you are tempted to speculate, go for Les Clos.

The 2004-2005 Fevre Chablis tend to be available for around $40/bottle for a premier cru, and $60/bottle for a Grand Cru, and $80/bottle for Les Clos. Patient speculators can find these wines at auction for $10-$20 lower than these prices.

I like Fevre Chablis for three reasons:
1. It tastes like a wine that costs 50% more.
2. The wines are well made. I have never had a Fevre tainted by premature oxidation.
3. Prices of the 2002, 2004, and 2005 Fevre Les Clos actually rose by about $25/bottle during the 2007-2010 time period, a time when most non-blue chip wines fell or barely maintained their value.

Is Chablis worthy of investment? Mostly not, although owners of Raveneau did well with the '02 vintage Grands Crus. Fevre's Les Clos could similarly beat the odds and make the jump to $120+ over the next few years.

Expect Discounts on Blue Chip Wines

Yesterday's massive US stock market drop has been attributed to a trader error, in which "billion" was substituted for "million". That may make us feel better in the short term, but look to the Asian markets to predict the next move in the wine market.

Investment grade wines, especially first growth Bordeaux, have experienced a dramatic turnaraound since the crash of 2008-2009. A closer look at the Bordeaux market reveals that this recovery comes from Asian demand.

http://www.decanter.com/news/293682.html

http://www.lovethatwine.co.uk/blog/bordeaux-gets-boost-asian-demand

http://www.winespectator.com/webfeature/show/id/42409

But Asia is now undergoing a massive stock market correction, with the Hong Kong stock market down 11% over the last three weeks. Couple this bad news with the well-known fact that the Chinese real estate bubble has yet to burst ....

http://www.nytimes.com/2010/03/05/business/global/05yuan.html

http://www.cnbc.com/id/35056774/Jim_Chanos_China_s_Real_Estate_Bubble_Is_Unprecedented

http://money.cnn.com/2010/04/15/news/economy/china_bubble/

... and we have the perfect storm brewing for investment grade wines.

For wine speculators, I recommend waiting for the correction before establishing any new positions in the following: Lafite, Latour, Margaux, Mouton, Ausone, Haut Brion, La Mission Haut Brion, Cheval Blanc, Petrus, or anything DRC. Look for these prices to fall as the Asian markets correct.

2007 Scarecrow

The 2007 Scarecrow (100 RP) is offered at $225, a hefty 28% increase over the 2006 release price of $175. If you get an allocation, buy it, but do the math first.

If you don't drive to the winery and pick it up yourself, you probably need to get your wine shipped to 55 Degrees (a California based wine storage facility), where your wine will be held until safe wine shipping temperatures prevail in both California and your home state. 55 Degrees makes its money by renting you a wine storage locker, so you can expect to wait the better part of a year before your wine gets to you. For your 3-bottle allocation, plan on $112 in wine storage fees, $37 in CA sales tax (which you must pay, since delivery to 55 Degrees is in CA), and $60 in shipping and shipping tax to 55 Degrees by FedEx 2nd day service. You'll pay more to have it shipped to you.

Your $225 bottle is now over $300. If you sell at auction, the auction house will clip you 15-20%, plus you'll have to pay again to ship your wine to the auction house. To break even, the hammer price plus premium must be over $350. Will your 100 point 2007 Scarecrow be profitable? Probably (pre-sales on Winecommune.com are around $500), but you'll want to think hard about future allocations at these prices. Here's a list of past vintages by score and market price:

2003 RP98, $700
2004 RP95, $445
2005 RP96, $395
2006 RP94+, $379

Scarecrow is no longer the no-brainer it was a few years ago, when a $100 bottle could be flipped at auction for $800. Unless Scarecrow drops their prices (or begins direct shipping to the consumer), it appears that future vintages with Advocate scores under 95 will be too expensive for speculators.

2007 Quilceda Creek Allocation

The 2007 Quilceda Creek allocation offerings are in. The cabernet in 750 mL format is $125, and $275 in magnum. Buy your entire allocation.

Unlike Sloan and Screaming Eagle, Quilceda Creek has resisted the urge to raise its prices in recent years. In addition, the 2007 vintage as a whole is a good bet for Washington state. The Wine Advocate gave the whole region a 92 score for that year. While the 2007 Quilceda Creek is still unrated by the Advocate, over the last 5 years this winery has turned out a string of high scoring cabernets. Three of the last five Quilceda Creeks earned 100 points, and the other two got 99.

Owners of the 2002-2006 vintages have done well in the marketplace. Even in this difficult market, the 2002 and 2003 are well north of $200 at auction, with average prices around $275 each (wineprices). Less auction data is available for the 2004, 2005, and 2006, but retail customers can expect to pay $225, $299, and $169 respectively for these three (wine-searcher). I expect auction prices to be about 20% less than the cheapest retail.

Is there risk? Of course. The 2001 Quilceda Creek got only 98 points from the Advocate, and it trades at $177 (wineprices), and that is a recent breakout to the upside. In 2006, it was barely over $100 on the secondary market. As pricing for the 2006 and the 2001 suggest, you need both a 99+ score, and a few years of cellaring time to double your money.

Clarendon Hills Astralis - Investment Grade?

In a word, maybe. Australia has been tough on wine investor/speculators.

The past five years have shown little motion in such Australian blue chips as 1971 and 1976 Penfolds, which are both languishing around $500. Wild Duck Creek Duck Muck seems to loose $100/year regardless of vintage, and Chris Ringland Shiraz is stuck south of $1000 for the 1998, with other notable vintages auctioning for half or a third of that price.

Clarendon Hills Astralis gets released around $300 in a great vintage, but patient speculators can usually pick it up around $200 -$250, if they are willing to wait for the right auction. I got the 1996 Astralis for $160, held it for two years, and then drank it. I have also enjoyed the 1995 on two occaisions, and the 1997 on at least three. These early vintages are just getting out of their dumb phase, and they have emerged with their rich glycerine and fruit intact. It still takes the whole dinner for the bottle to open up fully - yet I don't feel that the wine is holding anything in reserve either. Its Sine Qua Non - like jammy character is morphing into something, but what? Astralis has everything going for it: 100 year old vines, brilliant winemaking, ...all it needs is a track record - something that Chris Ringland and Penfolds already have. Astralis was first produced in 1994, and it will take another 5 years to know for certain if these early vintages can age gracefully.

If you want a safe Australian bet, then 1976 Penfolds and 1998 Chris Ringland are your fist choices. It might be years before they get thier proper recognition in the marketplace, but if speculators ever discover Australia, these wines will be the first to move higher. If Astralis shows it can age, then it could make a bigger move. If you like a little more risk, or just need a cheaper entry point, Astralis could be ready to join Australia's big boys.

1970 Petrus Review

High shoulder, not so bad for 39 years, I had seen worse. Capsule was visibly worn, a sign of ??? I became concerned; the capsule was bonded to the bottle. Unpeeling it revealed seepage and corrosion, and - mold. The cork came out about 2/3 with the waiter's friend before collapsing into bits. Somewhere in the debris branded bits of cork revealed "POM" and "197". So, it might be oxidized and baked, but at least it was genuine. I was certain that I had waited too long to drink it. There was a coarse sediment. I resisted the urge to decant. Experience with the 1945 and 1964 Petrus had taught me - at great cost, that these are delicate wines. Decantation kills.

I poured a few drops into my smallest Riedel Sommelier. It was their Sauvignon Blanc glass, sometimes marketed for "mature Bordeaux". At first, it felt strange drinking red wine from what was clearly a glass for white. I sipped. No trichloroanisole, no volatile acidity, not baked. I was cautiously optimistic. Some tertiary flavors were present, wet mossy earth, tea? I inserted a rubber cork and packed it up with the glasses for the trip to the BYOB restaurant. Then it hit me -Fruit. I swallowed it 30 seconds ago, but these flavors kept going. This wine was alive.

At the restaurant, the wine performed brilliantly. It was surprisingly robust, while also being delicate and balanced. This was not a "big" wine, but it was absolutely a steak wine. It screamed steak. It made my halibut taste like steak. The small glasses were the right choice. If you have 1970 Petrus, it won't improve -drink it up.